Tue, 09 Nov 2021 | ADMINISTRATION
Loopster, an online second-hand clothing retailer backed by investment from the Development Bank of Wales, has fallen into administration after a funding round failed to reach its target. The business was launched in Newport, Wales in 2017 with the aim of reducing the environmental impact of the fashion industry.
The company’s plans for scaling up its operations were supported by a seed funding round worth £500,000 last year. This funding round included £250,000 in equity investment from the Development Bank of Wales, the Welsh Government’s wholly-owned investment bank.
The investment enabled the company to improve its platform, increase efficiencies and optimise its customer experience. The business moved to new headquarters in the Newport Business Centre and recorded strong revenue and order growth.
This growth saw the company pass the milestone of over 12,000 items of clothing sold since its launch and, with revenue growth of 400 per cent over the past year, it was projected to become a business with multi-million-pound turnover.
On the back of this, the company sought to raise further equity funding in order to continue its strong growth. It launched a new fundraising on the Crowdcube platform earlier this year, with the aim of raising a further £500,000.
If this target was met, the company would have secured further matched investment from the Development Bank of Wales. However, the effort raised just under £400,000, meaning that, under Crowdcube policy, none of the funding raised could be secured, as the full amount was not met. After failing to secure the funding required for its next stage of growth, Loopster’s directors opted to put the business into administration.
In a statement, the Development Bank of Wales said: “In June 2020, the Development Bank of Wales made a six-figure seed equity investment into Loopster alongside a number of business angels. The investment was to support the development of its platform to resell second hand clothes, extending the life of fashion garments and reducing their environmental impacts.”
"A crowdfunding campaign to secure private investment to match further capital from the development bank failed to reach its target and as a result the business has entered voluntary liquidation. Any proceeds from the company administration will be distributed to the company’s creditors according to priority.”
Read more about the fashion industry in this exclusive BSR insight.
View the latest distressed UK businesses here.
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