Blockchain Startup Everledger Collapses Despite Tencent Support – Cryptopolitan

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

The collapse of the Brisbane-based company, which specialized in tracing the provenance of diamonds and other valuable commodities 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 using blockchain technology to trace the provenance of diamonds.

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

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

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

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

Kemp explained that external pressure on the investor meant that Everledger was in a difficult position. She stressed that the decision to lay off staff and place the company in the hands of administrators was taken to protect the interests of stakeholders.

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

Past financing and the company’s future

In 2021, Everledger raised $7 million through a convertible loan, and received $3.5 million from the UK 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 shutdown of other well-funded startups, such as delivery service Milkrun, online restaurant marketplace Providor 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 were in line with its board’s controlled growth plan.

As Everledger navigates its future, it’s clear that the company’s rapid expansion and high-profile support weren’t enough to prevent its collapse. The outcome of the May 8 meeting of creditors will be a decisive factor in deciding the fate of this once-promising blockchain startup.

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