Online Publisher Geosign Splits Up; Investor Getting Cash Back: Report

Here’s something you don’t see very often: a VC investor getting some cash back after a deal gone sour. In March, we reported on the $160 million funding at Ontario, Canada-based online publisher Geosign. A report from TheStreet.com explains that things haven’t gone so well. Soon after the deal, reports claimed that the company laid off a big chunk of its 230 person workforce and recently the company split into two. Several blogs, see here and here, have been talking about the story for awhile. The split hasn’t been officially announced, which is obviously odd, though TheStreet (NSDQ: TSCM) claims confirmation of it. It appears the company had a Google (NSDQ: GOOG) arbitrage strategy that got hurt when the search engine tweaked its algorithm in an unfavorable manner. Not surprisingly, the company didn’t describe its strategy this way.

The split up has created two companies: eMedia Interactive, which is run by founder Tim Nye, owns the domain names. The advertising business has gone to Moxy Media, which is owned by American Capital—with the deal, the company is getting a “substantial” chunk of its cash back. Moxy Media is now focusing on the lead gen space.

What’s not clear is how much of this crack up was due to something unique at Geosign or if there’s a broader warning for the other well-capitalized domain media plays.