Award-winning app developer Buzinga has been placed into liquidation, this month, because it was reportedly unable to sustain costs it had incurred to fuel continued growth.
The Melbourne-based start-up had averaged 30% year-on-year growth, employed around thirty people and developed several chart-topping apps, including FoodSwitch.
In addition to securing Gold wins at the Australian App Design Awards for three consecutive years, Buzinga had made it into Job Advisor’s Top 10 Coolest Tech Companies for the past two years, and been recognised by BRW as a Top 100 Australian Fast Starter in 2015.
In conversation with Dynamic Business, the appointed liquidator – Paul Vartelas of B K Taylor & Co – attributed Buzinga’s ‘financial demise’ to the fact that it had “expanded rapidly in anticipation of…rapid growth, which did not eventuate”.
He explained further, “The company was travelling reasonably well… with turnover probably in the vicinity of $3.5 million. The directors geared the company up, incurring costs and employing additional employees, expecting growth to continue. When it didn’t, the company was left with all these committed costs which they were unable to sustain”.
Vartelas said conversations were being had with “about half a dozen” parties within the industry who’ve expressed an interest in acquiring the company and “hopefully employing some of the staff and tending to some of the projects the company was endeavoring to complete”. He added, “Finding a suitable purchaser will be beneficial not only to the creditors of the company but also at least some of the employees and some of the customers.”
Buzinga’s managing director Graham McCorkill spoke to Dynamic Business, last month, about the Melbourne-based start-up, which he co-founded with Logan Merrick in 2012. Asked to name the biggest challenged he’d faced at the company’s helm, McCorkill replied, “Growth – if it isn’t managed properly, it can be both a difficult and scary experience, particularly for a service-based business such as Buzinga. When you’re a start-up, decisions have to be made quickly during the growth phase, particularly around hiring; however, making snap hiring decisions can result in a headache down the track”.
In the wake of Buzinga being placed into liquidation, Appscore – another Melbourne-based app developer – released a statement offering to support Buzinga’s customers “where possible” and “potentially” offer staff employment.
Appscore Managing Director and co-founder, Alex Louey, said, “It’s never good to see businesses go under, especially when you consider the toll of their staff and clients…We want to help those affected by this situation even though our books are full. Our team are ready to assist anyone who may have questions about their ongoing services or employment.”