Blockchain startup Everledger collapses despite Tencent backing – Cryptopolitan

Blockchain startup Everledger has been placed into voluntary administration after a second tranche of expected funding failed to materialize.

The collapse of the Brisbane-based company, which specialized in tracking the provenance of diamonds and other precious goods using blockchain technology, comes as a surprise given the support it received from the Australian federal government and Chinese tech giant Tencent.

Everledger’s rapid growth and expansion

Founded in 2015 by serial entrepreneur Leanne Kemp, Everledger initially focused on utilizing blockchain technology to track the provenance of diamonds.

The company quickly expanded its operations to include supply chain tracking in numerous industries such as critical minerals, art, wine, and fashion. High-profile customers included luxury brand Alexander McQueen.

Everledger had raised over $54.7 million from external investors, including a $3 million grant from the government’s blockchain pilot program in 2021. The company had been anticipating a second round of funding from an existing investor this year, but the funds never arrived.

The lack of expected funding led to the redundancy of all staff on March 31, followed by the appointment of administrators Steven Staatz and Ashley Leslie from Vincents Chartered Accountants on April 24.

The first meeting of creditors is scheduled for Monday, May 8. Everledger’s UK holding company is not yet in administration.

Kemp explained that external pressures on the investor meant Everledger found itself in a difficult position. She emphasized that the decision to make employees redundant and place the company in the hands of administrators was taken to protect stakeholder interests.

Kemp also pointed out that Everledger’s situation is complex, with multiple restructuring events in progress. The company’s Australian branch is in voluntary administration but not liquidation.

Previous funding and the company’s future

In 2021, Everledger raised $7 million through a convertible loan, receiving $3.5 million from the British government’s Future Fund, matched by Tencent. Tencent had also led the company’s $20 million Series A round in 2020.

Everledger previously closed a $10.4 million funding round in 2018, led by Fidelity Investments’ Canadian arm and GMP Securities, with participation from Vickers Ventures Partners, Graphene Venture Capital, Rakuten, FPV, Fenbushi, and Bloomberg Beta.

The collapse of Everledger follows the recent closure of other well-funded startups, such as delivery service Milkrun, online restaurant marketplace Providoor, and online alcohol retailer BoozeBud.

Kemp stated that the eight-year-old company had a binding investment agreement in place to secure the necessary capital to achieve profitability.

She denied the notion that Everledger was a “cash-burning” startup, arguing that the company’s use of capital and operational footprint aligned with the board’s controlled growth plan.

As Everledger navigates its future, it’s clear that the company’s rapid expansion and high-profile backing were not enough to prevent its collapse. The outcome of the creditors’ meeting on May 8 will be a crucial factor in determining the fate of this once-promising blockchain startup.