StretchSense, a New Zealand-based wearable sensor manufacturer spun out from University of Auckland, has let go 140 staff after e-commerce firm StartToday terminated an acquisition deal, the New Zealand Herald reported yesterday.
StartToday, which owns a 39.9% stake in StretchSense, paid $20m in November 2017 for an option to wholly acquire the spinout at a valuation of $120m. The agreement was valid until the end of September 2018.
However, the e-commerce portal called the deal off on April 27 blaming “long-term stagnation due to difficulty of reaching the agreement”.
Founded in 2012, StretchSense produces wearable sensors that can be attached to apparel. Its products include the ZozoSuit, a suit that offers precise body measurements to ensure customers purchase the correct size when shopping online.
Demand for the ZozoSuit significantly outstripped demand and StretchSense was unable to keep up, leading to StartToday changing to a camera-based system made in China.
StretchSense previously employed approximately 180 staff and now has a reduced workforce of about 35.
Ben O’Brien, chief executive of StretchSense, said: “They launched [the suit] based on our technology and it was a huge success.
“They sold a very large number of them and because it was a new tech and a new product, the rate at which it could be produced here, we just could not keep up with demand.
“We have had to let go of about 140 people, so quite a significant number. It has been really, really hard. I never want to have to go through that again.”
StartToday invested an undisclosed amount of series A funding in 2016, after the spinout raised a seed round of undisclosed size from state-backed New Zealand Venture Investment Fund and angel syndicate Flying Kiwi Angels in 2015.
Auckland UniServices, the university’s tech transfer arm, government-owned innovation agency Callaghan Innovation and angel investor Ralf Muller are also among the spinout’s backers.
