Recently available documents show that Goo Technologies’ valuation has decreased by 70 percent from 85 million SEK ($10 million) down to 25 million SEK ($2.9 million). The company is now pedaling back to its original business model.
The last year has been a rollercoaster ride for Goo Technologies, which specializes in 3D graphics in HTML5. The idea is that other companies can use Goo’s software to create so called rich media ads.
In january the company raised $2.2 million in convertibles from venture capital firms GP Bullhound and Moor Capital. But in the fall, Breakit revealed that the company had trouble with its A series round and that a majority of the staff left the company(article in Swedish).
It ended with Moor investing $700,000 (6 million SEK) and thus saving the company.
But documents from the Swedish Company Registration Office shows that the salvation was costly for the founders. The valuation of the company has dropped from about $10 million to less than $3 million. And Moor now holds 48.6 percent of the company shares, which makes the VC-firm the largest share holder in the company.
“There are a lot of great things with venture capital, but its all about timing. We tried to grow too fast, and maybe not in the optimal direction, but its looking good now. This is what its all about for a startup. You try out different ways to run your company to until you find the best way”, Ola de Freitas, CEO of Goo Technologies, says.
GP Bullhound, however, chose not to invest further in the company. Becauses their investment was in the form of a convertible loan, so the cap table might change in the future.
In concjuction with the latest investment round, the company also changed its business model. The company had previously focused on selling so called rich media ad solutions, ads that are more than just images, directly to advertisers. But during the fall, the company liquidated the studio part of its business, and pivoted to selling the design tool Goo Create that the studio used to other ad solution companies.
“It didn’t scale like we hoped when we had both the tool and the studio. Revenues increased in the short run but the companies that we partner with today saw us as competitors back then. We’ve gone back to simply providing a tool for others”, Ola de Freitas says.
The company has also made the engine behind Goo Create open source, with the hope of getting other developers to create plugins and contribute to the service.
The company started as a tool for game developers and is now more focused on the ad market. However, it just provides the tool, not the ads itself.
Instead of earning money from selling ads, the company now makes money on licensing its tool to other companies. Breakit reported this fall that Goo had started a partnership with Adssets.
“We have a few things in the pipeline but we’re still wrapping up the details”, Ola de Freitas says.
In 2014 the company had revenues of almost $2 million and made a loss of $1.5 million. The company hasn’t presented any numbers for 2015 yet.
According to Breakits calculations, Moor has invested over $4 million (35 million SEK) in Goo Technologies since 2012.
Moor has declined to leave a comment.