Investors’ fury as Thread unwinds ...and M&S steps in to take control

Out-of-pocket crowdfunders claim fashion site founders left them in the dark over rescue deal

SMALL investors have expressed fury at being kept in the dark over the collapse of fashion marketplace Thread, which was snapped up by Marks & Spencer last week.

The retail giant bought Thread’s intellectual property after the firm went into administration.

But Thread’s shareholders – who have invested in the online fashion specialist through crowdfunding site Crowdcube – have blasted bosses at the failed business.

The site raised just over £2million from more than 3,000 investors in 2018. Founded ten years ago, it used technology to recommend clothes for customers.

As recently as March, Thread’s chief executive Kieran O’Neill said he was ‘excited’ about the firm’s prospects. But many of those who stood by the UK-based firm are now out of pocket following its collapse.

Aggrieved shareholders blasted Thread’s founders for the ‘complete disregard’ towards Crowdcube shareholders. One wrote online: ‘This is disgusting. I really hope the owners of Thread didn’t make any money out of the sale so they can’t behave like this again.’

The firm told customers of its deal with M&S last Wednesday. But shareholders were left uninformed about where they stood until later in the week.

Thread’s founders Kieran O’Neill and Ben Phillips have both joined M&S as part of the deal, and will move alongside a team of 30 data scientists.

An announcement on the company’s website said M&S has ‘acquired Thread’s brand, technology and data’, but it makes no mention of the pre-pack administration.

A statement was sent to investors on Friday afternoon, during which O’Neill apologised but confirmed that ‘unfortunately the value of the deal means there won’t be a return for shareholders’.

He said: ‘Frankly we have really struggled, particularly given the deteriorating macro-environment this year. I know that we haven’t communicated with you as frequently as I’d like over the last few years, but this is candidly a long way off where I thought we’d end up. I don’t take the faith you placed in me lightly, and it pains me not to have done better for you.’

In a previous update in March, O’Neill said he was ‘more excited than ever about the future of Thread’ as he declared revenues of $50 million (£40 million).

In a joint statement with M&S, he said on Wednesday: ‘We’re so excited to join forces with M&S; through their infrastructure and support, we’re able to take our market leading technology to the next level, providing a personalised and unique shopping experience for their 30million customers.’

M&S said last night: ‘The responsibility for communication to any shareholders lies with the associated administrators’.

The acquisition follows a flurry of deals in the retail sector that include Next’s acquisition of Made. com and Joules. Sports Direct owner Frasers last week snapped up high-end homewares website Amara.com which includes brands such as Versace Home.

O’Neill, from Winchester, launched his first company aged 15, selling it four years later for nearly $1.25million. He has three start-ups under his belt. Phillips, who studied computer science, joined O’Neill’s second company. They worked on a video games social networking service together before selling it in 2012.