A Melbourne-based company that raised $5.3m in funding last year has collapsed.
The company, which included one of Australia’s largest esports teams – an industry where gamers compete on video games – went into voluntary administration on Monday.
The company, called Order, currently has about $200,000 in debt to creditors while 12 employees have been affected by the collapse, according to David Holton, the appointed administrator of insolvency firm Rodgers Reidy.
The pandemic and “cash flow problems” were two of the main causes of the collapse of the company founded in 2017, Mr Holton told news.com.au.
“What the company has told us is that over the last two years they have been affected by Covid like in many other industries and although Covid has brought many people into esports and gaming, it was just a very different and difficult year to get into the tournaments and they couldn’t accommodate people in the same areas,” he said.
“Covid has been a bit of a distraction for things, but it’s also a new market that requires a lot of capital investment.
“The company had been reaching out over the past six months for additional equity … which was not available and ultimately it was cash flow issues that drove it into administration.”
The team behind the players
Order had a team of professional esports gamers known as “Vexite”, “Kingfisher”, and “Sico”, who lived with other gamers together in a warehouse in Collingwood.
The team also hired a professional trainer, team leader, strength and conditioning expert, dietitian and mindfulness coach, as well as a clothing manager who sold merchandise such as posters. jerseys for $25, team jerseys for $80, and hoodies for $90 on its website.
Last year, the company achieved the largest private fundraising round for an Australian esports organization by securing $5.3 million in funding, while recruiting former executive Marc Edwards from the team. ‘AFL, the Melbourne Demons, to be the CEO.
At the time of his appointment in May 2021, Mr Edwards said he was “delighted to join” the company and the industry as they were “on the verge of significant growth”.
“I could have continued to pay my dues in traditional sport, but I chose to apply the skills and experience of those roles to The Order,” he said in a statement.
However, Mr Edwards has now deactivated his social media accounts such as LinkedIn and Twitter and could not be reached for comment.
The administrator told news.com.au they were looking to “urgently” sell the business and its assets within the next two weeks with around a dozen parties interested at the moment.
“We hope to complete a sale that will then retain the employment of the remaining 12 employees and retain the existing teams, players and partnerships that the business has built over the past two years,” Mr. Holton said.
He added that the administrators had “acted reasonably and fairly quickly to ensure that there were no significant outstanding debts” and held discussions about selling the business before it was placed. under judicial administration.
“Massive increase” in business bankruptcies
It’s no secret that there has been a “massive increase” in the collapse of Australian businesses, but recent findings showed they have soared 50% since April.
Tech companies in particular are struggling in Australia after a bloodbath in the stock market spooked investors and made funding harder to come by.
An Australian tech company called Metigy left staff “shocked” by its sudden collapse earlier this month after planning to raise funds with a $1 billion valuation.
Other failed businesses include grocery delivery service Send, which went into liquidation in late May after the company spent $11 million in eight months to stay afloat.
Last month, Australia’s first-ever neobank founded in 2017, Volt Bank, went bankrupt with 140 employees losing their jobs, while 6,000 customers were ordered to withdraw their emergency funds.
A Victorian food delivery business that billed itself as a rival to UberEats and Deliveroo also collapsed in July as it became unprofitable, despite delivering deliveries worth more than $6million since its launch in 2017 and had 18,000 customers.
A venture capital firm has released a sobering message about the state of Australia’s start-up industry, warning that more new businesses will go bankrupt and withdraw funding as a result.