Yesterday we reported that Sellaband filed for bankruptcy and this had been granted by the Court in Amsterdam. Now Sellaband CEO Johan Vosmeijer has come up with a new story for their community and Techcrunch has picked this one up.
On the website a message from the CEO has been posted stating that the Amsterdam Lawyer who granted the bankruptcy says, as a ‘trustee’ that “apart from a few technicalities, the completion of a transaction with a potential buyer of the business, is to be expected soon, in order to make a fresh start, safeguarding both the rights of Believers and Artists”
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So what is going on here you might ask. Is Sellaband dead or not?
What follows is purely my own thoughts on what happened here. I have no more insight than anybody else. I’m not a lawyer and not a trustee, but I believe you don’t have to be a rocket scientist to guess what’s happening here.
Fact: Sellaband filed for bankruptcy, and it has been granted by an Amsterdam court.
Question: Why file for bankruptcy, close down the website and then try to sell the company? (or at least what is left of it)
You don’t file for bankruptcy overnight… especially if you’re an Internet startup. The costs of keeping the servers running is virtually none, they could scale back the number of employees, the marketing costs (they probably should have done both a long time ago) and continue in a sort of stealth mode to try and find a buyer in the mean time. So something must have gone bad, very bad.
My impression is that Sellaband was just not making money and the costs were way out of line with the cash inflows. Probably the expected cash outflows were ‘as expected’, but the inflows were way behind.
Lets take a look at the numbers that we do know. Sellaband raised in total 3 million dollars from fans for their artists, 30 artists made it to the ’50k limit’ to record a CD. One of business models of Sellaband was making money on the interest of the funds that are invested in bands that haven’t reached the 50k limit yet. In the best case, with a 5% interest rate, Sellaband would get 75k dollars a year on interest. Well I don’t have to explain that this is simply not enough to run their business. Other ways of income will also not be enough to run the business (less than 10k unique visitors a month according to compete).
The dutch equivalent of Financial Times asked founder Pim Betist about the bankruptcy and he gave 3 reason why they failed. Betist left the company a while ago after an argument about the future of the company, but he is still a shareholder.
Sellaband is dead, the money is gone and yeah sure, maybe they will find a company that gives a couple of thousand euros (maybe couple of hundred thousand euros) to buy the software, the servers and the community (lets hope so), but that is not yet what we call an acquisition.
To be continued…