It once had plans to take on tech giants Apple and Spotify, but troubled music streaming startup Guvera Limited has now reportedly ceased all operations after facing a number of challenges in the months following its failed bid to list on the Australian Securities Exchange.
According to Fairfax, the startup’s parent company, Guvera Limited, has stopped operations and founder Claes Loberg has stepped down from his role of director, with a note to shareholders on Friday asking for volunteers to step into roles on the company’s board.
The reports come less than a month after a breach of the terms of a Deed of Company Arrangement (DOCA) for two of Guvera’s subsidiaries, Guvera Australia Pty Ltd and Guv Services Pty Ltd, which led to the appointment of liquidators to Guvera Australia Pty Ltd.
Over the years SmartCompany and StartupSmart followed the growth of the ambitious startup and its bid to become a public company.
2008-2016: Global growth goals
Guvera was founded on the Gold Coast in 2008 and according to its ASX prospectus, the startup had raised $180 million from 3000 investors since the formal launch of its music streaming platform.
The business had its eye on global expansion and the importance of international music licensing deals. In March last year, chief executive Darren Herft told StartupSmart the business planned to take on Apple and Spotify through targeting emerging markets for its streaming services.
2016: The ASX bid
In May 2016 Guvera released an initial public offering prospectus, informing investors the company offered a unique opportunity to invest in the streaming space.
“The directors believe that Guvera is one of only a few global music streaming companies to have obtained extensive music rights from music labels such as Universal Music Group, Sony Music Entertainment and Warner Music Group, as well as local labels such as India’s Hungama,” the prospectus said.
The prospectus also detailed a revenue shortfall after Guvera failed to secure $100 million in private equity in 2015, leading the company to then raise $40.8 million through chairman Darren Herft’s private equity firm, AMMA.
“Despite AMMA raising AUD$40.8 million of equity on behalf of Guvera, there was a cash shortfall at 31 December 2015,” the company explained. Funds from the IPO were to be used to contribute to paying these liabilities.
The prospectus also suggested the IPO was a necessary step for Guvera’s continued operations.
“If the capital raising under the prospectus is unsuccessful and the company is not able to achieve profitable operations and receive the continued support of its creditors, lenders and shareholders to continue its operating activities, there is significant uncertainty whether the company will be able to continue as a going concern,” a note from Ernst Young reads.
June 2016: ASX blocks listing
In June 2016, the ASX blocked the company’s bid to list on the exchange, saying in a statement provided to StartupSmart this was for “confidential” reasons.
The startup then said it was considering its legal options.
Concerns had been raised about the listing by a number of parties before it was blocked, including the Australian Shareholders Association and Atlassian co-founder Mike-Cannon Brookes, who said in a tweet the prospectus “terrified” him.
Guvera had sought to raise up to $100 million through the IPO, despite having recorded revenue of $1.2 million and a net loss of more than $80 million in the 2015 financial year. In the first half of the 2016 financial year, the company has recorded net losses of more than $50 million.
June 2016: Administrators appointed to subsidiaries and DoCA
In the same month, two of the company’s subsidiaries, Guvera Australia Pty Ltd and Guv Services Ptd Ltd, were placed into voluntary administration, with administrators from Deloitte appointed to the companies.
Deloitte partners Ezio Senatore and Neil Cussen were appointed as voluntary administrators to both companies, a spokesperson for Deloitte confirmed to SmartCompany this morning.
At the time, the company said it decided to call in administrators to start the process of an “international restructure”, and would focus its attention on high growth markets India and Indonesia.
A Deed of Company Arrangement (DOCA) was subsequently established, requiring the company pay $180,000 a month to creditors.
April 2017: Breach of DOCA
In a note on May 2, administrators Neil Cussen and Ezio Senatore confirmed that after a breach of the DOCA, creditors had voted to wind up the arrangement and liquidate Guvera Australia Pty Ltd.
A spokesperson for Deloitte told SmartCompany this morning the decision was made after paying out former staff members.
“All DOCA requirements had been met until 28 April when Senatore and Cussen were appointed Liquidators of Guvera Australia Pty Ltd,” a Deloitte spokesperson said.
“Prior to this date, all former Australian employees of the two companies had had their outstanding entitlements and superannuation paid in full”.
May 2017: Reports of ceased operations
Guvera Limited has now reportedly ceased operations. SmartCompany was unable to contact the company this morning for comment and the customer service phone lines for the company have been disconnected.
However, director Darren Herft has indicated the company could still commercialise or sell its “valuable IP”, reports Fairfax. In the letter to shareholders, Herft reportedly said the company is owed company tax and research and development refunds, and he is “as upset as anyone” about the situation.
Administrators at Deloitte were unable to provide details on the reports as they never had control of Guvera Limited, only its subsidiaries.
“The administrators have never had any responsibility for the Guvera Limited parent company,” a spokesperson said this morning.