Back in April, US retail investing giant Robinhood announced it was buying London-based crypto exchange app Ziglu to a fanfare of optimism, citing an “impressive team” who would help the company’s international expansion.
Now, Robinhood has slashed its offer for Ziglu to $72.5m, less than half of the original price tag of $170m, amid a fall in crypto prices and industry turmoil. It means that Robinhood’s second attempt at entering the UK will cost significantly less, but some Ziglu investors are on track to lose more than 40% on their original investment.
A message from Ziglu’s CEO Mark Hipperson, sent to the company’s investors on the crowdfunding platform Seedrs and shared with Sifted by an investor, justified the new price by citing the crypto winter, including name-checking the “notable failures” of Celsius, BlockFi and Voyager, as well as “ongoing macroeconomic and geopolitical risks”.
Robinhood’s revised offer represents the latest casualty of the dramatic crypto crash we’ve seen this year. Ziglu was seen as one of the most promising players in the UK crypto space. Hipperson had served as chief technology officer at Starling Bank, and Ziglu was one of just 33 crypto companies to win the approval of the UK’s financial regulator.
The message to investors from Hipperson added that Ziglu’s board had spent “significant time” renegotiating the revised offer from Robinhood, as well as considering alternative options including “other funding sources and significant cost-cutting measures”.
Hipperson said that the revised offer was the “best and only reasonable path forward for the company”. Ziglu confirmed to Sifted that the contents of the message seen by Sifted are accurate.
Just how much will Seedrs investors lose?
Ziglu sold shares on Seedrs twice, once in 2020 and once in 2021, according to the Seedrs website, raising more than £13m. Sifted understands that Seedrs investors were able to invest in the two rounds at share prices of £34 and £48.30 respectively.
The new share price after the amended offer from Robinhood is £28.29, meaning that investors who got in at £34 will lose around 17% of their investment. Those who invested at £48.30 will lose 41% of their investment.
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In messages seen by Sifted, one Seedrs investor said that Ziglu’s directors “should be ashamed” for accepting the revised deal, while another called it “disgusting behaviour” from Ziglu’s board.
In response, Seedrs sent a message to investors saying that “investing in early-stage companies carries risk”. It added that it would attempt to make an application with the UK’s Enterprise Investment Scheme, which allows investors to offset losses against their tax bill.