Blippar made news in 2011 when it started offering companies the chance to purchase AR ads placed on real life objects. Now the augmented reality startup shared a different kind of news: it is entering into administration. This means that Blippar will have a court-appointed administrator who will try to find a buyer for the business. It is a similar procedure to filing for Chapter 11 bankruptcy in the United States. The appointed administrator is the corporate insolvency firm David Rubin & Partners.
At its height, the company employed 300 people. The headcount shrunk to 261 according to recent records. On Monday, the AR startup announced on its official blog that its entire staff will be laid off.
A Spiraling Path into Lack of Liquidities
This distressing outcome is not a source of surprise for anyone who followed the AR startup in the last few years. Blippar reported losses in its financial statements for the last two years.
Since its expansion to the US in 2013, the management has backed several short-lived projects, such as Google Glass and Windows Phone. These projects cost the AR startup time and money, without coming to fruition. However, in 2015, one of the founders, Ambarish Mitra, said that an unnamed buyer offered $1.5 billion for the business. But, Mitra turned the deal down, and in March of the same year, the company raised $45 million in funding.
And then, slowly, a string of bad news started affecting the image of the company. The Financial Times reported in 2017 that Ambarish Mitra embellished his resume. During the same year, the company sustained huge losses. And 2018 started with the shutting down of Blippar’s offices at Mountain View and the departure of several high-level executives.
A Questionable Business Model
Some say that the AR startup was doomed to fail from the start. What Blippar offered end consumers was an app that accessed AR ads placed on items. No matter how innovative and interactive the technology is, people are unlikely to download and install an app to see ads.
However, investors believed in this business model. The AR startup managed to raise $150 million in 2011 to fund its development. Nonetheless, the company burned through the funds and in March 2017 registered losses of nearly US$47.5 million and revenues of only US$6.3 million. In the attempt to salvage the business, Blippar approached the B2B market, trying to sell its proprietary technology to other companies. In late 2017, they also launched an AR navigation app.
Despite the negative financial results, Blippar managed to secure $37 million in Series E funding from Candy Ventures and Qualcomm Ventures in September 2018. At that moment, the management of the AR startup said that the funding would help the company become profitable.
Opposition from Major Shareholder Seals the Fate of Blippar
The collapse of Blippar is the result of the opposition of one major shareholder to the infusion of extra funding. Khazanah Nasional, a Malaysian sovereign wealth fund, blocked the emergency funding. The reason, reportedly, is because it would have diluted its shares in Blippar.
It is not yet clear if the emergency funding thus blocked is the amount raised during the Series E in September. The company stated that, at this moment, it is unable to give further details on the effects of entering into administration. However, “Blippar’s services are likely to come to halt once the administrators take control of the business and its servers,” according to the blog post.
