colour Denies Report That It's Being Shut Down*

colour and Lala founder Bill Nguyen

UPDATE: colour, the maker of a notoriously failed photo-sharing app and one of the most controversial startups of this decade, is not shutting down operations, despite a VentureBeat report by Ricardo Bilton to the contrary.

Below is our original story before colour reached out.

Original: colour, the maker of a notoriously failed photo-sharing app and one of the most controversial startups of this decade, is going to wind down its business and return what money it has left to shareholders, Ricardo Bilton at VentureBeat reports.

Bilton got a copy of an email colour management sent to employees that says, “As you may or may not have heard, colour is going through a number of changes.  Last week, the Board and major shareholders voted to wind down the company.”

colour raised $41 million in a round led by Sequoia Capital in March 2011. That funding led many to question whether the social-mobile bubble had peaked—and whether investors had lost their mind.

But colour’s megafunding fit a long-established Silicon Valley pattern where investors have been willing to bet large amounts on entrepreneurs with track records of success. colour CEO Bill Nguyen had previously launched a music startup, Lala, and sold it to Apple—the kind of win that stokes venture capitalists’ confidence.

In May, Nguyen said that colour had “five to six years” of “runway,” or funds to operate the company, left. That suggests that the majority of the money it raised was still in the bank, meaning the investment won’t be a total writeoff.

But Sequoia, for its part, has already written colour off of its website. Its portfolio page no longer lists colour; the company description page returns an error; and partner Doug Leone no longer includes colour on his list of investments.

Reached for comment, Leone said of colour, “It’s an investment,” but didn’t explain why it was off the website. We’ve asked Sequoia for further explanation.

Last month, Nguyen took off for an extended vacation in Hawaii, which he characterised as a “sabbatical.” TechCrunch reported that he hadn’t been seen at colour headquarters in months.

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