Problems for Colvin, the startup that sells flowers online. The company has suffered during the last year and a half difficulties in its business for companies and the losses have hit the income statement. Given the drought of capital in the market for firms with direct-to-consumer products, the technology suffers a very significant valuation cut in a sort of internal round. P101 and the French Eurazeo (investor holding company of the Idinvest fund) have decided to open the door for the two co-founders, Andrés Cester and Sergi Bastardas, to leave their posts as CEOs.
The Barcelona-based company has raised, between debt and capital, more than 100 million euros since its foundation. The last relevant round took place in mid-2021 when they announced an increase of 45 million in which there was a significant secondary and not all of it was allocated to new shares. At the end of that year they agreed on a loan with the Claret fund of up to 20 million euros. And I also obtained two loans convertible into shares that totaled 3.5 million with a Catalan public investment company (Avançsa) and the investment arm of the alcoholic beverage manufacturer Pernod Ricard. Despite all that money raised, the difficulties have remained.
As they explain to La Información up to three known sources, the company has experienced what in the jargon of the sector is known as ‘downround’, that is, a significant valuation adjustment from the one agreed in that year 2021. Analysis services such as Dealroom placed it above 200 million, although funds like Samaipata, which controlled 11%, placed it significantly below. Several of these sources speak of a cut now executed between 40% and 50%. In recent times, many companies have been resisting making this type of reduction in the ‘quote’ with extensions between current partners that do not force it to be fixed.
Among the measures that have been raised by investors is the departure of the two co-founders from the post of CEOs. Both shared the work as chief executives. Both were present on the board, which had the majority of the international partners, with P101, the Italian fund, with two seats, and the French Eurazeo and the Italian Milano Investments Partners with one seat each. Another director completes the list, Simha Kumar, a former director of Amazon and other large companies who is a member and advisor. Consulted by this newspaper, the founders have not made any kind of statement. Before the conversion into shares of the aforementioned convertible loans, the shareholding was distributed as follows: P101 with 16.4%; Milan (12.6%); Samaipata (11%) -he left the board in mid-2021-, and Idinvest (10.9%). In addition, Pau Gasol entered as an investor in the middle of last year and also as an advisor.
The valuation cut could be between 40% and 50% in the midst of a capital drought for e-commerce companies and those dependent on the final consumer
The startup was born in 2017 with the intention of shaking up the market for the sale of flowers, especially fragmented and full of intermediaries (up to seven in each sale) but with a size of more than 100,000 million dollars. It was founded by three young people: Andrés Cester, Sergi Bastardas and Marc Olmedillo (the latter left at the end of 2020). The first came from the axis as an investment banking analyst and the second had held various positions as a manager at Amazon for less than three years. They sought to buy directly from the producers to deliver to the final consumer and reduce the complexity of the distribution chain of a perishable product and with not easy transportation.
losses and purchases
Growth was rapid until 2021, the year in which it raised the largest round in its history. It went from 13.4 to 19.1 million euros of income, according to its own consolidated income statements including all countries, despite the fact that its intention was to more than double. Losses skyrocketed precisely for this purchase of merchandise (especially flowers) to 12 million euros, even after making controversial adjustments for tax credits from previous years. Although there are no closed data, the year 2022 and what has been going on since 2023 has kept pace, according to the same sources. The forecast that he initially handled was to achieve ‘black numbers’ for the first time in the year 2024.
These tax credit adjustments were clearly indicated by Deloitte, the auditor of the accounts, in its latest reports. In 2021, the firm made reservations insisting that the activation of these deferred taxes (tax losses) can only occur when there is sufficient evidence of their future recoverability based on benefits. For this reason, he believed that the necessary probability criteria are not met, so the losses could increase by 4.1 million in 2021 to 16 million. Now, at the beginning of 2023, the ‘big four’ has been terminated to be replaced by BDO Auditores.
Given the significant change in sentiment in the capital market experienced for a year and a half, especially in the market focused on the final consumer and not on companies, the company has been adjusting costs, especially in terms of staff. After the 2021 round, the team grew exponentially with hiring that exceeded 25 per month at the beginning of 2022. From there, the scissors were put in, as reflected in the professional social network, up to just under 120 employees.
To try to grow abroad, it has also resorted to purchases. It is present in Spain and Portugal (Iberia), Germany, Italy and France. In these last two they acquired two relevant purchases. In the territory, Halo acquired Monsieur Marguerite (Freshome SAS) for 7.8 million in December 2021 (billed 3.7 million in 2021 that were consolidated) paid cash and shares worth 1.9 million. In the Italian market, it was done with another local operator called Bloovery who was a wholesaler -the last valuation in a round with crowdfunding was more than 2 million in 2020-.
This incorporation of the Italian company was also intended to grow in this wholesale market and it is one of the segments that has generated the most headaches in the company, according to other sources. The company insisted on combining its direct sales to the end customer with the intermediation or ‘marketplace’ service for companies in the sector. On the one hand, its online flower and plant distribution business will appear and it will also consume the purchase of stock from florists by ‘digitising’. This duality has not been easy to execute. Now it remains to be seen how the leadership in the company finally looks after the changes.
