Online furniture retailer Brosa is up for sale after the business was placed in voluntary administration this week.
Richard Tucker and Michael Korda of KordaMentha were appointed Voluntary Administrators of the 8-year-old ecommerce company, which raised more than $7 million in venture capital from the likes of Airtree and ASX-listed Bailador Technology Investments.
While Bailador revalued its investment in Brosa up by 49% ($1.5m) to $4.5 million last year “to reflect its strong operating performance over the prior 12 months”, a red flag on problems with the investment appeared in a shareholder update released on December 8, when it was written down to $0. Bailador did not offer any commentary on reasons why, aside from alluding to “a valuation determined by us based on our knowledge of the business” saying it occurred in the last six months.
Two years of pandemic lockdowns were kind to the online upmarket furniture retailer, which grew rapidly over the past two years. But that came to a grinding halt in 2022.
KordaMentha’s Richard Tucker still sees potential in Brosa under new owners.
“The business faced challenges when sales declined after the COVID-19 restrictions were lifted. This caused short-term cashflow pressures after a period of phenomenal growth,” he said.
“KordaMentha is seeking urgent expressions of interest in the sale of Brosa as a going concern. The business tripled in size during the pandemic, developing a strong customer base and technological capabilities that would be an asset to many other furniture retailers. I expect that there will be strong interest in the Brosa business.”
The Melbourne startup was founded by Ivan Lim and Richard Li in 2014 after Lim moved into a new house and, going out shopping for furniture, wondered why the mark ups were so high.
It raised $2 million from AirTree Ventures in 2015, then a further $5 million in a Series B in 2017, backed by AirTree, BMY Group, and Bailador.
Last year the company opened bricks and mortar stores in the industrial Sydney suburb of Rosebery and Melbourne’s Fitroy. They continue to trade and existing floor stock is being sold off at up to 60% off.
“The company was embarking on a campaign to reduce its inventory holdings and refocus itself as a make-to-order business,” Richard Tucker said.
“We plan to continue this process to clear stock. If you are looking for a new couch, or other stylish furniture in the lead up to Christmas please visit the website for a great deal.”
Potential buyers of the brand can lodge their Expressions of Interest with KordaMentha’s Mitchell Banks via email: [email protected]