Finance

Coffee pod company iCapsulate collapses into administration after being offered biggest ever Shark Tank deal

Dominic Powell /

A company that once received the biggest ever deal on the Australian edition of Shark Tank, but was marred by controversy in the months after the show aired, has fallen into voluntary administration.

Coffee pod manufacturer iCapsulate was placed into voluntary administration late on Monday, with Rodgers Reidy administrator Andrew Barnden appointed to oversee the administration process.

However, speaking to SmartCompany, Barnden says the company is not insolvent, and he understands the company’s administration is due to a dispute between its shareholders and directors.

“It is not as a result of insolvency but the result of a shareholder and director dispute. The company does not appear to be insolvent, it’s trading as per usual”, he says.

Appearing on the third season of the popular entrepreneurial TV show in 2017, iCapsulate founder Kane Bodiam exiting Shark Tank with a whopping $2.5 million investment offer for 22.5% of the company from shark Andrew Banks, the highest ever on the show.

During the Shark Tank pitch, Bodiam said the company had recorded $4 million in sales in 2016 and the offer from Banks valued the company at $11.1 million.

But eight months after hands were shook, the deal was still in due diligence, and the future of the capital injection was drawn further into question after a number of competing Australian coffee pod manufacturers called out iCapsulate for a number of “highly questionable statements” made on the show.

On the show, Bodiam claimed his company had contracts with “Australia and New Zealand’s largest coffee companies”, but the other coffee capsule companies alleged they were “not aware of a single major retail store in Australia from which a customer can purchase coffee capsules packed by iCapsulate”.

“We were concerned by the number of vague statements made during Kane’s pitch, which we believe do not reflect the true state of our industry. Most particularly, in relation to existing contracts in the marketplace,” Podpac director Toby Strong told SmartCompany at the time.

“We would appreciate the opportunity to clarify the market status quo in relation to contracts with major brands, which we believe were not represented accurately in the show.”

Bodiam and Banks then proceeded to hit back at the claims, with the investor telling news.com.au he “frankly didn’t take too much notice” of the claims by his competitors, and Bodiam claiming he was victim of a “smear campaign”. Banks confirmed the deal was still “on hold” at that time.

Shark Tank deal falls through

However, almost a year later, Banks confirmed the iCapsulate deal ultimately fell through due to the company’s claims about its biodegradable capsules not being accurate.

“It didn’t go because on the show you’ll remember they said, ‘we are the exclusive producers of biodegradable coffee pods and the CSIRO will validate that soon’,” Banks said in March this year.

“And guess what? They didn’t, and they aren’t. So for 2.5 million bucks I wasn’t going to risk that. It was [a shame], because their revenues were getting close to $15 million that year and $21 million the next, they had a reasonable business. They still [do], they just don’t have my money.”

Bodiam disputed what Banks said, saying his claims were “basically false” and that all certifications for the coffee pods’ being biodegradable were there. He said the decision to not proceed with the deal was an internal one at the company.

“We gave them some info at the beginning, but when we received all the certification and everything we just never continued [with the deal],” the founder told news.com.au.

“They stopped communicating so we stopped communicating. It was just moving slowly and we were moving quite quickly. We made a decision probably two or three months after we met Andrew that we were just going to go it alone.”

Additionally, the founder said the $2.5 million capital injection wasn’t a great deal of money to the company, as it would be equal to “barely a deposit on new machinery”. According to administrator Andrew Barnden, iCapsulate doesn’t have any significant outstanding debts, bar a “fair bit of money still owed on equipment”.

The administrators are proceeding to seek third-party expressions of interest for the company, but Barnden says there are also purchase offers from the company’s management to consider.

“We’ll be considering any proposals that come forward including a Deed of Company Arrangement or a straight sale,” he says.

However, at this point, he says the future of the company is still uncertain, as it is “too early to tell” which route creditors will be keen to pursue.

SmartCompany contacted Bodiam and iCapsulate but did not receive a response prior to publication.

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany.

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