Mozido's New Start
Mozido, an Austin, Texas-based digital-payments company with a couple of prominent Philadelphians on its board, ranks among the venture-capital-backed private tech companies known as "unicorns" in Silicon Valley: Blue-chip investors have pushed the firm's implied stock-market value above
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Mozido, an Austin, Texas-based digital-payments company with a couple of prominent Philadelphians on its board, ranks among the venture-capital-backed private tech companies known as "unicorns" in Silicon Valley: Blue-chip investors have pushed the firm's implied stock-market value above $2 billion.
The firm has developed a "mobile wallet" for digital payments by smartphone. Dunkin' Donuts and Dairy Queen use Mozido apps. Mozido has announced acquisitions and partnerships abroad.
Yet like other high-stakes start-ups, Mozido faces legal as well as technical and market challenges. Can its sky-high valuation endure?
Mozido's founder, Michael A. Liberty, is a well-known developer, business owner, and charitable and political donor from Maine. Having self-funded Mozido in its early years, Liberty could get rich if Mozido goes public or sells to a bigger company.
His investors haven't always been so blessed. Liberty figured in an unfortunate chapter dealing with Philadelphia venture capital and the area's underfunded public-worker pension plans.
In 2006, the Securities and Exchange Commission alleged that Liberty had persuaded the former Center City-based Keystone Venture Management fund group to invest $27 million from the Philadelphia city workers' pension plan, the Pennsylvania state pension plan, and three New England plans, in an earlier generation of Liberty-backed companies, some of it without proper authorization by the plans.
Those investments, starting in the late 1990s, lost millions. Three Keystone principals paid penalties to the SEC, and the firm never raised another fund, vanishing from the area's modest venture scene.
Liberty in 2010 signed an agreement, without admitting wrongdoing, to pay $6 million to the pension funds, with all but $600,000 waived by the SEC, based on Liberty's "sworn financial declaration" of income, assets, and debts.
Since then, Liberty has led Mozido's fund-raising, collecting more than $250 million from investors - getting the firm onto the Wall Street Journal and Fortune unicorn lists. Two directors say Liberty's Mozido stake is worth more than $40 million.
The company has told investors that sales totaled $90 million last year, and should top $130 million this year, with Mozido's first profits this fall.
Boosting Mozido's credibility are big-name investors: Wellington Management Co., which picks stocks for Vanguard Group and other mutual funds, bought Mozido shares for some of its private clients (not the funds) in 2014, and again last year. MasterCard also invested, and who knows more about electronic payments than the global card network? So did Julian H. Robertson Jr., octogenarian boss at hedge fund Tiger Management. And his royal highness, Sheikh Nahyan, of the United Arab Emirates. (Feb. 2017: More on the Mozido-Wellington-Nahyan connection here.)
The firm announced that Randi Zuckerberg, sister of Facebook founder Mark, went on the board in 2014, though she later stepped down. Ex-Unisys chairman and First Data Corp. CEO Henry "Ric" Duques was Mozido's chairman in 2013-14.
Current directors include such payment-industry heavyweights as Mike Love, ex-chief data architect at First Data, and Philadelphia's Richard Vague, who used to run credit cards for JPMorgan Chase. Ex-MasterCard CEO Robert Selander is a Mozido adviser. Mozido's new chief executive, Todd Bradley, was CEO of Palm, and ran Compaq for Hewlett-Packard.
Vague said Mozido's executive chairman, Robert Turner, led him to Mozido. Vague was impressed by the team's payment expertise, the blue-chip investors, and its promise to build a worldwide mobile network, which he called "the Holy Grail" of the payments business.
Liberty has come a long way. He didn't answer calls trying to reach him in Maine and Florida. So I called Turner, head of Berwyn-based Turner Investments, a mutual-fund company, to see whether he could tell me more about Liberty's progress as a tech investor.
There's a personal tie: Liberty's cousin Stanley Liberty is former provost at Bradley University in Peoria, where Turner is an alumnus, trustee, and namesake donor to the Turner School of Entrepreneurship and Innovation.
But "there is litigation involved and Bob's lawyers won't let him talk," Turner spokesman Tucker Hewes told me. Litigation was initiated last year by another ex-Mozido director, Philip H. Geier Jr., past CEO of public-relations giant Interpublic Group.
Geier sued Liberty, accusing the Mozido founder of not giving him stock he was entitled to - and of failing to tell him about Liberty's old SEC case.
Lawyers for Mozido and Liberty in court filings said Geier is waging a "smear campaign" to wrongly tie the SEC case, settled without admission of wrongdoing, to Geier's later claims.
In his court filings, Geier said he's been subpoenaed twice this year for federal investigations into Liberty and his business arrangements.
On Feb. 11, Geier was subpoenaed by a grand jury in Maine for help with "the investigation of a federal felony offense." The government told him to bring "all financial records" from his time as a Mozido director.
Separately, on Feb. 23, the Securities and Exchange Commission's Boston office subpoenaed Geier for information about Mozido and its dealings with Liberty.
"The DOJ has told Mozido that it is not the subject or target of its investigation," said Dean Pamphilis, a lawyer representing Mozido and Liberty.
(215)854-5194@PhillyJoeD