Online rental marketplace Ruckify is ceasing operations after the money-losing Ottawa firm’s bid to merge with a U.K. competitor collapsed.
Ruckify’s shareholders voted in late December to officially dissolve the five-year-old company, which had burned through nearly $20 million in capital and saw its proposal to acquire London-based Fat Llama fall through after it failed to meet key conditions to complete the deal.
The transaction was contingent on Ruckify achieving a public listing by last Nov. 30 and securing funds for a $15-million buyout of certain preferred Fat Llama shareholders.
But CEO and co-founder Bruce Linton said this week that funding roadblocks and pandemic-related delays in compiling the necessary financial paperwork for Ruckify’s planned reverse takeover of a capital pool company on the TSX Venture Exchange ultimately scuttled the deal.
“In the context of everything going on, we could not get a (public) listing,” Linton said in an interview with Techopia on Thursday. “We couldn’t come to terms, and that means it’s over.”
The company filed for an official motion of dissolution after a shareholder meeting on Dec. 23. Linton said Ruckify’s fewer than a dozen remaining employees will receive all outstanding wages and applicable severance pay and all creditors will be paid in full. He said he expects the Canada Revenue Agency to issue an official certificate of dissolution before the end of the first quarter.
“When it’s done, all bills will have been paid and there will be nobody stuck other than me,” Linton added.
Ruckify’s demise marks the final chapter in what once appeared to be another up-and-coming Ottawa tech success story.
Co-founded by Linton and well-known Ottawa entrepreneur Steve Cody in 2017, Ruckify exploded out of the gate, raising millions of dollars in capital from big-name backers that included Brett Wilson of Dragon’s Den fame and Joe Fresh founder and fellow Dragon Joseph Mimran.
In 2019, the company acquired Calgary-based RV-sharing platform Wheel Estate. Meanwhile, it continued to expand into other North American cities, including Toronto, Vancouver, Austin, Nashville and Denver.
The firm made more headlines in late 2020 when it announced plans to go public on the TSX Venture Exchange, and its future appeared to be bright.
But the company’s momentum soon stalled amid mounting financial and managerial turmoil.
In August 2019, Ruckify discovered one of its employees had misappropriated millions of dollars in company funds. Though most of the money was quickly recovered, the resulting financial audit and C-suite shakeup that saw veteran finance executive Dean Cosman step in as CFO forced the firm to delay its targeted February 2021 debut on the TSX-V.
Meanwhile, Ruckify continued to bleed cash.
Despite raising $6.9 million in another private investment round in late 2020, the firm slashed its workforce from 80 to about 35 that December after its benefits from the federal government’s wage subsidy program were cut.
Two months later, Cody announced he was stepping down as CEO, saying the company needed someone at the top with a different skillset to guide it through its next phase of growth.
"We were trying to (combine) something that was broken with something that was working."
Linton, who replaced Cody as chief executive, said he felt joining forces with Fat Llama – which he described as a profitable company with lower overhead costs and a more user-friendly operating platform – was the only way to save Ruckify.
“We were trying to (combine) something that was broken with something that was working,” said Linton, adding he poured millions of dollars of his own money into Ruckify last year to keep the company afloat.
Cody – who remains a shareholder in Ruckify but did not vote on the motion to dissolve the firm – disputed Linton’s assessment that the company’s business model was no longer viable.
He told Techopia he still believes the model can work if the company had more time to build a wider network and reach the scale it needs to turn a profit.
He said Ruckify engineers had created a robust tech stack and questioned why management was so quick to ditch it in favour of Fat Llama’s software. He said hundreds of thousands of items that used to be in Ruckify’s rental inventory were transferred to Fat Llama’s site as a result, leaving Ruckify shareholders little choice but to wind up its operations.
“There was so much potential and so much had already been done,” Cody said. “There were already so many breakthroughs.
“I was shocked that (Ruckify) was shutting down. It makes no sense. That’s the most upsetting part about it all.”