Food delivery firm Gousto plunged into governance storm after slashing valuation
Gousto, the food delivery service backed by Joe Wicks, the celebrity fitness instructor, has become embroiled in a bitter corporate governance row after excluding long-standing investors from a deeply discounted share sale.
Sky News can exclusively reveal that Gousto slashed its valuation from $1.7bn (£1.4bn) just over a year ago to less than $300m (£250m) last month when it secured £50m of new funding from some of its biggest shareholders.
The fall in valuation represented a cut of about 80% in 13 months, according to insiders.
Gousto has also secured another £20m in debt financing as part of its efforts to shore up its balance sheet, according to insiders.
While steeply discounted capital-raisings have become commonplace during the technology downturn of the past year, Gousto’s decision to shun investors holding just under 10% of its shares has sparked uproar.
The row has prompted several smaller shareholders to lodge complaints with the company’s board, which is independently chaired by Katherine Garrett-Cox, the former Alliance Trust chief executive.
Ms Garrett-Cox was hired in 2021 to bolster Gousto’s corporate governance standards as it seemingly headed towards a stock market flotation.
The meal-kit delivery company was founded in 2012 by Timo Boldt and James Carter, two former investment bankers, with the former winning the accountancy firm EY’s prestigious Entrepreneur of the Year award in 2022.
Mr Boldt quit his job at the age of 26 to set up the company.
Gousto sells subscriptions to recipe boxes and markets itself as offering healthy meals at value-for-money prices, with Mr Boldt describing the company’s ambition to become “the UK’s most-loved way to eat dinner”.
It has attained B Corporation status, which is awarded to businesses with strong ethical or environmental credentials.
Katherine Garrett-Cox was hired in 2021 to bolster Gousto’s corporate governance standards
One investor questioned whether its B Corp certification was in keeping with its treatment of small shareholders, some of whom have backed Gousto since its earliest days.
A $150m fundraising in January 2022, led by the giant SoftBank Vision Fund 2, cemented the company’s “unicorn” status – referring to start-ups worth $1bn or more – and paved the way for some investors to reduce their holdings in a separate secondary share sale.
The SoftBank fund is not thought to have participated in the latest capital-raise.
It invested at a significant premium to the valuation that saw Gousto become a unicorn in November 2020, meaning it is now sitting on a huge paper loss on its stake.
Gousto’s other major shareholders include Unilever’s ventures arm, Fidelity International, the railways pension scheme Railpen and Grosvenor Food & AgTech, an arm of the Duke of Westminster’s vast business portfolio.
A number of institutions which are not currently shareholders in Gousto were, however, also approached about the so-called open offer of shares, according to one insider.
‘Something has gone wrong in the last year’
The decision to gauge the appetite of a number of prospective new investors has further angered the existing shareholders who were excluded from the process.
One investor said this weekend: “Gousto is a great business and Timo has been a great founder/CEO, but clearly something has gone wrong in the last year, and people don’t see the company taking action to resolve this.
“And then the company and big shareholders do this significantly discounted fundraise as an ‘open’ offer but does not offer it to all shareholders.
“Why would the board vote not to offer to all shareholders and why would these big funds treat their fellow investors like this? Are they doing this across all their investments?”
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A spokesman for Gousto declined to answer questions about the capital-raise other than insisting that the open offer had been extended to over 90% of the company’s investor base.
Volatile economic conditions
The row at Gousto raises wider questions about shareholder rights at large private companies, particularly those which have gone through multiple rounds of funding.
While Gousto is not in any immediate financial difficulty, it told shareholders that the latest £50m was designed to steer it through more volatile economic conditions.
The governance row in which it has become embroiled has also prompted questions about the role of Ms Garrett-Cox and Gousto’s other independent board members.
Workforce slashed
The former Alliance Trust chief was forced out of that post following a battle with the activist fund Elliott Advisors.
This weekend, Ms Garrett-Cox declined a request to speak to Sky News.
Sky News revealed last month that the company had slashed its workforce by 14% and taken an axe to its ambitious hiring plans.
A person close to Gousto said the redundancy round equated to fewer than 100 employees, implying that its announcement in 2020 that it would create 1,000 new jobs by the end of 2022 had failed to bear fruit.
The job cuts reflected the chill in investor and management sentiment towards technology-focused companies’ growth prospects in 2023, even as economic data suggests that any UK recession may be shallower than feared.
Surge in demand during pandemic
Prior to the latest funding round, Gousto secured $150m of new capital in January 2022, which was followed weeks later by a $230m secondary share placing.
It benefited from a surge in demand during the pandemic, and had said it aimed to double its workforce to 2,000 and open two further distribution warehouses.
In its 2020 financial year, Gousto saw revenue more than double to £189m, up from £83m during the prior 12 months.
It also reported underlying earnings before interest, tax, depreciation, and amortisation in 2020 of £18.2m, against a loss of £9m in 2019.
Bankers at Rothschild were retained some time ago to work on a flotation, although that is now unlikely to take place for several years.
The UK’s power grid operator has issued a call for electricity providers to bolster output this evening to avert the risk of blackouts.
The National Energy System Operator (NESO) issued an alert “to encourage market actions to increase system margins”.
It was the first such precautionary measure of the winter to date and issued at a time when much of the UK is shivering under sub-zero temperatures.
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The NESO is worried about a lack of spare capacity in the grid from 4pm until 7pm due to “system constraints”.
The body, which is in public control having been part of National Grid until last autumn, said in an update that it was seeking 1,200 megawatts (MW) of power as part of the so-called system margin notice.
Such notices are a call for a greater safety cushion between power demand and available supply.
The NESO was at pains to point out that it does not signal that blackouts are imminent or that there is not enough generation to meet current demand.
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Sky’s Ed Conway explains why your energy bills look set to rise this winter.
There is strain on the system due to a lack of wind and bitterly cold temperatures, which stoke stronger demand for electricity and gas.
Lows of minus 16C, the coldest of the winter so far, are forecast for parts of the UK on Thursday.
A yellow warning for snow and ice has been issued for northern Scotland and Northern Ireland from noon on Wednesday until midnight on Thursday.
Sub-zero temperatures are expected across the country for the foreseeable future.
It is the first winter the UK has seen in living memory without coal power forming part of the domestic electricity generation mix.
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The number of such power stations held in reserve was gradually drawn down under efforts to reduce the country’s carbon footprint.
Ratcliffe-on-Soar power station shut down in September.
The UK has reciprocal arrangements with neighbouring countries to draw power via so-called interconnectors if and when required to help keep the lights on.
National Grid data showed that more than 50% of the UK’s power was being generated through natural gas.
Renewables accounted for just 16% while France and Norway were helping provide 10% of output, with nuclear and Biomass accounting for the bulk of the balance.
Piers Morgan, the broadcaster and journalist, is leaving Rupert Murdoch’s British empire to focus on expanding his Uncensored YouTube channel in the US and other international markets, underlining prominent media figures’ accelerating shift away from traditional outlets.
Sky News can exclusively reveal that Mr Morgan and News UK – publisher of The Sun and The Times and owner of Times radio – have agreed a deal that will see him taking ownership of the Uncensored media brand and its existing 3.6 million-strong YouTube subscriber base through his production company, Wake Up Productions.
He is understood to have struck a four-year revenue-sharing deal with News UK that will see the Murdoch-owned company receiving a slice of the advertising revenue generated by Piers Morgan Uncensored until 2029.
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Mr Morgan returned to News UK in January 2022 with a three-year deal that included writing regular columns for The Sun and New York Post, as well as presenting shows on the company’s now-folded television channel, Talk TV.
People close to the situation said a book deal with the Murdoch-owned publisher Harper Collins would still go ahead, with Mr Morgan expected to complete that project later this year.
He will also continue to write occasionally for News Corporation’s newspapers, according to one insider.
Mr Morgan’s future had been the subject of growing speculation following the expiry of his three-year contract with News UK at the end of 2024.
As part of his new arrangements, Mr Morgan has also signed a deal with Red Seat Ventures, a US-based agency which partners with prominent media figures and influencers to help them exploit commercial opportunities through sponsorship and other revenue streams.
Piers Morgan on TalkTV. Pic: PA
Among those Red Seat has worked with are Megyn Kelly, the American commentator, and Tucker Carlson, the former Fox News presenter.
Mr Morgan is also understood to have received expressions of interest in other commercial and broadcasting deals from American media groups, having been one of few Brits to present his own TV chatshow on a mainstream US network.
Fond of the phrase “One day you’re the cock of the walk, the next you’re the feather duster,” during various phases of his career, his latest deal reflects the shifting dynamics in media consumption.
Responding to an enquiry from Sky News on Wednesday morning, Mr Morgan said in a statement: “I have had a great time working back at News and am delighted that we will continue to be partners.
“Owning the brand allows my team and I the freedom to focus exclusively on building Uncensored into a standalone business, editorially and commercially, and in time, widening it from just me and my content.
“It’s clear from the recent US election that YouTube is an increasingly powerful and influential media platform, and Uncensored is one of the fastest-growing shows on it in the world.
“I’m very excited about the potential for Uncensored.”
Mr Morgan declined to comment on any other aspect of his new arrangement with News UK or his expansion plans ahead of an official announcement, which is understood to be scheduled for later on Wednesday.
His decision to strike out on his own – albeit with a continued relationship with News UK – is said to reflect his belief that broadcast audiences will increasingly shift away from mainstream channels to platforms such as YouTube.
“He thinks YouTube will be a dominant broadcasting platform in terms of audience share within a couple of years,” said one.
It was unclear what the precise revenue split would be between Wake Up Productions and News UK during their four-year partnership.
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He is expected to focus his efforts to expand Uncensored on US audiences initially, with a wider international plan to follow that.
On Tuesday, Mr Morgan posted on X that he believed an interview with Elon Musk, the Tesla founder who has sparked a firestorm in British politics in recent weeks, was “getting closer”.
Among the other interviewees on his YouTube show have been Donald Trump during his first presidency, the Ukrainian president Volodomyr Zelensky and Cristiano Ronaldo, the footballer.
Rolls-Royce Motor Cars says a record £300m investment at its West Sussex factory base will help expand production of bespoke and electric models.
The BMW-owned firm, like rivals in the luxury sphere, has enjoyed rising demand for personalised vehicles among its wealthy customer base.
The carmaker said recent orders to complement its base models included 18-carat gold sculptures, embroideries consisting of more than 869,500 stitches, wood veneers including 500 individually-shaped pieces and holographic paint finishes.
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The investment, Rolls-Royce said, would bolster facilities at Goodwood to cover such requests and also its Coachbuild programme – an invitation-only service where clients get to “craft an entirely original motor car.”
The company added that additional space would also be created to prepare Rolls-Royce for an all-battery electric future, with a new fully electric model due to be unveiled later this year.
Bespoke commissions for 2024 included ‘year of the dragon’ embroidery for one customer. Pic: R-R/Ciaran McCrickard/Mindworks
The £300m investment marked the largest cash injection in the company’s operations since the plant opened in 2003, Rolls said.
It made the announcement while revealing a fall in sales during 2024.
The company sold 5,712 cars in 2024, a drop of more than 5% versus the 6,032 vehicles sold over the previous 12 months.
It said the decline was in line with expectations as it switches over to new models. Four were introduced during 2024 including the Cullinan Series 2 and Ghost Series 2.
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North America was its largest market in 2024. The most popular model, it said, was the all-electric Spectre.
Goodwood employs 2,500 people and produces 28 cars daily, it added.
Recent workforce expansion has been a result of its high margin Bespoke and Coachbuild programmes but also the transition to electric technology.
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