London-based music startup Crowdmix allegedly spent £2m per month pre-launch and pre-revenue, according to a leaked document.
The company, which sought to build a social app to allow fans to listen to music and group songs according to their popularity, went into administration in July following months of speculation over its future.
Co-founded in 2013 by CEO Ian Roberts and Gareth Ingham, Crowdmix came to employ 160 people, spending £14m before going bankrupt.
According to Business Insider, which obtained the leaked document, Crowdmix leased its London office from Mind Candy, the British gaming firm known for producing Moshi Monsters at a cost of £243,109 per quarter.
The document also states the firm spent an additional quarterly service charge of £40,224.
The document shows Crowdmix spent a maximum of £1.1m on monthly salaries before properly launching its app and failed to have any monetisation plans in place.
According to the publication, Crowdmix was last able to pay its staff at the end of May. Following this, many of the company’s employees either resigned or were working off site.
Additionally, the administrator’s report claims Crowdmix owed £1.39m in unpaid wages to its former employees as well as more than £260,000 in arrears of pay and holiday pay.
Sold at auction
In July, reports surfaced that Crowdmix had been sold to Nick Candy, a billionaire property tycoon, who had also invested in the startup.
Business Insider claims Candy paid £6.75m for the company even though the document obtained shows that he was owed £7.79m in return for investments he’d made in Crowdmix – meaning the billionaire actually paid just over £600,000 for the now defunct startup.