Directors and investors of failed music streaming startup Guvera have revealed in court hearings that plans are in the works for a relaunch of the business as Dragonfly Music.
Guvera was one of 2016’s biggest cautionary tales for startups after the company was rejected from listing on the Australian Stock Exchange. The company’s prospectus revealed the company had only recorded $1.2 million in revenue in the prior financial year with a net loss of $80 million.
The startup, founded in 2008, was seeking to raise $100 million through the initial public offering. At the time, Atlassian co-founder Mike-Cannon Brookes said in a tweet the prospectus “terrified” him and the “ASX shouldn’t allow this stuff”.
And it didn’t; the company’s listing was blocked due to “confidential” reasons. Later that same month, two Guvera subsidiaries entered voluntary administration to start the process of an “international restructure”, the company said at the time.
In May this year, reports emerged that the company had ceased operations, although director Darren Herft said it could still commercialise or sell its “valuable IP”.
Yesterday, Herft revealed during public examinations in Sydney’s Federal Court that he and two other former directors and executives involved with Guvera are planning to re-launch the product under the moniker Dragonfly Music, reports Mumbrella.
“The products are ready and there is initial testing being done,” Herft reportedly told the court.
Explaining further, Herft outlined that Dragonfly Music would be a redeployment of Guvera’s “brand channel technology” which offered brands opportunities to advertise on specific streaming channels. However, this time playlists would not form part of the content, reports Mumbrella.
“They [the brand channels] will contain music-related content but it won’t be a playlist of songs,” Herft told the court, while also maintaining that the company is not currently trading.
“There is a wide variety of other services that Guvera could have provided in the music services area … it could be music news for example that we could pull from different partners on a daily or weekly basis or as regularly as a brand would like.”
Herft was also probed about various debts Guvera allegedly owed to companies such as Sony and Warner.
At one point during the hearing, Mumbrella reports Guvera founder Claes Loberg walked in and took a seat in the public gallery during Herft’s hearing. Asked why he was there, Loberg reportedly responded: “I’m here to see what’s going on”.
When asked to leave, he did without incident. The public hearing will continue in March 2018.
The well-documented failure of Guvera’s attempted IPO prompted many prominent investors to sound warnings against early-stage tech companies looking to list, with Blackbird Ventures co-founder Rick Baker telling StartupSmart he was “worried that the public markets aren’t properly assessing the risk and valuation of early-stage tech companies”.
“We’re seeing valuations of hundreds of millions for companies that would be priced in the single or low double-digit millions by the venture capital markets,” he said.
Square Peg founder Paul Bassat sounded a similar warning, saying at the time: “Some advisers and entrepreneurs will make a killing but it will be a zero sum game and retail investors will be the losers”.
StartupSmart was unable to contact Herft or Guvera for further comment.