A few months after staffing shakeups at Viddy, the Venice startup is giving investors some of their money back.
Viddy has announced that it will return $18 million of the $30 million series B round it raised a year ago. The lead investors expected to get much of their money back include NEA, Khosla Ventures and Goldman Sachs.
That will leave Viddy with $11 million, according to tech blog AllThingsD.
“Viddy raised a substantial amount of capital last year,” Viddy President JJ Aguhob said in a statement. “A year later, Viddy is a product-focused organization that is steadily growing its audience and we plan to release new products. Our late stage investors have been supportive, but it just makes good business sense to return capital we do not need.”
Viddy, which lets users share short video clips similar to photo-based Instagram, raised its $30 million round last year off the popularity of social video apps and heavy traffic from Facebook’s Open Graph – which allows people to sign into the app using their Facebook accounts and posts their activity to their Facebook walls.
But Facebook has since changed its algorithm, driving less traffic to social apps like Viddy. And then Twitter acquired Viddy competitor Vine. The app has taken off since it became available for iPhones in January.
The social video app lost its co-founder and chief executive Brett O’Brien and laid off more than a third of its 30-person staff in February. Two months later, Chris Ovitz, a co-founder and head of business development, said he would leave his full-time position with the startup.
Viddy has stated that it is not worried about the competition from Vine. But for now, now the company is focusing on further developing its product.
“Since late February, we’ve put out four releases including a redesign,” Aguhob said in the statement. “The core app has seen engagement more than double over the past months, with over 18 million monthly videos watched, up from 7 million just two months ago.”