The CEO that bought part of failed tech unicorn Powa says 'Peter was robbed to pay Paul'
Powa Technologies was once reportedly valued at $2.7 billion and raised at least $220 million in funding since 2013. But last month it collapsed into administration with just $250,000 in the bank.
The payments company had three main business lines: PowaWeb, which built online shops for retailers; PowaTag, a mobile commerce app that lets people buy things by scanning pictures, QR codes, and sound waves; and PowaPOS, a card reader that could be used with a smartphone, built to rival the likes of Square and iZettle.
Administrators Deloitte last week sold off two of the businesses - PowaWeb and PowaTag. Greenlight Digital, a digital growth agency, bought PowaWeb and CEO Warren Cowan told Business Insider: "One of the reasons we were so excited about the business was PowaWeb was the only bit that was making any revenue or profit in the entire business. As well as looking like a great business, the fact that it was revenue generative was a great incentive."
Prior to its collapse, Powa's CEO and founder Dan Wagner told staff the business was "basically pre-revenue," according to a video seen by the Financial Times. Business Insider also reported that most of the 1,200 clients Powa claimed to have signed up to its PowaTag app had not signed contracts and simply expressed interest in the technology.
Cowan added: "What has been interesting is that, sitting inside the Powa business, there's definitely indications that Peter was robbed to pay Paul on an almost weekly basis."
The phrase "Peter was robbed to pay Paul" is an idiom referring to old Church taxes, it means resources from one area are used to pay for the needs of another area.
Cowan explained: "The PowaWeb business hasn't had the sales and marketing backing of the wider business because it's been incredibly consumed with pursuing its wider ambitions for mobile payment plays in China. That's ultimately burnt out the company. The company was all ready for a significant sales push when it ran out of road."
Administrators Deloitte, who now act and speak for Powa, declined to comment. Dan Wagner, the founder and CEO of Powa, did not respond to a call and email requesting comment.
PowaWeb hasn't had the backing of the wider business because it's been incredibly consumed with pursuing its wider ambitions for mobile payment plays in China. That's ultimately burnt out the company.
"It's hard to go into the details but certainly in an organization where PowaWeb was the only thing making money, I can imagine it would definitely have been the go-to source for additional cash if required."
Powa signed a deal to take it into China shortly before it fell into administration. At the time, CEO Dan Wagner said the deal was "like winning the lottery" and forecast revenues of $5 billion over the next 2 years. Somewhat confusingly, he also said revenues from the deal would take 18 months to filter through.
Cowan wouldn't disclose how much revenue or profit the PowaWeb business was generating. As for what that money was spent on, Cowan says: "From what we can ascertain there were a huge amount of employees all around the world costing a huge amount of money. I don't think I can divulge any of the specific details but we did get a good insight into how the company sort of ran out of road."
Powa employed over 300 people globally at the time it fell into administration. Sixty-nine jobs have been saved in the UK and 75 people have been made redundant, but many of Powa's international employees are understood to still be "in limbo" with no clarity around their future.
As well as acquiring the PowaWeb platform, Greenlight Digital is taking on around 20 staff. Cowan says: "Initially we were only considering it from a technology perspective but when we had a chance to meet the PowaWeb team, we very quickly realised that Powa was a lot more than a technology, it was a business that was pretty much taking ownership of delivering global success for its clients."
"It was delivering technology, marketing services, trading and online support, analytical support. We looked at it and thought, it feels like a business just like ours."
Cowan wouldn't disclose how much Greenlight paid for the business, saying: "I've been asked a few times did I pay £1 for it, what I will say is we're happy we've been able to purchase a great asset with a great opportunity."
Business Insider has heard from multiple former Powa employees that PowaWeb was run on outdated technology and struggled to sign new clients, but Cowan says: "As far as we've been able to gauge from our technical due diligence, we're buying a platform that's successfully and very beautifully supporting the global business of a number of brands in over 55 global markets and is doing so reliably and compellingly and has continued to grow that revenue year on year."
PowaWeb's clients include Harper Collins, Electrolux, and Hoover. Cowan says: "Everybody can make criticisms of the foundations of code. Fundamentally what we believe is we're buying a great business with great potential and we've got the skills to take that technology to the next level. We're very happy with what we've got."
Addressing the issue of new business, Cowan says: "The fact that a client has been able to obtain big global contracts and sustain them for years and years and keep those clients, I don't think that would be a concern to anybody."
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