The chief executive of the Australian Small Scale Offerings Board denies the funding platform failed Shooii, following news that the online shoe retailer has been placed in administration.
It was revealed yesterday Shooii has entered into voluntary administration only months after its launch, with a lack of outside investment blamed for the company’s woes.
Shooii was founded by former Footlocker executives David Prince and Mark Campbell, both of whom have declined to comment on the news.
Administrators from the Brisbane office of SV Partners were appointed on June 29.
The administrators said in a statement that while the company successfully raised two small rounds of capital, a lack of investor funding led to cashflow problems.
The administrators are trading the company’s business on a limited scale, with a view to selling the business during the voluntary administration period.
“Alternatively, the administrators hope to be able to secure the commitment of investors to assist the business through its start-up phase,” the statement read.
After struggling to raise an initial round of capital from Australian venture capitalists, Shooii turned to the Australian Small Scale Offerings Board, which is a capital raising platform.
ASSOB chief executive Paul Niederer says he suspects Shooii’s downfall was the result of an internal operational issue, rather than a deficiency on ASSOB’s part.
“Many companies go through ASSOB, and some it doesn’t work out for: 176 companies in the last five years have received funding, and 152 are still operational,” Niederer says.
“We do have a fairy high standard so it’s always disappointing when something like this happens.”
“It seems like they ran out of money to keep it going… That usually gets down to the board of investors and management.”
Niederer doesn’t believe Shooii was too young when it came to ASSOB, insisting it had “mapped out all the things they wanted the money for”.
However, he is quick to point out the start-up scene is fraught with risk so securing funds can be a long and arduous process, suggesting Shooii simply ran out of time.
“To get a group of investors backing you and helping you can take a number of months… [The funding] may have come over a period of time,” he says.
Despite Shooii’s financial turmoil, Niederer says the news should not deter other start-ups from “marching forward” and looking for investment because every company is different.
“Eventually, a match will be made… but it is a high-risk area,” he says.
“Start-ups in the early stage do have risks so, in order to use ASSOB to raise funds, you have to jump over a fairly high bar.”