The company behind the Fyre Festival, a music festival that was promoted as a luxurious getaway in the Bahamas for the wealthy and elite but ended in disaster and ridicule, got an early seed investment from a Chicago VC firm.
Corazon Capital, a firm led by former Match CEO Sam Yagan, made a small seed investment in Fyre Media last May, a spokesman for Yagan told Bloomberg. Corazon invested specifically in Fyre App, a tech platform that connects musicians and venues.
The spokesman added: “As passive investors, we had no involvement in operating the business or the conception or execution of the Fyre Festival. We had no interest in their plans to produce a festival and unequivocally disavow the handling of the situation in the strongest possible terms.”
An email to Yagan was not immediately returned Tuesday morning.
The Fyre Festival was founded by rapper Ja Rule and Fyre Media founder Billy McFarland. The festival was intended to promote the Fyre music booking app, which Corazon invested in last year. The event was promoted on Instagram by "influencers" like Kendall Jenner and Hailey Baldwin and boasted ticket packages as much as $100,000, as guests were promised luxurious accommodations, gourmet food, and a one-of-a-kind gathering of celebrities and supermodels.
What the festival actually became was a disastrous and disorganized event that was ultimately cancelled, leaving festival goers stranded on the island and giving the internet a healthy dose of schadenfreude.
But after the online ridicule has come a legal battle, where lawyers are suing Fyre Media for $100 million in damages. Hollywood law firm Geragos & Geragos has filed the suit, and has listed several unnamed Fyre Media investors as defendants. Corazon is not among those in the legal battle, according to Bloomberg.
The suit alleges that Fyre misled investors on its valuation and that organizers knew the event was destined to fail before it began.
“In the weeks leading up to the festival, when the company already knew the event was doomed for failure, Fyre Media Inc., which was minimally under-capitalized with [initial] investors, was floating a completely inflated and shocking valuation of Fyre Media Inc. between $90 million and $105 million to additional” investors, lawyers said in the court filing, according to Bloomberg.
Corazon launched in 2014 and recently closed its second fund at $40 million. Yagan is also the CEO of ShopRunner, an e-commerce startup.
Update: A Yagan spokesman sent us the follwing statement:
“After meeting Billy last May, we committed to make a small seed investment in Fyre App, a tech platform connecting musicians and venues and having nothing to do with festivals of any kind. As passive investors, we had no involvement in operating the business or the conception or execution of the Fyre Festival. We had no interest in their plans to produce a festival and unequivocally disavow the handling of the situation in the strongest possible terms.”
