Term Sheet — Friday, April 21

On its own, this is not notable. Young startups with big dreams and piles of crowdfunding cash fail all the time. But this one isn’t just ceasing operations. According to a notice posted to the company’s website, it is “exploring options” to file for bankruptcy. Two things to note:

• There is an increasing willingness of venture-backed companies to go through bankruptcy.

Normally when startups shut down, bankruptcy is pointless for a few reasons: With young software companies, there are usually no assets to reorganize. What’s more, venture backers and founders would rather not glorify their failure with an embarrassing public auction. And lastly, bankruptcy is expensive. If the company is truly out of money, who will pay for it? Not the venture backers – even if there are assets to liquidate, the equity holders would be last to get paid anyway. “Their muscle memory is to avoid Chapter 11 at all costs,” says Jeff Cohen, a partner at Lowenstein Sandler. “It’s pretty taboo in the Valley to use the term Chapter 11.” (To be clear: Plastc filed for Chapter 7 liquidation, not Chapter 11.)

But bankruptcy is becoming increasingly appealing for two reasons: One, the increase of asset-based lenders. Startups that took out debt with little collateral beyond their massive valuations need to at least try to cover those loan obligations. Especially in high-profile cases, Cohen says. “There is a larger group of activist attorneys that, if you don’t pursue the right path, will come after you,” he says. Further, depending on the state, sudden shutdowns resulting in mass layoffs without severance payments could result in personal liability for executives, which a bankruptcy process can help avoid.

And two, assets. Patent portfolios and customer lists are increasingly seen as valuable assets for a startup that might not have any physical assets. Firms like Boston’s Hilco Streambank specialize in monetizing these assets. “It used to be an afterthought asset, and now it’s a value driver in Chapter 11,” Cohen says.

• Plastc’s failure is another wrinkle in a tale that may as well be called “Danger: Crowdfunding!” Enthusiastic backers have had to learn, one outrage at a time, that most forms of crowdfunding entitle them to very little. This was most notable when Oculus VR sold to Facebook in 2014. It seems quaint now, but the fans who contributed to Oculus’ Kickstarter campaign were quite angry when Facebook spent billions to acquire a product they were emotionally and financially invested in, making its founders and venture capital investors very rich and leaving early backers with nothing.

Three years and lots of consumer education later, crowdfunders understand that if they’re not getting equity, the company they’re backing owes them nothing – they had merely made a donation toward a very specific goal (in Oculus’s case, to ship its first developer kits, which it did).

But Plastc did not merely ask for donations towards the development of its universal credit card. The company took pre-orders for the card in the range of $135 to $155 a pop. (Reports claim it had amassed $9 million worth of pre-orders from 80,000 people, though that figure appears to be based on this one not-terribly credible blog post and I could not verify it elsewhere.) Unlike the recently failed Lily Drone, Plastc has not its offered pre-order customers a refund. The company went so far as to delete its social media accounts.

After many delays, Plastc’s product was promised to ship this quarter. The company had raised $7.7 million in venture backing and convertible debt from Grayhawk Capital, IncWell, Mitsubishi, Peninsula Ventures, and ZenStone Venture Capital, according to Crunchbase. It blames its failure on two venture capital deals that fell apart at the last minute. “The round was a signature away from closing and we were extremely caught off guard when they notified us yesterday they were backing out,” the company wrote. Now, pre-order customers are calling their credit card providers and attempting to get refunds on the charges, most of which were made two years ago.

There are so many tales of crowdfunding hardware woe out there that I’m surprised anyone opens their wallets for a cool-sounding idea with nothing more than a slick demo video anymore. At one point, Kickstarter hired an investigative journalist to find out what happened with a highly funded failed project; the journalist determined that crowdfunding sites should have “better mechanisms to identify weak projects before they fund, as well as new processes to provide mentorship, support and expert advice to newly-funded projects.”

For companies taking on risky hardware endeavors, crowdfunding is a way to gauge customer interest, get some PR, and build a community around your product. But communities of supporters can quickly turn on a company when things go wrong (especially in today’s era of online outrage spirals). In other words, it’s a risky proposition for both sides of the transaction.

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Housekeeping: Term Sheet’s dealmaster Laura Entis is going on a well-deserved two week vacation, so in the meantime direct your M&A and investment announcements to Polina Marinova. (You can also follow her on Twitter here.)

THE LATEST FROM FORTUNE...

• Inside China’s $43 billion bid for food security.

• Hollywood’s search for a blockbuster algorithm.

• What betting markets tell us about Trump’s next move.

• Trump administration and world financial officials clash over trade.

• Uber extends its sexual harassment investigation.

• Downgrading alcohol stocks on 4/20: Consumers are choosing marijuana over booze.

• Coins2Day interviews Woz.

…AND ELSEWHERE

Juicero CEO responds to Bloomberg’s story, offers refunds. Being “entrepreneur-friendly” in the era of “genius jerk” CEOs. Oracle’s pricetag for Moat: $850 million. Extremist meme armies are turning into militias. Klaus Kleinfeld’s wild antics. Yahoo’s demise is a signal that web-native companies are next. Private equity eyes your nest egg.

VENTURE DEALS

• SenseTime, a Beijing-based facial recognition tech developer, raised $60 million in funding. Sailing Capital led the round.

• Gladly, a San-Francisco-based cloud software provider, raised $36 million in Series C funding. GGV Capital led the round, and was joined by Greylock Partners and New Enterprise Associates.

• Pitchy, a Paris-based personalized video company, raised €4 million ($4.3 million) in funding from Seventure Partners and the Fonds Ambition Numérique, according to Tech.eu. Read more.

• Fraym, a McLean, Va.-based geo-spatial data platform, raised $4.2 million in Series A funding. Investors include Kupanda Holdings. (This company's description has been updated.)

• DreamCheaper, a Berlin-based travel deals provider, raised €1.5 million ($1.6 million) in funding. Investors include Holtzbrinck Ventures and TruVenturo.

• Swingvy, a Malaysia-based cloud HR software provider, raised $1.1 million in seed funding. Read more.

HEALTH AND LIFE SCIENCES DEALS

• Consortia Health Holdings, an Austin, Texas health care company helping physicians treat patients with pelvic disorders, raised $2 million in funding. Ponil Ventures led the round, and was joined by Golden Seeds and Belle Michigan.

• Wellmo, a Finland-based mobile wellness service provider, has raised €1.3 million ($1.4 million) in funding from undisclosed investors.

• Microdermics, a Vancouver, Canada-based medical device provider, raised $1 million in funding from K5 Ventures, Shoreline Ventures and e@UBC Seed Fund.

PRIVATE EQUITY DEALS

• KKR Capital (NYSE:KKR) invested $250 million in Masan Group Corporation (HOSE:MSN) and in its branded meat platform. Terms of the deal were not disclosed.

• Schroders (LSE:SDR) agreed to acquire Adveq Holding, a Switzerland-based private equity firm. Terms of the deal were not disclosed.

• Powerplant Ventures acquired a majority stake in Beanfields Snacks, a Los Angeles-based snacks and chips company. Financial terms weren’t disclosed.

OTHER DEALS

• SNC-Lavalin Group (TSX:SNC) agreed to acquire WS Atkins (LSE:ATK) for C$3.6 billion ($2.7 billion), according to Reuters. At 2080 pence ($26.66) per share, the offer represents a 35% premium to Atkins’ closing price on March 31. Read more.

• Virtu Financial (Nasdaq:VIRT) agreed to acquire KCG Holdings (NYSE:KCG) for $1.4 billion.

• Element Materials Technology agreed to acquire Exova Group (LSE:EXO) for £620.3 million ($792.6 million). Read more.

• Loblaw Cos (TSX:L) agreed to sell its gas station unit to Brookfield Business Partners LP (TSX:BBU.UN) for about C$540 million ($400 million).

• Microsoft (Nasdaq:MSFT) is in talks to buy Cloudyn, an Israel-based cloud computing developer. Cloudyn raised over $20 million in funding from investors including Carmel Ventures and Infosys. Read more at Coins2Day.

• Bebe, a Brisbane, Calif.-based women’s apparel company, will close all of its stores by the end of May, according to an SEC filing.

IPOS

• Guotai Junan Securities HK, a Chinese brokerage with a market value of $17.7 billion, raised $2.1 billion in its Hong Kong IPO, according to Renaissance Capital.

• Netmarble Games, a Seoul, South Korea-based mobile gaming company, raised $2.3 billion in an initial public offering, according to Reuters. Netmarble sold 17 million shares at ₩157,000 per share, at the top of its expected range. Read more.

• Select Energy Services (NYSE:WTTR), an oilfield services company, raised $122 million by offering 8.7 million shares at $14, below its expected range of $15 to $18, according to Renaissance Capital. Credit Suisse, FBR Capital Markets, Wells Fargo Securities, BofA Merrill Lynch, Citi, and J.P. Morgan served as lead managers. Read more.

EXITS

• Unilever agreed to acquire Sir Kensington’s, a New York-based condiment maker. Sir Kensington’s raised $8.5 million in venture funding from Verlinvest. Read more at Coins2Day.

• Oracle agreed to acquire Moat, a New York-based search engine for display based. No financial terms were disclosed. Backers include Insight Venture Partners, Mayfield Fund and SV Angel.

• Gannett (NYSE:GCI) acquired SweetIQ, a Montreal-based marketing analytics company. Terms of the deal were not disclosed. SweetIQ raised over $4 million in venture funding from investors including Plaza Ventures and Rothenberg Ventures.

• Insight Venture Partners acquired Spanning, an Austin, Texas-based cloud-to-cloud backup company, from Dell Technologies. Terms of the deal were not disclosed. Spanning raised $9 million in venture funding from Foundry Group. Read more at Coins2Day.

• EverFi has acquired Workplace Answers, an Austin, Texas-based online compliance training developer. Terms of the deal were not disclosed. Workplace Answers raised venture funding from investors including RHV Capital and The Operand Group.

FIRMS + FUNDS

• DFJ Growth, a Menlo Park, Calif.-based venture capital and private equity firm, raised $535 million for its third fund.

PEOPLE

• Chris Moody joined Foundry Group as a partner. Previously, Moody was vice president and general manager of data at Twitter.

• Stella Point Capital promoted Robert Jahn to managing director. Prior to joining Stella Point Capital, Jahn managed investments at Lindsay Goldberg & Bessemer.

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