Investor writes Spinvox down by 90%, says it's for sale

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It’s ironic that on a day when voice-to-text transcription company SimulScribe signed a – potentially – $17 million exclusive deal with Ditech Networks to resell SimulScribe to its carrier customers, it’s now emerged that competitor Spinvox may in fact be up for sale. However, the difference between the two is marked.

Simulscribe raised only $5.7 million and says it is is already profitable on sales of about $4 million. It also only has 7 employees for it’s Phonetag service. ( It reminds me of Vox Sciences). And Ditech already has voice processing software and equipment inside every major carrier’s network. Ditech has noise canceling technology, so combine it with Simulscribe – which also supplements its transcriptions with humans – and you have a good combination.

By contrast UK-based Spinvox has raised a whopping $200 million and has deals with call centres employing thousands of people because it’s service can only transcribe the most basic of messages. It is also not yet profitable, despite Spinvox CEO Christina Domecq saying in late July that it will be cashflow-positive within 90 days.

Invesco Perpetual says in its latest report that it has “written down” the value of its £759,000 investment to, er, £76,000. That’s 90% less, just in case you don’t have a calculator handy.

Invesco Perpetual said in its report: “The business has been put up for sale, and it is possible that, should a good sales price be achieved, the new valuation may be exceeded.” So, exceeded from the new valuation of £76,000? One would hope so.

A Spinvox’s spokesperson emailed us with a very short “No comment” and has apparently asked the investment firm to withdraw the statement.

Spinvox raised £15m of more backing in July after burning through the $100m (£61m) it raised in March 2008, however, we understand this figure was more in the form of a loan than new investment.

Of course we are talking about a potentially large market here.

The prize is a potential $1 billion million market as carriers realise that traditional free voicemail is a dead business when people will pay to have their voicemails to be converted into text. They are also quite worried about Google Voice which has a similar – though less accurate – service.

But it seems unlikely now that Spinvox can hope to achieve a valuation to better the money put into it, especially since a potential exit route has now been closed off by this SimulScribe deal with Ditech Networks. Then again, if Spinvox does indeed go nowhere at least it won’t affect the startup market – well, too much.

  • CE

    Can’t imagine the founders of SpinVox making any money on their equity if there’s all that debt and liquidation preferences for the investors on the proceeds ….

    On the other hand, perhaps Julie Meyer could put her money where her mouth is and use her new fund to buy all of SpinVox.

  • BF

    The Invesco Perpetual filing also says Spinvox “was written down in value after the Company chose not to invest in a further funding round, which was dilutive to non-participating investors.”

    Having seen many such financing rounds from both sides, the valuation of the underlying company may (or may not) have fundamentally changed. The previous liquidation preferences may or may not still exist. Invesco Perpetual may have chosen not to participate in this round for a variety of reasons which may (or may not) be related to do with the prospects for the underlying company. There are plenty of investors out there today who would love to defend their positions but just can’t, perhaps because they’ve changed strategy, perhaps because they’ve run out of cash. Investors in good companies often have to take write-downs too. It’s very difficult to discern what’s going on here, but hey, why let the facts get in the way of a good story?

    Nonetheless, the statement that the company is for sale is unequivocal, though a highly irresponsible thing to say in a public report.

    • http://rodolfo.weblogger.com Rodolfo

      @BF

      “Irresponsible” to admin SpinVox is for sale? Every company is for sale once it takes VC money. Stating the contrary is just silly.

      • BF

        If only life were that simple. There’s a huge difference between actively selling your company (thereby indicating this is best option you have) and being bought (where carrying on is just great, but someone makes an offer you can’t refuse).

  • mohammad
  • http://www.nevillehobson.com/2009/09/13/end-of-the-road-looms-for-spinvox/ End of the road looms for SpinVox — NevilleHobson.com

    […] also Mike Butcher’s report in TechCrunch Europe (“…if Spinvox does indeed go nowhere at least it won’t affect the startup market – […]

  • http://www.iqbalgandham.com Iqbal Gandham

    So let me get this correct its value is £76K, if so does it have any cash in the bank :-) i.e of that $200 million

    Iqbal

  • stuart

    I doubt it. I used to be a recruiter and had to find employees for spinvox. I’ve never seen a start up offer the packages Spinvox was. The $200m has been spent on them making their head office look pretty and hiring every single employee on a 25% mark up on their previous package.

  • http://thenextweb.com/2009/09/14/end-of-the-road-looms-for-spinvox/ End of the road looms for SpinVox

    […] also Mike Butcher’s report in TechCrunch Europe (“…if Spinvox does indeed go nowhere at least it won’t affect the startup market – […]

  • http://johnacraft.com/2009/10/28/spinvox-on-the-critical-list/ SpinVox on the Critical List

    […] the wake of SpinVox’s less-than-successful July Demo, there have been steady rumors that the company is available for […]

  • http://eu.techcrunch.com/2009/12/14/spinvox-close-to-150-million-exit-to-nuance-not-so-fast/ Spinvox close to $150 million exit to Nuance? Not so fast

    […] then in September a major investor wrote down its investment by 90% Invesco Perpetual said it has written down the value of its £759,000 […]

  • http://theblogroad.com/spinvox-in-150-million-exit-to-nuance-not-so-fast Spinvox In $150 Million Exit To Nuance? Not So fast | Technology Nerd Blog

    […] then in September a major investor wrote down its investment by 90% Invesco Perpetual said it has written down the value of its £759,000 […]

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