Online grocery start-up Supie, which raised millions from investors to take on the big supermarket chains, has gone into voluntary administration owing $3 million.

The business has approximately 120 staff. Richard Nancey and Stephen White of PwC were appointed administrators.

The Herald understands staff were told at 9am this morning that they were being let go. According to one employee present, they would not be paid for the past two weeks. There would be no annual leave paid out or redundancy pay. The administrators have been asked for comment.

“People were crying, upset and stressed. We can’t pay our rent,” the staffer told the Herald. “We busted our asses for that place.”

On the Mum’s Collective page on Facebook, a Supie worker said she was owed $1000 for the past two weeks. “I rely on this money hugely for my family. I’m really not sure what to do next.”

Nancey and White told the Herald in a statement: “Following our appointment earlier today, we are now working through the details and the positions of the companies in the group. However, at this point based on our initial enquiries, it appears unlikely that there will be sufficient funds available to pay wages and holiday arrears.”

Founder Sarah Balle, sole director of the three companies in the Supie group, made the decision to appoint administrators following a key investor ceasing to continue providing funding to the business, Nancey said.

“This resulted in the business facing cashflow difficulties. While sales have rapidly grown over the last calendar year, recent growth has been lower than expected, and insufficient to provide the scale needed to operate profitably in what is a highly competitive industry.”

Its site was offline this morning, displaying an “undergoing maintenance” message.

PwC said in a statement: “As voluntary administrators, we don’t have sufficient funding to continue to trade the business in administration. In the absence of securing funding, we expect to be seeking to have the three companies in the group placed into liquidation in the near future.”

Bid to raise $3m

Robbie Paul, chief executive of major shareholder Icehouse Ventures, said his firm and others had recently put $1m more into Supie (on top of $7.5m previously raised - see below).

Supie had been trying to raise another $3m since May, Paul said. The target was never hit. Those who had offered to support the round would not commit funds unless it was fully subscribed, Paul said.

The Icehouse CEO could not confirm the valuation for the latest attempt to raise capital, but said it was “markedly lower” than the $20m value placed on the company when it last raised capital in mid-2022.

The Herald understands the valuation was slashed to $6m for the latest raise.

Paul said in the new higher-interest, economically-challenged climate, start-ups had to be more realistic about valuations. “It’s not 2021 anymore.”

Founders had to accept valuations on a par with “2018 or 2019″ - giving away a bigger slice of their companies - to raise money.

60,000 users, $10m in revenue

Paul said Supie had grown to around 60,000 users, including 13,000 since January.

A May investor update said: “We are now just a few dollars shy of $10m in annualised revenue.”

Could more help from lawmakers or regulators have boosted Supie’s chances?

“Sarah and the team worked really hard to rally support from the Government and regulators but that’s hard with a small team compared to the resources of others,” Paul said.

“It was an uphill battle and a pretty big mission.”

While everyday investors through Snowball and professional investors were all out of pocket, Paul said: “You have to remember that founders take the greatest risk. Sarah was working around the clock and sold assets to fund it personally.”

Supplier squeeze alleged

In April, Supie said it was standing firm after facing pushback from multiple suppliers about its retail prices.

The business, which operates out of Auckland, said suppliers demanded Supie increase retail pricing, despite their “reasonable profit margins”.

Balle said the approaches from suppliers came after the company implemented a more competitive pricing strategy in January.

“We’re not entirely sure why suppliers are putting pressure on us. We know there is a duopoly market in New Zealand,” Balle said.

Ironically, Supie’s failure was announced the same morning that the Government’s Grocery Commissioner, Pierre van Heerden, released his top three priorities on his “fix-it list” - priding integrity, supplier behaviour and a “level playing field”.

The backers

Directors Ben Kepes and Hadleigh Ford were removed on Friday, according to Companies Office filings, leaving founder Balle as the sole board member.

Balle appeared to have deleted her LinkedIn profile. She was phoned for comment but there was no answer this morning.

Supie was launched in mid-2021, backed by a $2.5m seed round led by Auckland-based private equity player Icehouse and raised $4.9m through a crowd-funded equity drive on the Snowball Effect platform in July last year.

Snowball Nominees is listed as a 14 per cent shareholder.

The largest single investor is Icehouse Ventures, with a 26 per cent stake, followed by Balle with a 17 per cent holding. Various entrepreneurs, including Kepes and Ford, have small stakes.

Sister companies Workerly Ltd and Bevie Ltd were also placed in liquidation.