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Powa Technologies goes into administration - FT

19 February 2016  |  13017 views  |  14 Dead end

Powa Technologies has gone into administration after the payments startup's largest investor, Wellington Management, called in loans, according to the Financial Times.

The news comes days after it emerged that Powa has recently held back staff salaries and payments to suppliers, leaving some employees locked out of offices.

Despite having raised a hefty $175 million in funding, according to the FT Powa had just $250,000 available to it at the start of February.

Business Insider recently revealed that late last year the firm had to take out a loan - the size of which is not known - from Wellington Management that required the startup to put up the entire company as security.

Now, in an email seen by the FT, Powa CEO Dan Wagner has told staff that Wellington has called in its loans. Deloitte has been appointed to oversee the resultant move into administration.

"There are a number of options available to us which are being explored," says the email. "In particular I want to ensure you all get paid".

Having started life as a Square-clone mPOS outfit, Powa switched its focus to the PowaTag app, which let shoppers buy products from hundreds of participating retailers by snapping QR codes with their phone cameras.

Serial entrepreneur Wagner boasted the company would "revolutionise" commerce and with its massive funding reportedly valuing the company at $2.7 billion, spent heavily on ramping up staff numbers into the hundreds, spread across offices in London, New York, Spain, France, Italy, Hong Kong, Shanghai, Tokyo, and South Korea.

Comments: (14)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 19 February, 2016, 18:32

Yet another wannabe disruptor gets disrupted. RIP.

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Steve Ellis
Steve Ellis - Metia - London | 19 February, 2016, 21:57

I'm expecting this story to run...

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A Finextra member
A Finextra member | 20 February, 2016, 11:02

Where ego and capability are mismatched.  The writing was on the wall for a while for these guys - QR Codes are not the answer - yet another mPOS clone was not the answer.  We live and learn - or maybe not.

I do see this as part of the impending FinTech Crash - who next?  Monitise?

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 20 February, 2016, 18:56

Maybe this shows that there's a limit to impulse shopping - whether by QR code or any other technology. On another note, isn't Powa more martech than fintech?

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A Finextra member
A Finextra member | 22 February, 2016, 03:23

$175M in funding for something that seems to be focussed on technology (QR codes) that no-one wants to use anymore? A fool and his money...

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A Finextra member
A Finextra member | 22 February, 2016, 06:47

I wonder whether this is to be traced back to technology, or management? There was plenty of money apparently, untill part needed to be paid back.

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David Godfrey
David Godfrey - ACI Worldwide - Watford | 22 February, 2016, 08:07

An office in Heron Tower reputedly costing £2M a year seems a little frivolous and unnecessary for a "pre-revenue" business...

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A Finextra member
A Finextra member | 22 February, 2016, 08:59

http://www.bbc.co.uk/news/business-20171479

Almost predicting his own scenario...

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A Finextra member
A Finextra member | 22 February, 2016, 09:12

Like rockstars drinking champagne before they've sold any records.

First Dial-a-Dog and now a Powa Outage.

Bet he regrets selling Venda now...

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 22 February, 2016, 10:54

SnapChat and Starbucks have valuations / revenues in $$B. Compared to that, $175M in Powa is peanuts. SnapChat and Starbucks use QR code technology. Maybe I should claim that this proves that QR code is the greatest invention since sliced bread. But I won't. IMO, Powa's failure has little to do with technology and lot to do with weakness of its value proposition. When it comes to the $$$-$$$$ ticket size items featured by Powa, perhaps impulse purchase is not a thing.

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Dharmesh Mistry
Dharmesh Mistry - Temenos - Reading | 22 February, 2016, 11:08

Unfortunately sometime we focus too hard on the idea and not enough on the business of being  business. Sadly this is a "seriel" track record for Dan.

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Lee Britton
Lee Britton - Prepaid Financial Services (PFS) - London | 22 February, 2016, 17:16

Hopefully there is a happy ending in this somewhere, although it doesnt appear likely to be the case for the investors en masse.  Maybe Powa is/was ahead of its time, or maybe the market conditions or product weren't right, or they overstated the financial forecasts, or investors pulled the rug out too early (or too late).  This is though fairly typical of UK approach to high-growth Fintech businesses.  We seem happy to throw money into it and substantiate high multiples of future EBITDAs and then we act surprised and shut the doors on capital access if there is a head wind or a downturn somewhere.  However this shouldnt reflect on the entirety of the UK fintech space.

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A Finextra member
A Finextra member | 23 February, 2016, 11:40

When Monitise crash and burns - after Powa - VC's and PE's will think twice before sinking more money into FinTech unicorns with little or no hope of any path to revenue.

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David Godfrey
David Godfrey - ACI Worldwide - Watford | 23 February, 2016, 18:24

To be fair to Monitise they finally seem to have grasped that they needed to better articulate what it is they actually do. Looking at their website today was the first time I could actually understand what they offer to the market, previously it just seemed to be vague statements of intent...

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