British tech start-up Ve Global in “financial distress”
Former British unicorn Ve Global is in “financial distress” just five years after being taken over by the administration, launching an accelerated sale of its assets after weaker-than-expected deals in recent months.
The struggling start-up, which was valued at £1.5billion in 2016, told staff on Wednesday it was at risk of bankruptcy if a buyer was not found within weeks.
The once high-flying company, which makes e-commerce software used by retailers, has had a checkered history. Formerly known as Ve Interactive, the company was a rare British ‘unicorn’ – a start-up valued at over $1 billion – but entered administration in 2017. heavy losses and a High Court judge slammed former boss David Brown. business management.
Ve, whose backers include Lloyds Bank manager Lord James Lupton, told employees weaker-than-expected trading was “preventing [the] release of additional financing” from existing investors.
“Ve needs immediate funding to improve its cash position,” the company said in a note sent to staff, adding that if the sale process fails, the “worst-case scenario would be the liquidation of the company.”
Jack Wearne, a former Citibank trader who has run the startup since 2020, confirmed to the Financial Times that the company began a sale process earlier this year and had several interested parties, but has now accelerated the process. Wearne added that Ve’s management was “working to achieve the best outcome for our investors”.
“Over the past 24 months, Ve has built a business that is approaching profitability and would be well positioned to raise external capital,” Wearne said. “Our existing investors have been more than supportive of this process and continue to believe in our mission as a business. We have a strong product in a high growth industry with long term customer loyalty and as such , we are optimistic about the future,” he added.
Hilco Streambank had been enlisted with an anonymous outside adviser appointed by Ve’s board on March 3, according to the memo, which said a successful sale by the end of April was still “the preferred scenario, and quite made possible”.
The administration of Ve Interactive in 2017 was controversial, with the company being sold for £2million to a consortium of existing investors. The High Court later removed the administrators so Deloitte could be brought in to investigate the process.
Ve’s early backers included David Furnish, husband of Elton John, as well as Douglas Barrowman, a Scottish businessman and husband of fellow Tory Lady Michelle Mone. Barrowman was part of the consortium that bought Ve in 2017. He and Mone resigned from the board in 2019.
The start-up has gone through several chief executives who have reduced the workforce from around 800 to just over 100 today. The 2019 accounts, the most recent available, showed losses of £11.5m and revenue down 30% to £16.8m.
The accounts said the company relied on shareholder funding to continue operations and noted disputes with employees in the United States, United Kingdom, Mexico and Spain. The accounts for 2020 are three months late.
Lord Lupton, who is also a former Tory Party treasurer, and two other investors currently hold a charge on the company.
This article has been edited to correct the Hilco Streambank name.