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Guvera's Proposed IPO Dubbed 'Horrifying'; Aussie Streamer Responds to 'Doubters'

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Guvera's announcement last week that it would seek an $80 million (AUD) initial public offering on the Australian stock exchange has not gone over well with some of the country's top tech executives and investors. 

The music streaming service has faced heavy criticism since releasing its prospectus, with venture capitalist Niki Scevak calling it "horrifying" and Atlasssian cofounder Mike Cannon-Brookes saying the document left him "terrified." And though he didn't name Guvera, SEEK founder Paul Bassat subtweeted that "the quality, readings and valuation of some of the tech companies coming to market is an absolute disgrace."

Based on this onslaught of skepticism, among other reports, investor website The Motley Fool Australia slapped a "buyer beware" on the proposed IPO.

Australian Streaming Service Guvera Warns of Losses as It Prepares $58 Million IPO

Guvera CEO Darren Herft hit back on Sunday in comments to the Financial Review, placing blame on the so-called "Australian tall poppy syndrome" -- a pejorative term for the resentment, and cutting down, of a peer for their success. Herft cited Bassat's Seek.com.au search engine among companies that "had shaky beginnings, lost money, pushed the envelope to change the norm with lots of doubters and non believers and then went on to become successful multi billion dollar businesses."

He added, "investing in these type of technology companies is always going to be 'high risk, but the returns if the company gets it right can be spectacular."

Indeed, Guvera admitted in its own prospectus to being risky. In the document, the company reported that it lost $81 million last year and expects losses of $55.7 million in fiscal year 2016. It also "expects operating losses and negative operating cash flow to continue in the future as it continues to increase investment in its businesses." The service also said it now has 14 million users, a drop of at least one million since last October. The company said it hopes to be worth about $588 million when it lists on the ASX in mid-July.


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