For a brief period connected vehicle data company Wejo achieved fabled unicorn status, meaning it had a valuation of more than $1bn.
Today the Manchester-headquartered business has a market cap of just over $9 million after announcing its intention to appoint administrators.
As Wejo’s share price continues to fall there’s growing speculation that Nasdaq will delist it completely.
Even in the volatile world of tech Wejo’s fall from grace has been spectacular.
So what went wrong? The simple answer is investors spooked by the collapse of Silicon Valley Bank and sweeping job losses in the tech sector decided that they no longer wanted to invest in high growth, loss-making, tech stock like Wejo.
To understand more about what went wrong we need to go back to the beginning in 2014 when the future unicorn was launched.
Richard Barlow, a passionate fan of motor racing and Formula 1, recognised a gap in the market around data.
He realised if the connected data technology collected in motor racing could be applied into the mainstream automotive sector he would have a business – and so Wejo was born.
Barlow spent the next three years travelling the world, trying to get people to take notice of his disruptive startup before securing its first OEM (original equipment manufacturer) contract.
“A chairwoman of a company once told me ‘time is time’ and what she meant by that was there are no shortcuts to certain things,” Barlow told BusinessCloud in 2021.
Before the game-changing moment in 2018 when General Motors took a 35% stake in Wejo, Barlow had visited the East Coast of the US no fewer than 43 times!
However a lesser known fact about the company is that before GM came on board, Wejo raised their first $50m from mainly 150 high net worth individuals.
Wejo’s story was compelling to investors. The company could process trillions of data points from 20.8 million vehicles, of which 13.9 million were active on the platform, transmitting data in near real-time. This was gold dust in tackling real-world problems like road safety and reducing emissions.
The technology allowed Wejo to see 7% of all vehicles moving around New York and 20% of all vehicles around Detroit in near real-time.
“Subject to consent we know the radio station being listened to,” Barlow said in 2021. “We know the temperature of the engine. We know the suspension data.”
Wejo was on a wave and big name investors were happy to throw money at the company.
In 2021 Wejo partnered with tech giants Microsoft, Palantir Technologies and Sompo Holdings ahead of its public listing in the US.
Microsoft and Sompo pledged a combined investment of £18m as part of Wejo’s Private Investment in Public Equity (PIPE) financing, joining General Motors and Palantir Technologies as strategic investors as the scaleup prepared to list publicly through a merger with specially created public company Virtuoso Acquisition Corp.
In hindsight listing on the Nasdaq didn’t help and Wejo hasn’t been the only European tech stock to take a battering in the US.
The car marketplace Cazoo, once a darling of the VC world, saw its share price drop by 98% while electric vehicle manufacturer Arrival and Babylon Health have also seen their share price plummet on the Nasdaq.
One insider told BusinessCloud: “Listing on the Nasdaq gave Wejo access to huge amounts of capital. That was fine in 2021 but it’s a very different world today.
“The combination of the banking crisis, especially Silicon Valley Bank, soaring inflation and even the crypto collapse, created a perfect storm.”
In simple terms investors didn’t want to invest and Barlow’s growth ambitions were predicated on being able to continue to raise money.
Headquartered at the ABC Building, in Manchester, Wejo – which featured on our TransportTech 50 ranking late last year – has offices around the world, predominately in the US, and employs around 200 people.
Softly spoken Barlow has a reputation for being a good communicator and would have 14 hour-long, one-to-one, meetings every week with his senior managers around the world. I’ve not met anyone who doesn’t like him.
He forecast the company would break-even by the middle of 2024.
Certainly there was no sign of any concern in Wejo’s full year results for 2022, which were only released on April 3rd 2023.
In them Barlow said: “Wejo delivered an outstanding year operationally, accomplishing the objectives we set out in 2022, including growth in key KPIs, expansion into new products and services and continued strong revenue growth, despite significant cost reductions.
“We expect these trends to continue into 2023 with revenue projected to grow almost 200% at the mid-point of our guidance and additional cost reductions expected to improve our adjusted EBITDA, which we believe will allow us to pull forward our cash-flow breakeven point to mid-2024.”
John Maxwell, chief financial officer, was similarly upbeat. “We reduced our monthly cash burn by 40% from the start to the end of 2022, and we are targeting another 50% reduction in our cash burn to get to under $3m by the end of 2023.
“Our focus on reduced cash burn, the deployment of our long-term capital strategy and continued strong revenue performance are key steps to fully funding Wejo to cash flow breakeven in mid-2024.”
Although net revenue for 2022 increased to $8.4m, up 227% compared to the full-year 2021, net loss in 2022 was $159.3m.
The cruel irony is that the connected vehicle data company literally ran out of road in the eyes of investors.
However according to the Manchester business intelligence platform, Red Flag Alert, Wejo were on their radar for over a year.
Managing director Richard West said: “Unfortunately the writing was in the wall for a while here. Wejo moved to 1 Red Flag within our insolvency index in March 2022. We are going to see a steady and steep incline in administration this year.”
The frustration for many is that Wejo has become a victim of a sea change in investor sentiment rather than an inherent failure in the business.
Robin Shaw, who spent three years at Wejo until December 2022, said on LinkedIn: “Extremely sad to see Wejo Ltd enter administration.
“This really was a visionary business, with the talent and team capable of global leadership. Unfortunately the massive achievements and progress they made just weren’t enough.
“A significant number of tremendously talented, incredibly knowledgeable and big ‘can do’ attitude former colleagues will now be seeking roles, a great opportunity for hiring businesses. I wish them all well.”
There’s been no official comment from Wejo or Barlow but earlier this week the company filed a notice in the High Court of Justice Business and Property Courts in Manchester of its intention to appoint Andrew Poxon and Hilary Pascoe of Leonard Curtis Recovery Limited as administrators.
Wejo is evaluating whether it will file ancillary insolvency proceedings for the company and its other subsidiaries in other jurisdictions, including in the United States, in due course.
BusinessCloud has contacted Barlow and Leonard Curtis Recovery for comment.