Mattress-maker Simba slashes value amid funding turmoil

The online mattress start-up promoted by Real Madrid galactico Gareth Bale has been forced to slash its valuation as it tries to secure sufficient funding to keep it in business for the next two years.

Sky News has learnt that Simba Sleep has accelerated talks with investors to complete a £50m fundraising just three months after announcing the appointment of Allan Leighton, one of Britain's most successful businessmen, as its new chairman.

Sources said on Tuesday that Simba Sleep had informed investors in the last few days that it will cut the valuation attached to its Series C funding round from £200m to just £125m prior to the addition of the new capital.

The development comes just weeks after the start-up told shareholders that it was on track to move towards an exit in or around 2020 that could attach a price tag to the business "potentially significantly north of £1bn".

Launched in 2016, Simba Sleep is one of a new breed of online mattress retailers which aspire to premium valuations by virtue of their business models and the advanced spring technology they deploy in their products.

However, confidence in the sector has diminished in recent months, with Eve Sleep, its listed UK-based rival, announcing plans last week for a larger-than-expected £15m cash-call and change of strategy following the ousting of its chief executive.

Simba Sleep's decision to slash its valuation comes several months before the company is expected to break even in its home UK market, and shortly after it launched a distribution partnership with Bensons for Beds, one of the biggest mattress retailers on the UK high street.

Insiders said that Simba had received firm commitments to invest more than half of the £50m being sought in the Series-C round, with Mr Leighton having pledged to invest £1m of his own money in the deal.

Nigel Wray, the entrepreneur who owns the rugby union club Saracens and is an investor in Simba, is to join the company's board, according to the update.

Saranac Partners, a wealth management adviser, is understood to be attempting to corral some of the remaining funds.

In its most recent update to investors, Simba Sleep insisted that the company "is trading well" but acknowledged that "stock market and global turbulence on all fronts" had led to the fundraising completing more slowly than anticipated.

"The board at Simba have decided to make two moves forward to accelerate the closing of our Series C round and to fund the business through to profitability, without the need to raise finance again".

The company said the decision to increase the sum being raised to £50m would allow it to retain up to £15m of cash.

"This will give the management and board bandwidth to executing the clear and focused strategy to deliver shareholder value and the £500m-£1bn+ valuation that we believe can be achieved with the global winner in this market," it added.

Simba Sleep's decision to cut its valuation "to bring the round to a prompt and successful close" would also mean it rebasing the value at which it secured new funds last year, "meaning Series C is not a down round".

Some investors are said to have been irritated by the upbeat nature of the message communicated to them in October with so much of the current funding round still to be secured, although others welcomed the lower price expectations as being "a sensible decision for shareholders".

Simba Sleep has embarked upon a breakneck international expansion, with a presence in more than a dozen countries, including China.

In a statement issued to Sky News, Steve Reid, Simba's chief executive, said: "Simba is close to completing its Series-C investment round to help accelerate the brand's growth and continue its global expansion.

"Since launching in 2016, Simba has sold more than 230,000 mattresses, along with circa 300,000 additional sleep products, and tracking for triple digit percentage year-on-year revenue growth.

"Simba is Europe's fastest-growing high-tech mattress brand and operates in 16 countries, including China, where it has just sold its first mattress.

"We have issued an appropriate valuation, aligned with current market conditions, to complete the funding round and take the business to the next level."