Guvera co-founder blames partners for collapse, while insisting the original idea is still good

Claes Loberg attends the pre-launch party for Guvera at Metropolitan Pavilion on February 18, 2010 in New York City. (Photo by Donald Bowers/WireImage)

Failed Australian music streaming startup Guvera is facing even more drama after its collapse, as more details of its operations have come to light.

The startup spent 9 years collecting $185 million from investors before its closure in May, with revelations that co-founder Darren Herft was on a salary of $264,000 for his role as chief executive and other founder Claes Loberg was on $300,000 – all while the business hardly made any revenue.

In an article published in The Australian on Tuesday, Loberg said his capital partners Herft and Herft’s investment vehicle AMMA Private Equity were to blame for the death of the company.

“The most important [lesson] is to choose your capital partners wisely,” Loberg told The Australian.

He said the “original vision” for the startup was still alive and that he was looking at options to start anew.

“Now I’m back to square one. I’m working with a few great friends I’ve met along the way to do something wild in that creative and innovation space again. Not sure where it will land. I’m exploring.”

The ABC revealed last week that Guvera was under investigation by the corporate regulator Australian Securities and Investments Commission for roping in everyday investors, who eventually lost all their money.

The startup sponsored the popular Nine Network television show The Voice to market its brand to the public, and used a network of accountants to recruit mum-and-dad investors – a practice that ASIC will scrutinise in its enquiries, according to the ABC.

One Queensland builder, Richard Kratochwil, told the AFR he lost $100,000.

“I’m not a sophisticated investor. This is the thing. I’m a bloody builder, an average joe,” he said.

“This is the first time I bought shares in my life outside of my superannuation.”

Even after nabbing $185 million of investments for a company that lost $81 million off revenue of just $1.2 million in the 2016 financial year, the venture wanted more capital – so it sought to float on the Australian Securities Exchange last year to get access to even more retail investors.

After public criticism from prominent members of the tech startup community, including Atlassian co-founder Mike Cannon-Brookes and Blackbird Ventures founder Niki Scevak, the ASX took the unusual move of blocking the public listing.

In addition to the ASIC investigation, The Australian reported that AMMA is facing a Federal Court case for allegedly signing up an elderly farmer with “rapidly failing cognitive functions” to chip in $8.7 million for now-worthless Guvera shares.

Loberg claimed that he himself was a victim as well, having merged his previously successful design agency Cocojambo into Guvera.

“I folded the staff and everything I had into Guvera. I worked for many years building on the initial vision. It was sidetracked a few times and for several reasons it didn’t work,” he told The Australian.

Herft’s AMMA investment vehicle was used to raise all the capital over the years and earnt $22 million in commissions and was set to grab 5.75% in commission on any money raised through the IPO.

ASIC is also looking into AMMA, which now has no office bearers, with former Palmer United Party candidate Angie Ison reportedly departing last week from the chief financial officer post. The Australian reports that the corporate regulator is exercising coercive powers to interview people while waiving their right against self-incrimination.

Loberg said that the concept behind Guvera was something that still had potential and could catch on with existing players.

“The idea that the way advertising works is to be a curator rather than a disrupter; some other players such as Apple Music, YouTube and Spotify are just now starting to scratch in that direction,” he told The Australian.

“I’m sure a YouTube or Netflix will hit onto it and change the way we find anything from news to music, film and TV in the future. Maybe we were too early.”