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Ripple-Backed Omni Announces Closure, Coinbase Shows Interest in Hiring Its Developers

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by Bhushan Akolkar · 3 min read
Ripple-Backed Omni Announces Closure, Coinbase Shows Interest in Hiring Its Developers
Photo: Unsplash

Reports stated that Omni offered its storage services at an extremely low and unsustainable price and thus became a victim of “venture capital-subsidized business”.

It looks like the digital storage and rental marketplace Omni has been struggling to make ends meet. In the latest development, Omni has announced its intentions to shut down its operations by the end of 2019.

This announcement comes just within a few months after the rental startup sold its physical storage operations to its competitor Clutter in May 2019. A report from the TechCrunch states that $35 million worth Omni is yet another victim of a “venture capital-subsidized business”. Meaning it could not sustain anymore offering its services at an unsustainable price.

Speaking to the media, the Omni spokesperson said:

“We’ll be winding down operations at Omni and closing the platform by the end of this year. We are proud of what we built and incredibly thankful for everyone who supported our vision over the past five and a half years.”

A source that was close to Omni also commented on this announcement:

“They realized that the core business was just as challenging as architected. The service was really great for the consumer but when they looked at what it would take to scale, that would be difficult and expensive.”

However, it was just last year that Omni has raised $25 million from blockchain startup Ripple. The investment took place directly through the XRP cryptocurrency. It’s also known that Omni used to actively collaborate with Ripple. What’s more, the company had raised $35 million in total. Some of the other investors in the company were Highland, Flybridge, Allen and Company, and Founders Fund.

Coinbase’s Interest in Acquiring Omni Staff

On the other hand, crypto exchange Coinbase has shown interest in acquiring Omni’s engineering team. Last month, Coinbase said that the Omni engineers could be a useful talent for its educational project Coinbase Earn. A spokesperson of the crypto exchange said:

“Coinbase has reached an agreement with Omni to hire members of its engineering team. We’re always looking for top-tier engineering talent and look forward to welcoming these new team members to Coinbase.”

Omni turns of to be yet another failure in the startup ecosystem which is currently reeling under pressure due to unviable business models. Too much focus on acquiring the customers while neglecting the bottom line is proving to be unsustainable for some companies and their investors.

One of the recent examples of valuation burst is of the co-working space rental company WeWork which has recently pulled-out of its billion-dollar IPO plans.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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