When Ve Interactive’s employees walk into their new offices in east London, they’re greeted with an aubergine-purple wall and a slogan: “Knowing what is next.”
That is presumably intended to be reassuring after the extreme turbulence at the company this year.
Ve Interactive, now Ve Global, was a London-headquartered “unicorn” which specialised in advertising technology and employed more than 800 staff globally. It was valued at one point at £1.5 billion and, unusually for a tech startup, relied not on venture capital but a sprinkling of high-net worth investors like David Furnish.
But the firm was overvalued and collapsed into administration, leading to a buyout by a consortium of its investors. A partner at one of those investors, Aston Ventures’ Morten Tonnesen, was installed as CEO to turn around the business.
He has spent the last five months trying to trim costs. Tonnesen started by cutting the global headcount from around 800 to 500, and reining in company expenditure. (Ve once apparently paid for its former CEO David Brown to take a private jet for a meeting). When Tonnesen took the helm at Ve, the firm was burning around £2 million a month.
“I believe in leading from the front,” he said, speaking to Business Insider from Ve’s offices in Brazil. “I just spent 11.5 hours in economy to go to Sao Paolo. If I can, the rest of the staff can. It’s across the board — we had to let go of colleagues around the world in terms of doing redundancies. There were too many people relative to what was needed.”
The Danish Tonnesen bills himself as a straightforward, open leader, a counterpoint to Brown, who is being investigated by a legal firm over allegedly funnelling company money into other unrelated ventures. Tonnesen wouldn’t comment on the status of the investigation, and said it was being handled by Ve Interactive’s administrators. Brown has described the allegations as “misinformation.”
Tonnesen’s role as CEO came about by accident. He had originally joined Aston Ventures, founded by Scottish entrepreneur Doug Barrowman, as a partner in January. He had got to know Barrowman on the Isle of Man, where he had spent a long stint as group marketing director for PokerStars. Shortly after joining Aston, Tonnesen quickly spotted that the valuation of its portfolio company Ve Interactive didn’t make sense.
The company reported £26 million in revenue in 2015 on a loss of £15 million, but still had a unicorn’s valuation.
“I was slightly concerned looking at Ve, the valuation seemed a little out of kilter to how I would value a business,” Tonnesen told Business Insider.
What followed was a complicated sequence of events.
The overvaluation, plus a subsequent request from Ve Interactive for more funding in February, was enough to prompt Barrowman and Tonnesen to talk to several other investors and form a consortium. In March, the consortium persuaded Brown to step down as CEO, funnelled in more cash, and took effective control of the business. Tonnesen took over as CEO — but the firm’s problems weren’t over.
The new management reportedly discovered Ve appeared to be propping up several of Brown’s other ventures, as well as funding luxury flat rentals, fine wine purchases, and high-end office furniture. The investors tried to raise £20 million in more funding, failed, and the firm collapsed into administration. A second consortium — still including Aston Ventures — bought the company back out of administration and Tonnesen remained CEO.
Ve’s valuation was slashed to £300 million in its buyout and, in June, Tonnesen laid off staff.
That hit morale, Tonnesen said, but he added there was “new energy” now that they had moved into new offices. The company has £15 million in fresh funding and plans to make new hires this year, including a chief data officer.
After the buyout, Ve’s staff had to shift from plush offices in Clerkenwell to work-sharing space WeWork in Moorgate. As of Monday, the firm has made its more permanent home in the new White Collar Factory in Shoreditch, a trendy new building on Old Street roundabout which has its own rooftop running track. The move is partly about efficiency — staying in a flexible space like White Collar Factory makes more sense than a 10-year rental lease in the City — but also about making a new psychological start.
Tonnesen believes Ve will break even by the end of this year after several consecutive years of losses. His main focus now is improving on Ve’s core ad tech products, winning over new advertisers, and slimming down Ve’s operations.
Ve’s most recent accounts, for the full year 2015, show an operating loss of £14.2 million. Business Insider asked whether Tonnesen might consider cutting the number of Ve’s offices around the world. Ve has around 15 international subsidiaries registered, according to the 2015 filings.
“We will keep on evaluating and we may close a few, we may not,” said Tonnesen.
Effectively relaunching an ad tech firm in 2017 is a tough challenge. Venture capital funding to the sector has collapsed, as investors take note of Google and Facebook’s absolute dominance in the digital ad market. The IPO market is quiet and one of the most promising ad tech firms, Rocket Fuel, was sold for just $US125.5 million (£92.4 million).
According to Tonnesen, there’s still opportunity for a smaller player to come and grab market share. The firm, he said, hadn’t lost any clients during the buyout and management drama and advertisers liked the company’s suite of products and global footprint. Earlier this month at Dmexco, a major digital ad conference in Germany, he said Ve’s sales teams held 270 meetings with current and prospective clients.
Part of Ve Interactive’s original problem was its lack of external oversight. For now, Tonnesen is reporting to its current investors such as Aston Ventures and myvouchercodes.co.uk founder Mark Pearson. Eventually he would “cherish” the opportunity to take institutional funding — but he isn’t thinking about potential acquisitions just yet.
“Right now the focus is on growing the business organically,” he said. “We want to make sure we see significant growth. We are looking at finishing this year on 25% to 50% higher than previous years. The focus is less on an exit.”