UK born social media SaaS pure-play company SocialGo has admitted defeat after a difficult year and outlined a plan to divesting existing operations to its shareholders and becoming an 'investing company'.
It has raised £200,000 in working capital to make the changes. The good news, for the time being, is that SocialGO will continue to provide the same services to its users under the ownership of the investment company.
AIM-listed SocialGo allows users to build a social network using its cloud-based platform. It offers standardised builds as well as a 'pro' service, which allowed users advanced customisation.
One of the company's main investors is Dominic Wheatley, the founder of successful gaming company Eidos Interactive, whom will remain as a non-executive director.
The news comes after SocialGo recently reported significant losses of over £1.5 million in its full-year results.
SocialGo's divestment will also likely come as a blow to the much touted success of TechCity in London, based in the Old Street area of the Capital. In the past it has been actively involved in supporting the government-led initiative to encourage technology start-ups to the area.
Anthony Miller, managing partner at analyst house TechMarketView, commented that the new funding is a desperate attempt to keep the company afloat.
"We had basically thrown in the towel withSocialGo a month ago after reporting its disastrous FY results. Now management has finally come to the same realisation that this was one lame duck that was never going to fly," said
"In a last-gasp attempt to salvage - well, I'm not sure what really - management has raised another £200,000 to keep the duck afloat while it tries to sell off the barely beating heart of the business and turn the carcass into - you guessed - an 'investing company'."
The company is now set to become Tavistock Investments and will focus on opportunities "within the financial services sector located in the United Kingdom" but will also "consider investments in other sectors or geographical regions that the Directors have expertise in".