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By Sommelier Privé

Sadly, Sommelier Privé Had to File for Insolvency

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We are very sad to announce that Sommelier Privé will discontinue its business activities. Despite hard work over the last few months, the Berlin start-up has not managed to secure follow-up financing for the future of the company. The online wine shop with its special recommendation algorithm was crowdfunded on Companisto last year. With effect from 21 August 2014, the founders have now filed for insolvency. The Companists had already been informed of this decision in the investor relations section of the Companisto website.


A total of 30 companies and projects have received funding in 32 funding rounds on Companisto thus far. Numerous start-ups have received follow-up financing, whereas 3 start-ups unfortunately had to go out of business. Investments in start-ups are risk investments that offer both great opportunities and great risks. A total loss of the capital invested may occur, so investors should only invest money whose loss they are able to handle in the worst case.

Companisto wishes the Sommelier Privé founders all the best for their future!

 

 

You recently had to file for insolvency. What was the reason for this? Was this due to a single reason or a number of unfortunate events?

That is a good question. There certainly was more than a single reason. Over the last 8 weeks, we faced a very turbulent time during which several potential investments fell through quite unexpectedly. Talks with VCs had gone very far, but these VCs literally copped out at the eleventh hour or changed the terms in such a way that the offer became unacceptable in the end. For us, these developments were completely unexpected since we had put a lot of work and money into due diligence investigations. Ultimately, then, our time was just too limited to secure follow-up financing. Over the next few weeks, we will certainly keep analyzing what went wrong.

 

By developing the app, you had changed your strategy. Was that already a reaction to the situation at Sommelier Privé?

Yes, we had noticed early this year that our initial business model would not have had a chance to survive. This was primarily due to the too-high cost of customer acquisition of that model. The large number of online wine retailers caused the cost of customer acquisition to explode; simultaneously, the margin pressure on strong-selling brands is too high because of price players. Consequently, we adapted our business model and started developing a mobile app that followed the example of Vivino, but our app included a purchase option and sommelier recommendations. In doing so, we wanted to achieve a lower cost of customer acquisition and enable more customers to benefit from our USP of preserving wine culture and combining it with personal recommendations. The feedback we received from customers, journalists, and investors was very positive. Unfortunately, we ran out of financial means just two weeks before the app was ready.

 

At which point did you sense that you had problems, how did you react to this, and how did you communicate this?

Once our last talks with VCs after finishing the term sheets had failed unexpectedly and once we knew that our financial resources would become tight, we informed our Companist of this fact in the investor relations area. At the same time, we had already started talking to business angels and reentered negotiations with VCs that had been on hold. Recently, we were close to reaching an agreement with two smaller investors, but these investors decided against an investment toward the end of the deadline for filing for insolvency because they believed the risk of our not receiving a follow-up investment would be too high. In order to ensure sufficient funding, we would have needed a financing round in the medium six-digit range. We were really shocked when we finally had to file for insolvency because of a lack of other options and a lack of time in spite of positive negotiations with VCs. We tried to constantly communicate with our Companists in the most transparent way possible and finally published another update 1.5 days before we filed for insolvency.

 

Looking back now, what would you do differently?

That is a difficult question that I cannot answer yet. Needless to say, we are continuously thinking about everything and wondering what we could have done differently. However, we have not yet found a final answer to this question. In any case, we are truly sorry that we have disappointed all those of you who invested in our company and believed in it!

 

How do you feel? What has the insolvency done to you?

I would not like to talk about this too much. We are really glad that our friends, partners, and families are supporting us very much. Still, the feedback from our Companists gives us even more strength. We are incredibly thankful for having such a unique crowd that has supported us all the time and is still helping us deal with the next few weeks! Thank you so much!

 

What does the insolvency mean for your Companists?

A total of 715 Companists invested in Sommelier Privé and in us. Because of their loan contracts, the Companists are creditors of the company and thus have a legal claim to the capital they invested. The insolvency of the company will most likely mean that a liquidator will be appointed, who will then try getting the most capital possible out of the company on behalf of the creditors. Afterward, this capital will be allotted to the individual creditors based on their rank. This means that liabilities from sales and services will be paid first, then loans, and finally equity. We will inform you in detail about the next steps in our investor relations area.

 

What will happen now? What will your personal future look like?

At the moment, we are still fighting to achieve the best solution possible for the creditors and to keep our baby online or have the app published somehow. Next week, we will have a team meeting during which we will discuss what we can do now and in how far we can help one another find something new. I have never worked with such a talented and committed team before, so I am sure that each of us will sooner or later find something good.

 

Is there anything you would still like to tell the Companists?

Yes! We have had a thrilling time with you. It is because of you that we had a great time during which we were able to work on one of the most beautiful projects there are. You have constantly supported us, but also asked us every now and then to question our decisions and to make sure these were really for the benefit of Sommelier Privé. The strength and support you provided through your comments, phone calls, emails, and meetings with us were unique. The feeling that our baby also became your baby has driven us and still keeps us fighting.

At the same time, we are very sad that we have not managed to make Sommelier Privé succeed. But even in these difficult times, you have proven that you are there for us and support us. Thank you so much!



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