Cameo, a unicorn tech startup once valued at over $1 billion, is now broke and can’t pay a $600,000 fine

Cameo, a celebrity video startup once the shining star of the tech startup world, now finds itself grappling with severe financial difficulties.

The video messaging platform, which was valued at over $1 billion just three years ago, is now struggling to pay a $600,000 fine imposed by the Federal Trade Commission (FTC) for failing to comply with endorsement disclosure rules. The details of the settlement, as reported by Business Insider, paint a grim picture of the company’s current state.

In 2021, Cameo was celebrated as a tech unicorn, thanks to a $100 million investment that catapulted its valuation to $1 billion. The app’s popularity surged during the pandemic, as users flocked to pay celebrities for personalized video messages, making it a cultural phenomenon.

Back in 2022, we also highlighted Cameo’s ambitious move to expand its offerings through a partnership with Candle Media, leading to the launch of Cameo Kids. This service aimed to provide personalized video messages from beloved family entertainment stars for children, showcasing Cameo’s efforts to broaden its appeal.

However, the company’s fortunes have taken a dramatic turn for the worse. According to a settlement agreement released by New York Attorney General Letitia James on Wednesday, Cameo’s financial instability has become apparent. The company has been found in violation of FTC regulations concerning celebrity endorsements but is unable to pay the full $600,000 fine. Instead, Cameo will settle for $100,000, a fraction of the original amount, with the remaining balance suspended under the terms of the agreement.

The settlement, dated July 15, outlines additional requirements for Cameo. The company must implement new compliance measures, including a watermark system to identify videos booked through its platform, mandatory acknowledgments from brands and celebrities regarding endorsement rules, and a reporting system to monitor compliance.

Cameo’s financial difficulties have been compounded by its inability to attract top-tier celebrities and multiple rounds of layoffs in 2022 and 2023. Recently, it gained unwanted attention as a source of income for former Representative George Santos following his expulsion from Congress.

The settlement also includes a provision allowing New York and the other 29 states involved to pursue the full $600,000 — plus interest — if Cameo fails to remit the $100,000 within the next three years. The company would also be liable for the total amount if it files for bankruptcy within 91 days.

“Due to Cameo’s inability to pay $600,000.00, as demonstrated by Cameo’s 2021 and 2022 audited financial statements, and additional representations made about Cameo’s financial status in October 2023, the Settling States and Cameo agree and stipulate that upon receipt of $100,000.00 from Cameo, the Settling States shall suspend the remaining amount due,” the settlement agreement says, according to Business Insider.

Founded in 2016 by Steven Galanis, Martin Blencowe, and Devon Spinnler Townsend, Cameo connects fans with their favorite celebrities for personalized video messages. Despite its early success and rapid growth, the company’s current trajectory highlights the volatile nature of the tech startup landscape.

Cameo’s swift decline from unicorn status serves as a stark reminder of the challenges and unpredictabilities faced by many startups in today’s competitive environment.