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Australian streaming startup Guvera has shut down after taking $185 million from investors

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Australian music streaming company Guvera has reportedly stopped operating, with its co-founder and biggest financial backer walking away from the project.

The startup, which was established in 2008, privately raised $185 million before its $100 million initial public offering was blocked by the Australian Securities Exchange last year. According to the AFR, the 3000 investors that put that money in were informed on Friday night that co-founder Claes Loberg and major investor Steve Porch had exited the board.

That’s left just Darren Herft as director, who asked for two shareholders to join the board to help “rebuild our company”.

The ASX last June took the unusual step of rejecting Guvera’s IPO, citing its right to exercise “discretion” while taking into account the spirit of the listing rules, which include minimum standards of “quality, size and operations” as well as sufficient disclosure.

Guvera’s IPO prospectus was widely criticised and the company was forced to issue an updated version with 45 amendments after scrutiny from the Australian Securities and Investments Commission. The company had lost $81 million in the 2016 financial year with revenue of just $1.2 million.

Atlassian co-founder Mike Cannon-Brookes at the time said the prospectus “terrified” him and Blackbird Ventures founder Niki Scevak called the float “horrifying”. Seek co-founder Paul Bassat criticised the ASX for allowing the company to proceed.

“Some advisers and entrepreneurs will make a killing but it will be a zero sum game and retail investors will be the losers,” he said on Twitter last year.

“Hopefully markets will be able to distinguish between the crap and the high quality tech companies but risk that whole sector will be harmed.”

Herft, is also a partner in the private equity business AMMA, which facilitated the previously raised $185 million while pocketing more than $22 million in commissions. AMMA was also underwriting the IPO up to $10 million, but was set to grab 5.75% in commission on any capital Guvera would have raised.

After missing out on the IPO cash injection, Guvera went close to insolvency in January as three of its subsidiaries went into administration. The company started developing an advertising tracking tool to bring in revenue to meet the terms of a deed of company arrangement, according to the AFR, which required $180,000 a month to pay back the creditors of the subsidiaries.

In his message to shareholders on Friday, Herft said the company holds “valuable IP” which could be sold off or commercialised to be able to return some money back to investors. He also claimed $6 million in R&D research tax credits were owed to the venture, and that two court cases involving the company were still to be complete.

As of Monday morning, the Guvera app was not available on the Google Play marketplace.

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