Admazely

What did it do?

Admazely offered small and medium-sized e-commerce sites a self-service retargeting advertising platform. The system automatically recognised a shop's products and served dynamic ads showing those products on other sites to people who had visited the shop and left without buying.

Why did it shut down?

In April 2012 the company received seed investment of about €600,000 from SEED Capital and two angel investors; the team had committed to making the money last 12 months and became dependent on the next investment. At the start of February 2013 the expected approval from the Accelerace investment committee did not come. That same month two employees who had been growing UK sales were refused permanent work permits, and co-founder David Björklund announced that he was moving to Stockholm. Because about 90 per cent of costs were staff costs, the company had no other item it could cut quickly. The cash ran out around March 2013 and Admazely went bankrupt; its entry in the Danish business register was closed in September 2014.

The story

Admazely was an advertising technology start-up that began informally in Copenhagen in the summer of 2011. Søren Holbech Nielsen joined the team started by Peter Vilsholm Therkildsen Schlegel, David Björklund and Sylwia Erhardt-Bednarska in 2012; the company was entered in the Danish business register in March 2012. The aim was to make the retargeting ads used by big retailers simple for small web shops. CEO Schlegel said they wanted to strip out the needless complexity in the field.

In April 2012 SEED Capital and angel investors Martin Bochineck and Christina Rind Helsbro invested about €600,000. The platform opened with selected retailers in May 2012, and within a few months regular sales began coming in from the UK market. Those sales were driven largely by two English-speaking sales staff.

According to the assessment Schlegel later wrote, the team had committed to making the seed money last 12 months and had become dependent on the next investment. At the start of February 2013 the expected approval from the Accelerace investment committee did not come. In the same period the two employees running UK sales were refused permanent work permits and had to leave the country within 30 days. Co-founder David Björklund also announced that he was moving to Stockholm with his fiancée. Because 90 per cent of costs were staff costs, there was no other area in which the company could shrink quickly.

The cash ran out around March 2013 and Admazely went bankrupt. Schlegel noted as lessons that the founders had not aligned from the outset on appetite for risk and willingness to work without pay, that they had relied too heavily on a single source of funding, and that no plan B had been prepared before the crisis struck. The company's entry in the Danish business register was closed in September 2014 on grounds of bankruptcy.

Lessons for founders

• If you plan your seed money as a bridge to a single next round, tie what you will do if that round does not come to a written plan B in advance.
• When almost all your costs are salaries, there is nothing else to cut in a crisis; look early for ways to keep fixed costs flexible.
• Track the residence and work permits of the key employees who drive sales as a risk to your revenue plan, and have back-up.

Sources

1. Startup post-mortem: Admazely and why it failed (Øresund Startups, 2014-02-20)
2. Admazely Creates DIY Retargeting Advertisement Platform, Raises €600K (ArcticStartup, 2012-04-24)
3. ADMAZELY ApS (CVR 34456461) (Det Centrale Virksomhedsregister (Danimarka ticaret sicili))

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