The private equity firm and accounting groups associated with failed Australian startup Guvera are facing potential class action.
The law firm Bannister Law is currently seeking investors who lost money on Guvera while it investigates “a potential class action against a number of accounting firms and AMMA Private Equity Pty Ltd”.
“Guvera Ltd, a music streaming service company, engaged AMMA Private Equity Pty Ltd to raise capital for the enterprise. From 2009 to 2016, AMMA raised $185.3 million on behalf of Guvera,” the law firm said on its webpage.
“It is estimated that approximately 3,000 investors invested in Guvera Ltd on the advice of accountants.”
In May, the startup shut following nine years of operations after a co-founder and major financial backer walked away from the project.
The company lost $81 million in 2016 with revenue of only $1.2 million.
“I am a simple investor and lost $30,000 of my superannuation savings on the poor advice of my accountants,” said Mark Cohen, a former Guvera investor.
Bannister Law principal Charles Bannister said his firm is “investigating how the money was raised and any advice provided to consumers when considering the investment”.
In July, another startup, video messaging venture Kwickie, led by Darren Herft — also involved in Guvera’s capital raising — attempted to raise capital in the same way. But the Australian Securities & Investments Commission (ASIC) stopped that.
“ASIC has made a declaration, to put the issue beyond doubt, that Kwickie International Ltd shares may not be offered to retail investors through a trust structure,” ASIC announced.
“ASIC is continuing its investigation into the use of these structures. ASIC is also in discussions with the appropriate accounting professional bodies about this issue.”
Bannister Law’s registration page for Guvera investors also asks whether they put money into Kwickie, which is now also known as KwikTV Australia Pty Ltd.
Business Insider has attempted to contact Herft for comment.
In August, Brisbane corporate investigation firm Coburn Corporate Intelligence (CCI) also announced it was “conducting due diligence” to see if a class action would be viable to raise against Guvera and associated parties.
“Many investors in Guvera were retail investors who may have been issued with inappropriate ‘sophisticated investor’ certificates by their accountants, so they could invest in Guvera,” said CCI on its website.
In May, it was reported Herft was on a salary of $264,000 for his position as chief executive while the other founder Claes Loberg was on $300,000.
After private capital raising options dried up, in mid-2016 Guvera attempted to float on the ASX to bring in more retail investors. That move was blocked by the Australian Securities Exchange after criticism of the prospectus.
Atlassian co-founder Mike Cannon-Brookes at the time said the IPO prospectus “terrified” him and Blackbird Ventures founder Niki Scevak called the float “horrifying”.