Guvera CEO Darren Herft steps down amid capital raising

Darren Herft, chief executive of embattled music streaming service Guvera, has stepped down.

Darren Herft has stepped down as Guvera chief executive.

Darren Herft, chief executive of embattled music streaming service Guvera, has stepped down as the Gold Coast-based company struggles with an emergency capital raising after putting two subsidiaries into administration.

Mr Herft, who came under sustained criticism for controversial related-party deals and was CEO for Guvera’s failed $1.4 billion ASX listing, will be replaced by company co-founder Claes Loborg on an interim basis.

Mr Loborg, who co-founded Guvera in 2008 for an MBA competition, blamed a difficult environment for the turmoil and said that raising capital for a technology was particularly difficult in Australia.

“The next steps for us will be to stabilise the company, make changes to where our product is live globally, work with investor support to stabilise our partner relationships, increase revenues and get back on our path of growth once more.”

Mr Loborg, who has been active on social media, said the company’s focus would shift from user product to platform.

Despite raising $185 million in capital the company lost $81m last year after earning only $81m in revenue, and was blocked from an ASX float where it was valuing itself at $1.4bn.

Guvera then put its subsidiaries into administration and axed 70 staff, embarking on an emergency $20m capital raising.

The company has faced ­criticism for not releasing its monthly active user numbers, only claiming in its prospectus it has “more than 14 million registered users” in 10 countries. It has only 17 companies as paying clients in ­Australia.

“Our engagement from brands has seen immediate growth and I will be announcing new partnerships in our major ­regions as we go,” Mr Loborg told The Australian.

“As much stress as there is in the digital music industry globally, we are an advertising and entertainment company that is growing a new business model that effectively reverses the concept of advertising.

“Changing anything that involves changing how people have been trained to view things I am told is impossible, but I don’t believe its impossible — I believe it’s hard, and its taken a lot longer than I had anticipated, but the reward of actually making it happen is too large to ignore.”

Mr Herft told The Australian he would remain a board director of Guvera, and his AMMA private network of accountants would continue to assist with capital raising.

Guvera’s free business model sees advertisers pay for access to users, offering branded advertising channels with a library of about 60 million songs.