Additionally, let's say they'll make their money through subscriptions instead of display ads. Then they can just adjust the UI/UX to push toward subscriptions, which will result in the problem that Ello had claimed to be solving. The $5.5M has to result in an exit, somehow, and therefore the incentives between business and consumer are misaligned.
Or maybe they'll run an actual business, instead of the startup pump-and-dump. Not every success story has to be "an exit"
If they won't do advertising and they won't exit, then how should they stay out of bankruptcy?
There are many alternatives, none perfect (otherwise everyone would be doing it), but enough to generate income of the company is willing to use a "combined arms" approach.
I'm not saying it's impossible, they could probably find a way to become a break-even business easily, but taking venture capital puts a lot of added pressure on them.
If there's other ways, please tell me; I'm genuinely curious about this! But as far as I can tell, even "run[ning] an actual business" has to have some sort of "exit" for the investors. It's my hope that Ello can buck the "acquire or IPO" trope, but their investors have to be on board with it. And with $5,500,000 invested, even the most patient investors have a limit.
The last company I was a part of had a similar level of investment, and they aren't selling. They aren't looking at an IPO, instead they manage a healthy 20M/year in revenue, with a a healthy profit margin. Not everything is an "exit"
I think every success story that starts with raising millions in VC funding pretty much does have to be "an exit"...
That being said, I'm not too concerned in that particular case, I don't see Ello going anywhere anyway.