Virtual assistant service Zirtual has won a reprieve from shutting down following revelations on August 10 that it had laid off its entire staff without warning. The company revealed that Startups.co, a startup launch platform, has acquired it and will keep the service up and running starting August 17.
Financial terms of the deal were not disclosed.
Zirtual chief executive Maren Kate Donovan attributed her company’s sudden demise to burn, writing in a Medium post:
Zirtual was not flush with capital — for as many people as we had, we were extremely lean. In total we raised almost $5 million over the past three years, but when we moved from independent contractors (ICs) to employees, our costs skyrocketed. (Simple math is add 20 – 30% on to whatever you pay an IC to know what it will cost to have them as an employee).
The collapse of this company caught many off guard, including not only its employees, but also the virtual assistants and clients. Employees told Business Insider that they felt “blindsided and not prepared for the news.”
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In a FAQ post, the rationale for the last-minute notification was based on Donovan’s belief that she could properly capitalize the company and worked on exhausting all options until there was no other choice but to cease operations.
In its darkest hour, Zirtual curried favor from Startups.co chief executive Wil Schroter, a customer himself. In his own blog post, Schroter wrote: “As a young company ourselves, having access to a curated on-demand workforce that can help us grow and scale is a huge opportunity. It’s an enormous challenge for the 1 million registered startups that we have across the Startups.co platform, and one that we absolutely can’t see go away.”
For some, the addition of Zirtual to the Startups.co platform may seem synergistic, as new companies will need to have all the help they can to get off the ground. Startups.co is the parent company of several offerings, including Clarity.fm, Fundable.com, Launchrock.com, and others.
However, it also could appear that Zirtual was bought because Schroter and his team felt it was something that just couldn’t go away and made an emotional bet. Schroter found out about this at the same time as everyone else — there hadn’t been any previous negotiations.
It’s good news for Zirtual’s investors and employees, but how does the big letdown affect customers’ faith in the company?
As Fortune’s Dan Primack noted, there’s no word on whether there will be any change in Zirtual’s management as a result. Investors in Donovan’s company will receive stock in Startups.co.
1/ Just talked to @wilshroter, whose co just bought Zirtual. Existing Zirtual backers will get http://t.co/LTm6OJHPre stock.
— Dan Primack (@danprimack) August 12, 2015
2/ No decisions yet on if any of the management team (including C-suite) will be retained.
— Dan Primack (@danprimack) August 12, 2015
