Startup Brandquad demanded 852 million rubles from Skolkovo Ventures for reputational damage

Brand Quad LLC, the Russian legal entity of the Russian-French SaaS startup Brandquad, an ecosystem for working with product data, filed a lawsuit with the Moscow Arbitration Court to recover 852.99 million rubles from its investor SK Capital LLC (Skolkovo Ventures). The request was admitted for processing on May 31, the first hearing of the case is scheduled for July 24. RB.RU has discovered new details of the case.

As the press secretary of the Moscow Arbitration Court, Maria Bogorodskaya, explained to the publication, “within the framework of the case, the plaintiff demands to recover the amount of damage in the form of marketing expenses incurred, damage to business reputation and the amount of lost profits.” Details were not revealed in court.

The request was submitted five days before the court approved an agreement between the companies, according to which Brand Quad must pay SK Capital 187 million rubles by June 30, 2024.

A representative of SK Capital confirmed to RB.RU that the litigation between the parties ended with the conclusion of a conciliation agreement.

“After the conclusion of the settlement agreement, at the moment SK Capital LLC and Brand Quad LLC have no reason to take further legal action,” a representative of SK Capital clarified, but did not explain whether the Russian-French startup rejected a new lawsuit . . Furthermore, SK Capital did not confirm receipt of the money under the settlement agreement.

• In 2021, SaaS startup Brandquad raised €1.5 million from the Skolkovo Ventures fund and €1 million from BPI France (France’s state investment bank). The money was given to Brandquad in the form of a convertible loan and soft loan and would be used to develop the marketing and sales of Brandquad products in the markets of Europe, the Middle East and the United States, as well as for the opening of an I center +D in Lille, France. Brandquad did not meet the conditions to convert the loan into equity; As the deadline for repayment of funds approached, the investor and the company began negotiating debt restructuring. After the expiration of the obligations under the agreement, the fund went to court to resolve the issue within the legal framework.

Brand Quad could not explain to RB.RU how they would pay the investor. At the end of 2023, the company’s losses amounted to 136.2 million rubles, although revenue increased by 6% to 231.7 million rubles.

The money for the company could have been provided by a participant of the Russian-French startup – Free Invest LLC, a subsidiary of the Fund for the Development of Internet Initiatives (FRII). According to the Unified State Register of Legal Entities, on June 6, Frii Invest LLC received 30% of the company. may 31 General Director of the fund Kirill Varlamov told RBC that the company invested 150 million rubles in Brandquad, without indicating the destination of the funds or the investment mechanism. The organization declined to comment further.

Since March 2021, 100% of the Brand Quad company belonged to the French company Brandquad, whose final beneficiaries are not listed in the Unified State Register of Legal Entities, now the participation of this structure is 70%. Until March 2021, shares were distributed between Frii Invest (20.46%), founders Philip Denisov (34.35%) and Konstantin Shishkin (29.37%), Mm Trust LLC Anatoly Mitroshin (15.82%) , all stopped being direct participants three years ago. .

• In 2019, Brandquad raised 187.5 million rubles from business angel Anatoly Mitroshin and the fund. In 2018, the startup attracted seed funding from the IIDF in the amount of 16 million rubles, RB.RU wrote. At that time, the platform worked with 32 manufacturers and retailers, including L’oreal, Unilever, Nestlé, Procter & Gamble, Johnson & Johnson, Henkel, Hasbro, Bayer, Stada, some of which left the Russian market after the start of the SVO or reduced investment in marketing.

Court documents mention that shares of Brand Quad LLC were exchanged for shares of France’s Brandquad. For example, as of April 1, 2024, Frii Invest LLC owned 56,458 shares of a French company, which in turn owned a Russian legal entity. Other former shareholders are likely to remain involved in the startup.

Before the conclusion of the settlement agreement, SK Capital, as the plaintiff, demanded the introduction of interim measures: a ban on changing the composition of Brand Quad participants, liquidating the company, mortgaging it and making decisions on the distribution of dividends. As a basis for taking provisional measures on the claim, the applicant referred to the fact that “the future decision cannot be executed in the country of origin of Brandquad (France), since the applicant’s party is a sanctioned person.” In addition, SK Capital referred to two attempts by the French company to sell its Russian assets. However, the courts of three instances found no grounds to introduce provisional measures, since the restrictions were supposed to affect the Russian company and not the French one. Frii Invest then intervened in the case on the defendant’s side.

Is the asset worth fighting for?

Experts interviewed by RB.RU found it difficult to estimate the current value of Brand Quad LLC, but believed that as a result of the court proceedings, IIDF could receive an attractive asset in its portfolio. Founder analytical company Dsight Arseniy Dabbakh suggests that the fund could probably profitably buy a stake in the startup, since Brandquad had a corporate dispute.

“Therefore, this is a special situation and it is not a classic evaluation,” says the expert, adding that this is just his assumption.

Dabbah notes that SK Capital likely had an agreement to convert the loan into equity when an event (or trigger) occurred, typically the next institutional round.

“The conditions were not met and the fund was given the opportunity to apply for a loan,” Dabbah explained. The expert believes that IIDF’s deal with the startup and SK Capital’s exit deal are related.

Despite the loss, the company is expected to see good growth in 2024, which may be what makes the IIDF want to participate in the project, Dabbah concluded.

Founder of the international school of programming and design CODDY Oksana Selendeeva He believes that IIDF acquired a stake in the company due to its low price.

“The real value of this company, in my opinion, is approximately 4-5 annual revenues (by 2023, revenues will be 231.7 million rubles). Most likely, the IIDF provided them with liquidity for a convertible loan and bought the stock at a low price,” Selendeeva believes.

Analysts agreed that, in any case, the IIDF’s investment in the startup is justified, since the company operates in a promising market. Philip Denisov, founder of Brandquad RB.RU stated that the COVID-19 pandemic has accelerated digital transformation, increasing investment in solutions like Brandquad to improve efficiency and adapt to new market conditions.

“The market for solutions for data management and automation of business processes in the field of e-commerce in Russia is experiencing significant growth. The growing need for personalized offers and a better user experience is driving the demand for these types of technologies,” Denisov added.

Founder of the promotion and analysis service for sellers “Anabar” Petr Markov says Brandquad is a popular analytical tool and PIM system for managing product data on trading platforms: descriptions, images and attached documents.

“With its help, it is possible to organize data within the company and quickly transfer it to online platforms, analyze market processes in e-com. “These technologies are relevant to suppliers of tens of thousands of products and will be in demand as a professional content management tool, primarily among growing Russian suppliers and distributors consolidating products from various foreign brands and manufacturers,” concluded Markov.