Numerous startups are bringing with them a plethora of innovative solutions and rising higher in their respective sectors. But, there’s a dark side to the startup ecosystem that needs to be acknowledged. The rate with which startups are failing to establish their businesses is alarming.
Gold Coast-based Guvera, a music streaming company, has been subjected to this cruel fate. A report states that the startup’s parent company, Guvera Limited, has shut down its operations. This comes nearly a year after ASX rejected its attempt to raise $100 million through a capital float on ASX. Also, founder Claes Loberg gave up his role of director, while major backer Steve Porch has also taken a step back. According to a 2016 prospectus, the former owned 11.5 percent while the latter, 6.5 percent of the startup’s shares.
In a note to shareholders, Darren Hert, the remaining director of the company, is touted to have asked for two volunteers to replace the two on the company’s board.
The music streaming startup was founded in 2008, and has raised $185 million from 3000 investors. The founders were ambitioned, to take on the likes of Apple and Spotify by operating in the emerging markets.
In May 2016, Guvera had released a prospectus for an initial public offering. Darren, one of the founders of Guvera, owned AMMA Private Equity. The prospectus had stated that AMMA deserved a 10 per cent commission on all cash raised by Guvera, a 5 per cent commission on any debt raised and a 1 per cent trailing commission. Guvera had paid $22 million in commissions to AMMA, out of the raised $185 million. The company had explained,
Despite AMMA raising AUD$40.8 million of equity on behalf of Guvera, there was a cash shortfall at 31 December 2015.
Therefore, it wanted to use the funds raised through IPO to contribute to pay these liabilities. But a month later, ASX had rejected its application to list on the exchange. In the same month, Guvera put two of its subsidiaries, Guvera Australia Pty Ltd and Guv Services Pte Ltd, into voluntary administration. It appointed administrators from Deloitte to the companies, which as the company had put it, to begin international restructuring.
A Deed of Company Arrangement (DoCA) was put into place, under which it had to pay $180,000 a month to creditors of the subsidiaries.
But, just a month before the terms of the Deed of Company Arrangement (DOCA) were breached. This had led to the designation of liquidators to Guvera Australia Pty Ltd., as creditors voted to end up the arrangement.
The company cannot be contacted, however, Darren has asked for two volunteers in order to rebuild the company.