Ve Interactive
British tech firm that won back abandoned baskets: from GBP 1.5 billion to administration
- Founded
- 2009
- Closed
- 2017
- Lifespan
- 8 years
- Peak valuation
- $1.9 billion
- Country
- United Kingdom
- City
- London
- Sector
- Advertising and marketing
- Founders
- David Brown, Steve Clucas
- Investors
- Concha, Aston Ventures
- At its peak
- Once valued at GBP 1.5 billion, according to The Telegraph
- Cause of closure
- Ran out of cash
What did it do?
Ve Interactive was a London e-commerce technology company that used online ads to bring back shoppers who had abandoned their purchases. Companies House records its incorporation in 2009. Its founders were David Brown and Steve Clucas. It made GBP 25.6 million of revenue in 2015 and GBP 40 million in its last year.
Why did it shut down?
Revenue rose to GBP 40 million in 2016 but did not cover costs. When staff went unpaid, founder David Brown left and Morten Tonnesen took over. According to The Telegraph, an emergency cash injection cut the valuation to GBP 300 million. The company entered administration on 25 April 2017 with total debts of GBP 50 million, including GBP 1.3 million owed to the tax authority. A group led by Doug Barrowman and Mark Pearson bought the core business the next day and saved 250 jobs. Administration ended on 19 April 2019 and the old company entered creditors' voluntary liquidation.
The story
Ve Interactive was founded in London in 2009. David Brown and Steve Clucas's company used ads to bring back customers who left an online basket unfinished. As e-commerce grew, so did the business.
Revenue reached GBP 25.6 million in 2015 and GBP 40 million in its last year. It was seen as one of Britain's rising tech names, and according to The Telegraph it was once valued at GBP 1.5 billion.
But revenue did not cover costs. When staff went unpaid, founder Brown left. Morten Tonnesen took over, and the valuation dropped to GBP 300 million with an emergency cash injection.
On 25 April 2017 the company entered administration with GBP 50 million of debt. A day later a group led by Doug Barrowman and Mark Pearson bought the core business and 250 jobs were saved. Shareholders such as the listed company Concha considered challenging the process. The old company entered creditors' voluntary liquidation on 19 April 2019.
Lessons for founders
- Watch where the cash goes while revenue doubles: debts reached GBP 50 million despite GBP 40 million of revenue in 2016, and scaling is a mistake if growth does not cover its cost.
- Do not use payroll tax as working capital: the debt to the tax authority was one of the signals before administration. If wages and tax slip, the cash crisis has already begun.
- Do not confuse a headline valuation with what the company is worth: a business called GBP 1.5 billion fell to GBP 300 million and changed hands for far less.
Sources
- Ve Interactive owed £1.3m in unpaid tax (The Telegraph, 2017-04-29)
- VE Interactive Limited insolvency (Companies House)
- Ve Global (Wikipedia)
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