Venture capital company Speedinvest -- the name behind the streaming platform formerly known as Hitbox -- is still waiting for due payments from Sapinda, the parent company of another streaming platform Azubu. The two brands initiated a merger in early 2017 and re-launched under the new name Smashcast hoping to challenge industry leader Twitch.tv, but the ride hasn’t been smooth, to put it mildly.
As separate entities, both Azubu and Hitbox have tried to fight Twitch with no success. Despite signing top streamers such as SKT’s Faker in 2014, Azubu had to eventually face decline two years later, following an employee outflow and subsequently reduced funding. Joining forces might have made sense for the two brands, but the union hasn’t yielded better results either. The popularity of Smashcast is far and away from even remotely challenging Twitch’s hegemony over the streaming market, with a lot of Smashcast’s channels struggling to even generate triple digit viewerships.
As a result, reports of financial struggles come as no surprise. “Lars Windhorst is in turbulence once again,” writes Austrian newspaper derStandard, referring to Sapinda’s non-executive chairman. According to derStandard’s report, Windorst’s Sapinda, as a parent company of Azubu and the initiator of the Smashcast merger, still owes large sums to two of Hitbox’s main investors: Austrian development bank AWS and aforementioned Speed invest.
“The first tranche of $5 million only passed after several follow-ups,” derStandard reports, adding it’s even more troublesome for the next installment of $9.5, which was due in April. According to the article, Speedinvest has already applied for insolvency proceedings against Azubu and Sapinda, though Speedinvest CEO Oliver Holle has been declining comment on the issue. Additionally, sources told Cybersport.com that former Hitbox employees who held shares in the company before the merger will likely not get a dime due to legal technicalities in their former contracts and are waiting for the completion of the sale to challenge the issue in court.
Azubu and Sapinda have to answer to more parties than just Speendinvest and AWS. In June, following statements from players about unpaid prize money, tournament organizer E-Frag commented on TwitLonger, putting blame on Azubu for not following up on contractual obligations.
“We are currently in the process of procuring the prize money of the event which was signed contractually to be paid by Azubu at the immediate end of the event.
After not paying we decided to hire lawyers in California to discuss this with them. Bearing in mind Azubu not only owe us prize money and months of contractual funds, but also many other event organiszrs. They asked us to accept a very small amount of the money owed and that we must tell the teams we had the prize pool paid to us.
We then took Azubu to arbitration and are currently in the process of getting the money that is owed. Azubu has been telling us that they do not have funds even though they recently purchased Hitbox for millions. Azubu denied buying hitbox when our lawyers spoke to them. The reason we have not yet gone public with this is in favour of reaching a mutual agreement with Azubu through our lawyers who advised us to not go public.”
Reportedly, Azubu still owes money to more streamers and content creators, too.
Windhorst himself is slated for yet another business fallout, according to derStandard, as reports lead to believe that he is to be dismissed as head of Sapinda, something Windhorst has denied. Potential firing from the company he co-founded would only add to his tumultuous business career which includes two files for personal bankruptcy in 2003 and 2007, a guilty plea to embezzlement charges in 2009 and reports of having his assets frozen as of June this year.