Viddy returns $18M of its $30M Series B

When Viddy raised money, it was when folks were jumping on the who will be the "Instagram of video" bandwagon.<p>Socialcam and Viddy appeared to be the front-runners for that, but then certain things got in the way<p>- FB cracked down on both for being aggressive with people's feeds. This killed growth.<p>- SocialCam got acquired for $60M by Autodesk which as a comparable transaction wasn't very favorable for Viddy (on a price/user valuation multiple basis since there was little to no revenue)<p>- Investors had control of the board and likely decided based on the above and other factors (such as company founders departing) that this was throwing good money after bad and so decided to take their money back

Can someone explain to me how this works? I've never heard of a company returning money except in the event of a shutdown.

VC probably got over 50% votes and forced this on them. Valuation goes back down.

It's really hard to say one way or the other what this is. "Recapitalization" is a hilarious euphemism for "gimme back my cash," but considering they're keeping a lot of what's in the bank and still going with their investors, it could also be a very good sign. What reasonable person would want more liability to investors than necessary?<p>Granted, the ~50% staff reduction probably sets off some alarm bells, but if it really is a matter of improving efficiency, that's actually really good business for a startup.<p>Unless I'm missing something... this is either news in both directions at once or neither. Now my head hurts.

Do the investors remain in control of the shares they acquired when they put the money in? If so isn't this like buying shares in a company for free?