Scandal-hit Sheffield tech firm WANdisco plans to raise $30 million as its funding runway will end in July.

WANdisco, who last week appointed high-profile tech executive Stephen Kelly as interim CEO, plans to cut its workforce by 30%, reducing its annualised cost base from $41m to circa $25m, following the revelation that a senior sales employee falsified purchase orders.

An internal investigation by WANdisco, which is being probed by the Financial Conduct Authority, concluded that recognised revenue of almost $15 million for FY22 was false, and that sales bookings of around $115.5m recorded in FY22 were also false.

As of 30th April 2023, the company had a net cash balance of $8.1m with no debt facilities, which it says gives it sufficient working capital until the middle of July 2023.

Trading in its shares remains under suspension.

“Having reviewed the various options, the board believes the most appropriate strategy is to launch an equity fundraise towards the end of June of $30 million to build balance sheet strength in order for the company to take advantage of the significant opportunities ahead,” it stated.

“The company will commence a consultative process with investors to assess the potential for the proposed fundraise, balancing all the different priorities and risks.”

Resumption of trading in the company’s shares will not commence until after the proposed fundraise, it said.

Without flexibility, you jeopardise your business

The scandal resulted in the departure of founder and CEO Dave Richards as well as finance chief Erik Miller. Former Blue Prism figure Ijoma Maluza joined as interim CFO before the arrival of Kelly.

Kelly joined startup Chordiant in 1997 and served as CEO of the NASDAQ-listed business between 2001 and 2005. He served as CEO of MicroFocus plc between 2006 and 2010, followed by a period as chief operating officer of the UK government. 

Returning to the private sector in 2014, he served as chief executive of Sage plc until 2018. According to his LinkedIn profile, Kelly remains as chair of Tech Nation following its acquisition by Founders Forum.

“We have been working at pace to deal with the issues the company has faced and create a positive path forward,” said chairman Ken Lever. “A lot has been achieved and I am particularly pleased to now have a world class CEO and CFO in place, who are both energised to see the company through this difficult period.”

WANdisco, which helps businesses to harness the power within their unstructured data using analytics tools powered by artificial intelligence, is headquartered in both Sheffield and California.

The FCA investigation into the firm, which had announced plans to explore an additional listing in New York before the news of potential fraud broke, is ongoing.

“Having now been in the business for some six weeks, there is no doubt in my mind that the company should have a very bright future given its differentiated technology,” added Lever. “However, improvements across sales and marketing need to be made to properly take advantage of the opportunity.  

“To do this, the business needs to be urgently properly capitalised and so today we are announcing our desire to raise $30 million towards the end of June.  Unfortunately, much of this capital requirement is a direct result of the issues that led to our announcement on 9 March.  On completion of the fundraise I believe that the company can have a bright future.”

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