Confusion reigns over what the future holds for cloud-based collaboration firm Huddle now the company has seemingly backtracked on announcing details of its new owner and the payout its shareholders will receive as a result.
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A letter received by shareholders on 7 August 2017 confirmed US-based private equity house Turn/River is set to acquire all shares in the company, and that ordinary shareholders – which include past and present Huddle employees – will receive just $100 as a goodwill gesture as a payout.
A blog post announcing Turn/River as the company’s new majority shareholder was published and quickly pulled from the LinkedIn page of Huddle CEO Morten Brøgger on Sunday, but not before being spotted by eagle-eyed investors and employees.
The brief post, seen by Computer Weekly, gives no indication of how much Turn/River is paying for its majority stake in the firm, but says its involvement should help the firm accelerate adoption of the firm’s technology in other geographies and industry verticals, beyond its public sector stronghold.
Computer Weekly has contacted Huddle for comment and clarification on this story, and was told: “Huddle is unable to comment at this time. The blog post was pulled for no reason other than Huddle is not currently in a position to make statements.”
Ex- Huddle employees have since told Computer Weekly the firm has sent through a follow-up “communication” to shareholders, hinting that a higher payout may be forthcoming, after some described the initial offer as a “slap in the face”.
Many of the affected employees took a salary cut to work at the firm in exchange for stock options, on the understanding they would make their money back once Huddle went public or got sold, and were expecting a far higher payout than the $100 “goodwill gesture” currently being tabled.
“For the people who were there early on, that was the deal. They said, ‘Listen, we’re a rising star, we’re winning awards, we’re on a trajectory, come and join us, pre-IPO, on less money’ and we did, and then this happens,” one ex-employee said.
“You see startups all the time that look really promising, and they get people in on the provision their shares will be worth something one day and get away with paying them really low salaries, and it’s just such a lesson in never accepting. There is no guarantee down the road of what your shares will be worth or if this company will ever be profitable.”
Is Huddle in trouble?
Concerns about the company’s financial health have been circulating since Spring 2017, when Computer Weekly uncovered details about the pressure the company was under to find $5m or more in equity by the end of April 2017 to meet the next 12 months of its financial obligations.
Since the company’s founding in 2006, it has been on the receiving end of $89m in venture capital investment, spread across four funding rounds, according to Crunchbase, but made a loss of £8.6m during the 12 months to December 2015.
Even so, ex-employees, G-Cloud watchers and members of the investor community have privately expressed surprise and disappointment at how the Huddle story has played out to Computer Weekly.
Particularly as the company has been lauded in the past an example of a British startup success story, as well as a small to medium-sized enterprise (SME) that has succeeded in securing public sector business, due to its inclusion on the G-Cloud framework.
Other sources, though, have queried how a company that claims its technology is used by more than 85% of central government departments, as well as local councils and NHS trusts, has struggled so much with its liquidity.
“Any company with 80-plus percent of any market would only ever be sold for a pile of money,” said a source, working for a fellow G-Cloud listed provider.