Strongroom AI, a Melbourne-based medicines management startup, has entered receivership just weeks after raising $17 million. The sudden events follow significant scrutiny from its financiers over the company’s accounts. Concerns arose when the lead investor EVP requested the return on its investment but was turned down by Strongroom AI.
This prompted EVP to involve legal and forensic accounting experts, as well as the police, to investigate the matter. On Friday, regulatory filings with the Australian Securities and Investments Commission confirmed that Strongroom Technology Pty Ltd had gone into external administration. Todd Gammel, Barry Taylor, and Matthew Levesque-Hocking from HLB Mann Judd have been appointed as the administrators.
Walsh & Associates has taken on the receiver role for the banking assets at the behest of Paddington Street Finance. Strongroom AI was founded in 2017 by university colleagues Max Mito, Christopher Durre, and Kieran Start. The startup had recently announced plans to acquire the healthcare loyalty program Member Benefits Australia with the funds raised.
The company was valued at $70 million at the time of the capital raise. In an official statement, an EVP spokesperson noted that the firm had no prior knowledge of the alleged activities at Strongroom AI.
Strongroom AI enters receivership
They affirmed their cooperation with the police and expressed their commitment to protecting their investors. Tyson & Blake, another investor in Strongroom AI, expressed shock over EVP’s swift actions. Aaron Michelin of Tyson & Blake criticized the handling of the situation, accusing EVP of acting unprofessionally and not consulting other shareholders.
Michelin also commented on the reputational damage that could result from the current turmoil. He emphasized that investments should be preceded by thorough diligence and expressed his concern over the potential defamation impacts on both Strongroom AI and EVP.
Other notable investors in Strongroom AI include Artesian Venture Partners, Kalytix, and InterValley Ventures. Artesian is backed by the superannuation fund Hostplus. Victoria Police have stated that they cannot comment on the investigation for privacy reasons.
The EVP has not publicly disclosed the nature of the allegations, and the founders of Strongroom AI have not responded to requests for comment. This significant development underscores the volatile and high-stakes nature of startup investments, especially in the rapidly evolving fields of AI and healthcare technology.
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