Employees at UK-based food and drink exchange Efdex remain in the dark as it emerged that the company has gone into liquidation. As the management team, headed up by Tim Carron-Brown, realised that a long-awaited second round of investment was not going to be forthcoming, it appears they simply drifted away into the sunset leaving unpaid bills of £42m.
Employees are left wondering if they are still in a job. Carron-Brown has a history of setting up big-noise ventures which fail – and then using the proceeds of the next venture to pay off the debts from the last. He is now believed to be in the US, while UK president Adam Rhodes resigned last week and sales director Mike Probate remains “unavailable for comment.” Phone lines at the UK HQ are down, and calls to the US office cannot even elicit an answer phone message.
Carron-Brown and his team clearly failed to draw up a realistic business plan. While hardly any customers had actually been signed, management continued to lavish money on free computers for potential customers and extravagant marketing spend. They even shelled out £10k for a band that appeared at the staff Christmas party. All this served to perpetuate the myth of success, but in the spring the company started to look shaky as staff salary cheques bounced.
What is most surprising about the whole fiasco is the length of time it took from the first signs of problems until the bubble burst. An employee who has not even been informed he is out of a job, told just-food.com that the staff believed so strongly in the Efdex concept that they were convinced the company would pull through any initial teething troubles. And their loyalty is understandable. An electronic exchange for food and drink traders, providing customers with all the information they need, including market prices updated by the minute – what could be better? As Efdex said, the idea was surely “the best thing since sliced bread.”
But the company sank deeper into financial difficulties, and staff have not been paid since May. They were told a rights issue was about to be carried out, initially to existing investors and then to new ones, and through his UK Directors Carron-Brown reassured staff that the US$110m needed to “forward the company’s development in a positive fashion” would soon be in place. As promises of impending investment dates came and went, the company kept staff and creditors waiting, although the operational tools of the company workforce (for example, mobile phones, cars and petrol cards) were slowly withdrawn. On Friday the Efdex Internet trading section and staff bulletin pages all became blank and the phone lines were cut.
Other Web-based food exchanges will move swiftly to fill the gap, but some may find that the Efdex fiasco will have tarnished their own reputation. It is to be hoped that this latest failure will not dent the growing confidence in the Internet as a secure trading tool. For the failure to draw up or adhere to a sound business plan is at the root of Efdex’ collapse, and this is a sure-fire way to bring any startup to its knees.
By Catherine Sleep, Managing Editor, just-food.com