London startup Pact Coffee has made 16 people redundant less than a week after it abandoned a £1 million crowdfunding campaign.
The Bermondsey-based company, which delivers freshly roasted coffee by post, terminated its crowdfunding campaign on Crowdcube last Wednesday, after raising £190,000, less than a fifth of its overall target.
A source close to the company told Business Insider on Monday that Pact Coffee had made 16 people redundant.
Pact Coffee CEO and founder Stephen Rapoport confirmed the layoffs with Business Insider on Tuesday.
“It’s true that we made 16 redundancies yesterday from the team of 74,” said Rapoport, who founded the company in 2012. “It was an incredibly hard decision as my team are like family but ultimately the right thing for the business and I had full board support.
“These redundancies are unrelated to our decision to delay fundraising, and will not affect the quality of our coffee, customer service or our rate of growth.”
Pact Coffee has several thousand customers across the UK. When it announced the crowdfunding campaign, it said it wanted to raise more capital in order to scale-up, go international, and take advantage of a “home coffee” market that Pact Coffee believes to be worth over £1 billion.
After the cancellation of the campaign, Rapoport said Pact Coffee was still in “great shape.”
Midway through the crowdfunding campaign, Pact Coffee held an investor party at its office, in a bid to drum up support for the campaign. At the party, investors were given free espresso martinis and bags of Pact Coffee to take home with them.
Speaking to Business Insider at the event, Rapoport said he was confident Pact Coffee would hit the crowdfunding target.
The campaign allowed Pact Coffee customers and the general public to invest in Pact Coffee from just £10.
On March 5, almost two weeks into Pact Coffee’s one month campaign, the company had received just £150,180. At that point Pact Coffee needed to raise £850,000 in 19 days if it was going to hit its target.
While Pact Coffee was unable to raise any money on Crowdcube, it has raised $8.1 million (£5.6 million) from angel investors like Robin Klein and venture capitalists like MMC Ventures.
The Pact Coffee crowdfunding campaign was cancelled days before London Cocktail Club, a bar franchise in London, cancelled a £750,000 Crowdcube campaign.
Crowdcube declined to comment.