A robotics start-up, in which the prominent online grocer Ocado holds a substantial stake, is currently teetering on the edge of collapse.
According to insider information obtained by Sky News, Karakuri, the company behind cutting-edge technology capable of assembling ready-made meals for clients in the food industry, is on the verge of submitting a notice of intention to appoint administrators.
Sources within the financial sector suggest that RSM, a leading professional services firm, which has been closely involved with Karakuri, is the likely choice for administration, with an official filing expected as early as Monday.
Karakuri has been engaged in discussions for several months in an attempt to secure additional funding, and had recently been in talks with Henny Penny, a prominent US-based manufacturer of food-service equipment, regarding a potential rescue deal.
However, it seems that these negotiations have unraveled in the past few days, leaving the future of Karakuri hanging in the balance.
Should Karakuri fail to secure a last-minute agreement to secure financing, not only will approximately 30 jobs be at risk, but it will also deliver a significant blow to the technology sector. This setback comes at a time when the Prime Minister has expressed his ambitions for Britain to emerge as a global science superpower.
Furthermore, this unfortunate turn of events follows closely on the heels of London Tech Week, the leading annual event for the UK tech sector.
Karakuri was established in 2018 by Barney Wragg, who continues to serve as its Chief Executive Officer.
In response to these developments, a spokesperson for Karakuri issued a statement to Sky News on Sunday, expressing regret over the inability to secure the necessary funding to continue their developments and bring their products to market.
As a result, the company will commence winding down its operations on Monday and is actively collaborating with external advisors to determine the next course of action. The spokesperson conveyed gratitude to all those who have supported Karakuri on its journey, including investors, customers, suppliers, and, most importantly, the exceptional team behind the company.
In 2019, Ocado acquired a nearly 20% stake in Karakuri for £4.75 million, a sum that, while modest, reflected the online grocer’s optimism regarding the potential value of Karakuri’s technology.
At the time of the investment announcement, Tim Steiner, Co-founder of Ocado, referred to Karakuri’s innovation as “potentially a game-changer in the preparation of food-to-go.”
Karakuri had also secured funding from a group of venture capital funds, underscoring the interest and confidence in the company from the investment community.
However, a prominent technology investor noted that Karakuri’s impending failure highlights the significant challenges that British start-ups face, particularly in sectors such as the one in which Karakuri operates.
“While there is much discussion about the UK becoming a powerhouse in science and technology, this situation exemplifies the difficulties faced by innovative deep tech start-ups in securing funding within the UK,” remarked the investor.
The investor further compared Karakuri’s funding situation with that of Miso, a similar company in the US, which managed to raise an impressive $115 million, whereas Karakuri’s funding fell short of a fifth of that amount.
In many respects, Karakuri possessed more advanced technology and commercial progress; however, it struggled to attract investors who shared the same level of belief and conviction.
Despite the current predicament, Mr. Wragg expressed optimism as recently as February, stating that Karakuri had benefited from being founded and operating its manufacturing division in the UK.
He remarked, “With a steadfast focus on education and the right incentives for long-term investors, I firmly believe that the UK has the potential to emerge as a global leader in smart systems and robotics for many years to come.”