When taxi app start-up GoCatch burst onto the scene in 2011 it had the world at its feet.
Global ridesharing giant Uber hadn't arrived in Australia and the multibillion-dollar taxi industry was ripe for disruption.
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Uber exec: autonomous cars will smooth out surge pricing
Uber Vice President of Global Vehicle Programs Sherif Marakby talks about autonomous cars and the company's future at the North American International Auto Show in Detroit.
Not surprisingly, it attracted a star-studded list of backers, including billionaire family the Kahlbetzers, the Millner family, fund manager David Paradice, Malcolm Turnbull's son Alex, and Square Peg, a technology venture capital firm backed by James Packer, Seek co-founder Paul Bassat and the billionaire Liberman family.
Fast forward to today and some minority investors are querying whether it has a future and whether it has squandered a first-mover advantage.
Just before Christmas three of its six directors, including chairman Bill Beerworth and representatives of its two biggest shareholders, stepped down, and a shareholder meeting scheduled for January 14 was cancelled. Beerworth's resignation comes less than a year after he became chairman and the company will have to tap shareholders – again.
An explanatory memorandum obtained by Fairfax Media reveals that the shareholder meeting was called to get shareholders to back a plan to terminate the shareholders agreement, convert GoCatch to a public company and adopt a new constitution.
The reason? According to the explanatory memorandum, it had outgrown its shareholders' agreement. It said the agreement contained a number of "ambiguities and inconsistencies that give rise to uncertainty in the company's corporate governance" and it created "unnecessary inertia" in the ability to undertake transactions, including issuing shares.
But the meeting didn't go ahead. Minority shareholders are not sure why.
GoCatch chief executive David Holmes shrugs it off as a delay to make some "minor changes" to the structure.
Despite a 50 per cent turnover in the board, no explanation has been given and the website is yet to be updated.
The resignations also include co-founder Andrew Campbell (who rejoined the board last year) and Dean Price, executive Director at Pitt Capital Partners, a wholly owned subsidiary of W.H. Soul Pattinson & Company.
Alex Turnbull remains on the board, along with GoCatch chief executive David Holmes and Tim Fung, who founded Airtasker – an online business where people post tasks such as house cleaning at a set fee and workers respond to the job – and a director of venture capital group Tank Stream Ventures, which is backed by Markus Kahlbetzer.
We've raised less than $10 million to date while Uber is closer to $10 billion.
GoCatch boss David Holmes
The three directors who left the company were contacted and Holmes was sent a list of questions but didn't shed much light on what is really going on or why shareholders have been kept in the dark.
The best Holmes would say was that no directors had resigned for other than personal reasons. When asked whether it was a concern that the company's top two shareholders had left the board, he replied: "We are focused on great governance and a strategic balance at the board and executive level." He said "major shareholders on the board isn't always a great thing". He left it at that.
He confirmed that another equity raising was in the wings in the next few months. It is not hard to see why. It is understood that in October the group was generating less than $100,000 a month in revenue. Documents released last year showed it was burning $275,000 a month in cash. Holmes failed to comment, except to say revenue in 2016 was up 43 per cent, so he was happy with the trajectory. "Always planned to raised funds this half and will have more news on that shortly."
Price said his resignation was "in the ordinary course of progression of the company not a statement by me".
GoCatch was forced to tap shareholders for $2.1 million last year, positioning it as a do-or-die situation. They were told in an explanatory memorandum "in the absence of raising funds pursuant to a capital raising or an alternative source of funding, it is very doubtful the company will be able to pay its debts as and when they fall due, and it is unlikely the company will be able to continue as a going concern".
It said the net proceeds would be used to fund GoCatch's business activities through to early-mid 2017, with a focus on its business of ride-sharing, which it launched in February 2016.
Given a history of a revolving door of directors and chief executives, a challenging market and a dwindling valuation, Holmes was asked whether GoCatch has a future. "Wow, that's pretty harsh," he said. "We are in a market that is being disrupted which is a huge opportunity. I see we are better positioned than any other Australian business to capitalise on that opportunity. Ridesharing is predicted to grow to a $300 billion global market by 2030 as we are Uber's only competition so far in Australia."
Holmes believes GoCatch has a "massive future", but even he concedes it will depend on continued access to capital. "Remember we've raised less than $10 million to date while Uber is closer to $10 billion."
There is no doubt that the global taxi industry has been turned on its head since the launch of ride-sharing giant Uber and a gaggle of copycats less than seven years ago. Uber is now worth more than $US50 billion.
In late 2015 GoCatch decided to get in on the act and expand into ride-sharing following the announcement by the ACT and NSW governments to legalise ride-sharing in late 2015. In February 2016 it launched GoCar in Sydney.
In December start-up London Rides entered the market with 90 cars on the road in Sydney. It signed an exclusive deal with GoCatch. It has prompted speculation that London Rides might become a shareholder. Indeed, Holmes said he would ensure it has the opportunity at the next equity raising.
The Uber revolution continues to march on, trampling competitors in its wake. For now, GoCatch continues to march in the dark.
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