It looks like a London payment technology company reportedly valued at £1.8 billion ($2.7 billion) is in turmoil.
It emerged on Tuesday that Powa Technologies is struggling to pay staff and supplier and Business Insider can reveal that this is despite a loan from its biggest investor just three months ago.
Powa Technologies is also so behind filing legally required accounts that a government-backed reporting body threatened to forcibly close Powa. The threat has since been revoked.
Powa declined to comment on specific questions from BI about the state of the business, the recent loan, and its overdue accounts. It also declined to give BI more information about whether it is struggling to raise new funding and when its latest accounts will be filed.
The Financial Times reported on Wednesday that Powa, which makes mobile payment apps, held back staff payroll in January and is behind on payments to suppliers as it struggles to raise fresh funds.
Powa confirmed to the Financial Times that “at times, payroll has been late, but we have always met our commitments to our employees.” Company information website DueDil says Powa has “made late payments on a high percentage of invoices.”
In a video seen by the FT, CEO Dan Wagner told staff the company was “hopefully well-funded” for 2016 but added: “I can’t commit to that.”
An inspection of Powa’s filings at Companies House by Business Insider shows the company received a loan from its largest investor, Boston-based Wellington Management, in November.
The size of the loan, made through a Cayman Islands-registered subsidiary of Wellington, is unclear from the documents at Companies House. The loan requires Powa to put up the entire company — including bank accounts, intellectual property, and actual property — as security that can be claimed by Wellington if Powa fails to repay.
While the size of the loan is unclear, the fact that Powa is still struggling to meet payroll just months after a cash injection is worrying.
David Varnham, head of law firm Mills & Reeve’s Birmingham-based banking team, inspected the documents for BI and told us: “It’s not unusual in distress situations for an investor to put in more money to keep things going and help them pay the bills.”
Wellington invested a huge $76 million in Powa back in 2013 and reportedly pumped another $80 million in at the end of 2014, in a round that valued Powa at $2.7 billion. That makes Powa one of only a handful of UK-based tech “unicorns” — companies worth over $1 billion. To date it has raised $175 million.
Despite the huge sums involved, Wagner told staff in the video seen by the FT that the company is “basically pre-revenue.” The company has signed a string of deals with companies like Adidas and L’Oreal but appears to be struggling with a lack of consumer adoption.
Powa has a mobile app called PowaTag that allows people to buy and order something by taking a photo of it on their smartphone. It also makes point-of-sale software for retailers and e-commerce software.
Wagner told BI in December that Powa was looking at a number of funding options including a public listing. The comments came after Powa signed a deal to enter China.
The company’s exact finances are unclear — the most recent set of accounts for Powa only cover 2013. In that year, the company made a loss of £22.5 million on revenue of £2.3 million.
Accounts covering 2014 were due by September 2015, but have not been filed. Companies House, the government body in charge of public accounts keeping, in October last year threatened to strike Powa off the company’s register and dissolve the business for failure to file. This threat was quickly revoked for reasons that are unclear but Powa has yet to submit its accounts.
Powa’s auditors, BDO, resigned last February. No reason was given at the time and BDO declined BI’s request to comment.
Overall, it looks like Powa is in turmoil — staff and suppliers going unpaid, investors pumping in debt, accounts well behind.
Powa told the FT remained in “start-up phase and it is typical for a business at this stage of the life cycle to experience growth challenges.” The company said it would make no further comment to BI.
Business Insider Emails & Alerts
Site highlights each day to your inbox.