Brainspark looking to return assets to shareholders

The internet incubator’s founding CEO and CTO have resigned to reduce overheads amid a restructuring bid to save the business.

Brainspark, the epitome of last year’s dotcom incubator boom with fashionable loft space offices and a peak valuation of £164m, has announced it will distribute net assets to shareholders following the collapse of bid talks, the Financial Times reports today.

Jasper Judd, the company’s financial director, said the cost of its offices and incubating its portfolio companies exceeded the amount of money coming into the company. The money Brainspark makes is from the interest it earns on investments and from the businesses that rent floor space. “It remains our intention to implement a restructuring plan that will keep the business running. But it is too early to talk about the specifics,” he said.

In April 2000, the company floated at 125p a share, valuing it at around £150m. However with a burn rate of nearly £200,000 a month, the company soon had to scale back its portfolio and reduce staff as the market lost interest in technology companies.

The company’s founders Stewart Dodd and Noah Freedman have resigned from their roles as CEO and CTO respectively, leaving behind five paid members of staff. The founders, who will stay on as unpaid non-executives, have said that the distribution of assets does not necessarily mean the business will be wound up. A number of portfolio companies remain with the incubator including Metapack and Smile-On.

Brainspark’s share price now limps around the 3p mark, and its market capitalisation resides at £4.3m. In June 2001, the net asset value of the company was £12.4m, including £7m in cash.