Mind Candy, the London tech startup behind Moshi Monsters, has landed crucial new cash to stave off bankruptcy.
The former tech darling once lauded as one of the UK's star startups has renegotiated the terms of a high interest loan with its lender and secured a fresh cash injection from existing investors.
A two-year extension has been agreed with lender TriplePoint Capital. The £6.5m loan was taken out in 2014 against its intellectual property assets with a rate of 12 per cent amid falling revenues.
In October last year the firm warned it could go bankrupt if it failed to negotiate new loan terms.
Revenues fell to £7.1m in the year to the end of December 2015, the latest period for which accounts are available, down from £13.2m a year earlier. Pre-tax losses stood at £10.9m reduced from £14.2m the previous year.
Venture capital investors Accel Partners and LocalGlobe have also ploughed a further $1.5m (£1.2m) into the kids gaming company, along with other undisclosed investors.
Accel partner and Mind Candy board member Bruce Golden said: "This company has been through a lot and has a lot to prove ahead of itself, but we think it is on the right track with the right team and the right plan."
Moshi Monsters returns
Mind Candy chief executive Ian Chambers told City A.M. the launch of its new game, Petlandia, in October last year has already helped it return to growth, with revenue up year-on-year in November and December, adding that double digit growth was "definitely indicative" of the year ahead.
The game lets users create characters of their pets and also offers them the option of turning it into a hard copy story book.
So far more than half a million consumers have created a virtual version of their pet, said Chambers, six per cent of who have been converted into buyers of the £30 book.
“We've had exceptional feedback from customers. Petlandia has proven our model and the products and services around it have market fit," said Chambers. More products and services around it are in the pipeline.
It also plans a full roll out of its latest Moshi Monsters game, Egg Hunt, in May and Chambers believes it can "very much regain the position Moshi had in the market".
It also plans retail partnerships and further digital products and Chambers said an expansion into new markets and new languages beyond its current English language-only was "a natural next step".
And the firm said it was very much still innovating in technology. "We're looking at what's happening in tech -what's on Alexa, what's on Facebook bots and VR and AR (augmented reality)," said Chambers. The company has dome some testing in VR and it "will be a art of our strategy a the right time", he added.
Brought in last February to turn things around and a veteran of gaming with stints at Ubisoft and EA, Chambers said that while it had now raised the money required, there was continued interest from potential investors, which it "would continue to evaluate as we go along".