More Geosign insights

If you are still interested (“Has the deal of the year become a nightmare?“) in what is going on at the strangely uncommunicative Geosign, blogger Ann Brocklehurst has been on the job. She appears to be a professional journalist by day, and a blogger by night. Her post yesterday provides some more colour on what Geosign is doing on the business front, although no one has yet been able to find out what is going on with the P/L following Google’s crackdown on adword arbitrage.

Perhaps Geosign is the first tech firm in North America to ever take on $160 million in VC funding (less $50 million for a founder secondary) and then lay ~85 staff off. If the money wasn’t for growth capital, and there is no patent litigation to fund, then what was it for? American VCs generally (universally?) want Canadian investees to increase the burn following a round. Spend more on sales and marketing, that sort of thing. I wouldn’t think the people at American Capital Strategies (ACAS:NASDAQ), Geosign’s new VC, are any different.

Could it be that Geosign was still a wildly profitable business following Google’s arbitrage changes, and the company decided to lay off about a quarter of their people anyway, and have that $110 million sit on its balance sheet collecting about 3% in the bank, all while that cash hoarde was dropping in value as the US$ has swooned meaningfully against the CDN$ since the investment was made?

What’s the word I’m looking for?

MRM