After high-growth investment momentum ends, proptech Superdraft enters liquidation

As Gold Coast-based company Superdraft gathered momentum in its bid to disrupt the architecture industry with its marketplace linking customers with professionals for renovations and builds, in late 2021 its founder claims to have signed a term sheet with a prospective investor to raise $18 million, valuing the proptech at $50 million.

But that investment was progressively postponed, also leaving another co-investment up in the air, so a few months ago Superdraft co-founders Mark Deacon and Jake Robinson made the decision to tighten the hip pocket to adapt. 

"Our company has relied on investment and high growth. We've raised over over $10 million in capital to date, and then all of a sudden that dried up. We started the process of pivoting the business and cutting back costs significantly over the last few months," Deacon tells Business News Australia.

"But it was just too late."

This week Cameron Crichton and Michael McCann from advisory firm Grant Thornton were appointed as joint and several liquidators for Archix Pty Ltd, which trades as Superdraft.

"After 10 years of hard work, blood, sweat and tears into the business, for it to fall over in these circumstances is pretty sad, but reflecting back I'm fortunate for the 10 years of experiences and the people I got to meet," Deacon says.

"For Jake and myself the thing that pains us the most is the impact on our customers, our partners and our staff," he says, clarifying the group had 80 staff at its peak, but reduced that number to 50 recently.

Deacon says the pair "fell for the carrot" of the significant investment that was proposed, but had to bite the bullet when the deal was postponed for the third time in August.

"In hindsight we would have done things differently - not relied on conversations or where some investment had landed, and we could have had a different scenario had we stripped back our costs and reduced our burn rate a lot sooner, but in the moment we felt confident, and the last thing you want to do is slow down your momentum when you're about to close significant capital."

He claims that if the planned investments got over the line, the company would have easily been able to pay its debts. According to a creditor listing prepared by the liquidators, there is an estimated $2.16 million owed to creditors, while the company has estimated assets worth $77,909.

"Because we were expecting $18 million coming in, to clear a couple of million dollars in those debts, it's a small portion and we would have had $15 million to pour into the growth of the business. We wouldn't have let it run that long or that far or caused that much impact, if we knew this wasn't going to come through," he says.

Meanwhile, Archix Holdings - which owns the intellectual property of the group - has also entered voluntary administration.

"At the moment it is going through a DOCA (Deed of Company Arrangement). We've got convertible noteholders, so some individuals invested on a convertible note," Deacon explains.

"It's basically up to those convertible noteholders whether they decide to force the holding company into liquidation and then sell the IP off and then they get paid through that, or whether they accept the DOCA for there to be a restructure and recapitalisation.

"In the short term our focus is going to be on working with the creditors of Archix Holdings and working through a DOCA to see if there can potentially be a positive outcome, because we always set out to solve the problems in this industry, and those problems still need solving and we're still super passionate about solving those problems."

Following their appointment on 31 October, Cameron Crichton of Grant Thornton has issued a statement noting liquidators are currently liaising with customers and suppliers to explore options to facilitate the continuation of projects currently underway.

"The Liquidators’ assessment of Archix’s financial circumstances indicated that it was not viable to continue trading its business operations and the business ceased trading this week," Crichton says.

"Archix operated the “Superdraft” managed marketplace infrastructure to connect homeowners to construction and building industry professionals and to track and coordinate home renovation and building projects. Development of the Superdraft infrastructure was funded by the ultimate parent entity, Archix Holdings Pty Ltd. Archix Holdings Pty Ltd was placed in Voluntary Administration also on the 31 October 2022. 

"The Directors are currently liaising with its funders with a view to proposing a Deed of Company Arrangement to creditors, which could support relaunching the Superdraft business at some time in the future. In the meantime, the Administrators are urgently exploring options to sell the Superdraft infrastructure and have already engaged with a number of market participants in this respect. Creditors are expected to vote on the future of Archix Holdings Pty Ltd at a meeting of creditors in early December."