Pollen’s enormous debt left behind: exclusive details

👋 Hi, this is Gergely with a bonus, free issue of the Pragmatic Engineer Newsletter. We cover one out of five topics in today’s subscriber-only The Scoop issue. To get this newsletter every week, subscribe.

Pollen, the events festival tech startup, went bankrupt in August after raising more than $200M in venture funding. In an exclusive investigative article, I covered the events and details leading up this bankruptcy.

On 16 August 2022, the administrator, Kroll, took over the company with the goal of returning as much capital to creditors as possible. On 10 October 2022, the administrator sent its first report to Pollen’s registered creditors, and I got my hands on a copy.

Pollen had a complex corporate structure consisting of 8 companies. The administrator mapped out the corporate setup of Pollen, which was the entity called StreetTeam Software Limited, incorporated in the UK.

The corporate structure of Pollen. Source of some of the graphics: Statement of Proposals document by Kroll
The corporate structure of Pollen. Source of some of the graphics: Statement of Proposals document by Kroll

Pollen’s assets were offered for purchase at $2.5M before it shut down. According to the administrator’s report, Pollen received an offer on 9 August – one day before entering administration – to be sold for $2.5M. The directors, after discussions with secured creditor, Global Growth Capital, decided to not take this offer and to market the sale of the company more widely, hoping for higher bids. The company therefore entered into administration on 10 August, and was marketed to other potential buyers.

Kroll sent out a teaser document to 154 potential buyers, 14 of whom indicated interest, signed an NDA and met with management. Not one of them went on to make an offer.

On 14 September, the company which had previously offered $2.5M lowered its offer to $500K and asked for Just Experiences Limited to be included, which it wasn’t before. On 28 September, the same potential buyer lowered its bid to $250K.

The Pollen assets being sold are limited to its technology stack, the Pollen brand and shares in Abode Records Limited. The administrator notes that the fixtures, fittings and equipment are unlikely to have any value realization due to their age and condition.

The company had £280K ($313K) in its bank account upon entering administration. These funds have been frozen by the administrator. However, this amount is subject to an R&D claim from the UK tax office, the HMRC, and so might not be available to creditors.

Pollen kept operating for the past two months in the hope of a sale. The administrator is using existing funds the company had in various bank accounts to maintain operations. Additionally, Global Growth Capital – the investor first in line to receive any proceeds from the bankruptcy – has provided funding for consultants to maintain the technology and software to facilitate its sale. Given how little value the company seemingly has, and no interest except from one party, a sale is likely to happen soon, unless this potential buyer drops out.

Pollen owes £75M ($83M) to creditors, meaning employees are unlikely to see a dime of their owed wages. Here’s how the stack of claims line up, in order of priority:

1. Secured creditors: £18.6M

This claim is for Global Growth Capital S.A.R.L which issued credit to Pollen, back in February 2020. The administrator forecasts there will be insufficient funds to enable a distribution to be made to the Secured Creditor, or other creditors lower down the list.

2. Preferential creditors: £607K.

This amount is for employees’ claims of pay in arrears, holiday pay and pension arrears.

3. Unsecured creditors: £59.4M. This consists of:

  1. General unsercured creditors: £24.3M. Includes vendors and funds who lent money to the company.
  2. Employees: £3.1M
  3. Pensions: £110K
  4. HSBC overdraft: £64K
  5. HSBC bank loan: £50K
  6. Shareholders with claims: £2.2M
  7. Convertible loans: £29.1M
  8. AMEX: £91K
  9. Employee expenses: £93K

Pollen owes money to a lot of software vendors. Here’s a list of a few better-known SaaS providers. These claims also help map out the vendor choices of the company:

List of SaaS companies Pollen owes money to.
List of SaaS companies Pollen owes money to

Recruitment partners Pollen used, but didn’t pay:

Recruitment partners Pollen used, but failed to pay
Recruitment partners Pollen used, but failed to pay

A few other vendors whom the company did not pay:

Other vendors whom Pollen did not pay
Other vendors whom Pollen did not pay

The number of vendors Pollen used should be unsurprising for engineering leaders, but it may still raise some eyebrows. The list I share is only a subset of all the vendors used; it only includes those that registered their claims in the hope of seeing some of it paid. Pollen used many vendors not on this list, but those vendors likely did not think it worth the effort to claim money they will not get. An example is Atlassian, which terminated Pollen’s JIRA and other products, after months of non-payment.

To me, the charges from Monday.com are surprising, both in how much higher they are than any other SaaS vendor, and how Monday.com seemingly allowed such a huge bill to accumulate. The SaaS debts also reveal interesting details about Pollen’s tech stack. For example, how it used both AWS and Vercel, adopted the pragmatic approach of paying for a specialized virtual queuing solution by Queue-it over building its own, and how Pool was a Retool, Airtable and Grammarly customer.

Read more on what happened at Pollen in the deep-dive Inside Pollen’s collapse: “$200M raised” but staff unpaid.

This was one out of the five topics covered in this week’s The Scoop. A lot of what I share in The Scoop is exclusive to this publication, meaning it’s not been covered in any other media outlet before, and you’re the first to read about it.

The full The Scoop edition additionally covers:

  1. Struggles at Sketch. Just weeks after Figma was sold for $20B to Adobe, the design platform Sketch laid off 30% of its staff. I talked with Sketch employees to find out what happened to the company which enjoyed a meteoric rise in popularity in around 2015. Why did Sketch change its approach from sustainable growth to hyper-growth? Exclusive.
  2. Rescinding offers before a mass layoff: yay or nay? At least two Sketch new employees started on Monday, only to be let go on Tuesday. Should the company have rescinded those offers in advance, paying severance and saving everyone time? I talked with founders with experience of similar situations, and it’s a nuanced question. Analysis.
  3. Compensation philosophy revamp at Netflix. The company is set to deliver details on compensation changes to all staff starting 24 October. But leadership prepared staff to not expect an increase. Why is this, and is Netflix making a mistake by not raising most salaries? Exclusive.
  4. Tech layoffs ongoing. In what is sadly unsurprising, VC-funded companies keep laying off staff. Details on Brex, AtoB and Felyx. But could the pace of layoffs be slowing? I think so. Analysis.

Read the full The Scoop.

Update: on 26 Oct 2022 - clarified that funding for Pollen's current operations partially comes from existing funds in their bank accounts.  


Featured Pragmatic Engineer Jobs

  1. Machine Learning Engineering Lead at Conjecture. £85-210K + equity. London (UK).
  2. Full Stack Software Engineer at Insitro. Poland.
  3. Staff Back-End Engineer - Core Services at BetterUp. Remote (Germany, Netherlands or the UK).
  4. Senior Full Stack/Frontend Engineer at Vitally.io. $180-270K. New York or Remote.
  5. Founding Engineer at Renterra. $140-180K + equity. Remote (Global).
  6. Senior Lead Software Engineer - Kubernetes at Akamai Technologies. Remote (US).
  7. Senior Software Engineer - Cloud Native at Akamai Technologies. Remote (US).
  8. Software Engineer at DevZero. $150-175K. Seattle, Washington.
  9. Senior Backend Developer at Founda Health. Amsterdam, Netherlands.
  10. Senior Backend Engineer at Vital. $70-140K + equity. Remote.
  11. Principal Backend Enginee at Pento. £120-135K. Remote.
  12. Founding Senior Fullstack Engineer (JavaScript) at Playht. $150-200K + equity. San Francisco or Remote.
  13. Staff Software Engineer at Qualified.com. San Francisco or Remote.
  14. Infrastructure Team Lead at Ometria. £90-150K. United Kingdom or Portugal.
  15. Engineering Manager at Gruntwork. $175-240K + equity. Remote (Global).

The above jobs score at least 10/12 on The Pragmatic Engineer Test. Browse more senior engineer and engineering leadership roles with great engineering cultures, or add your own on The Pragmatic Engineer Job board and apply to join The Pragmatic Engineer Talent Collective.

Want to get interesting opportunities from vetted tech companies? Sign up to The Pragmatic Engineer Talent Collective and get sent great opportunities - similar to the ones below without any obligation. You can be public or anonymous, and I’ll be curating the list of companies and people.

Are you hiring senior+ engineers or engineering managers? Apply to join The Pragmatic Engineer Talent Collective to contact world-class senior and above engineers and engineering managers/directors. Get vetted drops twice a month, from software engineers - full-stack, backend, mobile, frontend, data, ML - and managers currently working at Big Tech, high-growth startups, and places with strong engineering cultures. Apply here.