Graphcore employees have had the value of their shares wiped, as a “conditional agreement” to sell the company has been reached, sources tell Sifted.
One former employee says that CEO and founder Nigel Toon told staff on a team call that Japanese investor SoftBank is the acquirer, confirming previous reporting by The Telegraph newspaper.
Four former employees, holding either stock options or restricted stock units (RSUs), tell Sifted they’ve been informed that their shares are now worthless.
This is because the expected sale price for the company — reported to be around $500m — equates to less than the total amount invested in the company to date (more than $600m), one source explains.
It means that only holders of preference shares (likely to be the company’s larger investors) get any payout from the sale, while employees who hold ordinary shares get nothing.
Graphcore declined to comment.
At its highpoint, Graphcore was valued at $2.8bn after its $222m Series E in December 2020.
Turbulent times
If the deal with Softbank does go through, it would mark the end of a turbulent period for the scaleup — which was once considered one of the darlings of the UK tech scene and touted as a rival to giant NVIDIA.
But after a deal with Microsoft fell through in 2022 and Graphcore struggled to gain commercial traction, investors have begun re-assessing the value of the company.
Last month, Molten Ventures reported in its annual results that it had cut the value of its share of Graphcore by 45% — the second year in a row it had written down its stake. It’s also been reported that Sequoia has written off the value of its stake in the business, investment manager Baillie Gifford cut its stake by half and asset manager Schroders reduced its valuation by 25%.
Worthless shares
Former employees tell Sifted that they were informed towards the end of June and in early July that the value of their stock options and RSUs had been wiped.
While RSUs are often given to employees free of charge, stock options are usually purchased from a startup at a pre-set price and vest over a fixed period. It means that employees who bought their stock options have lost their money.
One former employee tells Sifted that they had lost “thousands” of pounds that they invested into Graphcore stock options.
