4.2 The Honey Group (THG)

4.2.4 Starting over, a clean slate

During the period of 2013-2014, Alejandra started devoting more time to taking care of company matters. They had received great help from the university through their connection with Per Eriksson in finding a new home for the research group, but she has gradually felt more and more that they are no longer suitable for the research and university environment.

The next critical incident surrounded the events occurring in the decision to sack their board members in February 2015. The reasons cited by the founders were differences in management opinions and disagreement with shareholders between Concellae AB and LUIS. Alejandra was burned out in 2014 and took a year of sick leave. Tobias took over the research group and company but soon also took sick leave. Together they were on leave for 1.5 years. During this time, and as previously, they tried to ask for help through the board for venture capital to keep the company running by hiring someone, as it was too much running the company with just Tobias and Alejandra. At the same time, they also tried asking for help from the university and they managed to get some help getting students through their research group (The Honey Group), which relieved their workload in some way. They felt that things needed to happen after six years of establishing the company since their first patent application in 2007. They were very good at coming up with products, but they did not have the skills and money to market them to the consumers.

We are very good at taking out products all the time but we can’t market them because we don’t have the money in the company. And that is a huge need because you need to make research about the market because otherwise you will not reach the consumers. It has been quite a tough time and we thought from the board, we can get help.

Concellae AB, personal communications, 2015 The founders thought they could get some help by including the Lund University Innovation System in 2007 with 5% of the company, and SLU holdings with another 5% of the company. It all happened at the same time as they were entangled in the issue with the American researchers. They were recommended to have LUIS and SLU holdings on the board and they also thought that by having both LUIS and SLU holdings, they would get some help from them in some respect. However, it was more in terms of financial help and not so much on the marketing aspects. They signed an agreement with LUIS without asking or reading too much into the contract, as they thought it was under Lund University and was recommended by the vice-chancellor.

When Tobias and Alejandra were sick, the board worked on the business plan for Concellae and did not involve Tobias and Alejandra on the business aspects so that they could concentrate on research, according to Alexjandra.

The board wanted to raise capital to expand the company but to have the founders remain as researchers. During the time they were on sick leave, they only maintained communication with Kent Lörd. When Alejandra and Tobias returned from the sick leave in the autumn of 2014, they were surprised to learn the plans for the expansion of the company that had been made in their absence. The board could not carry out the plan, as Tobias and Alejandra were still the majority owners. Kent was to be the MD for Concellae, they wanted to raise capital for 25% of the company and they had arranged meetings with potential buyers. These buyers had contributed with money in Lund University and by selling to them; Lund University will be increasing their stake in Concellae. They also wanted only one of either Tobias or Alejandra on the board.

Tobias and Alejandra did not like the plans. Tobias and Alejandra went through the agreement they had signed at that time with LUIS to see where they stood regarding these plans. They had decided that Alejandra would be devoting more time to the company and could be the MD for Concellae and also meet the potential buyers, but some on the board did not like this plan.

For example, Kent Lörd (who was supposed to be the new MD), LUIS, and SLU Holdings were not pleased with the new directions that Tobias and Alejandra were proposing. The board had already presented a business plan to the potential buyers while they were on sick leave without consulting them.

They realized that the agreement that they had signed with LUIS stated that decisions could only be made with two-thirds of the board’s agreement, despite the share holdings of the particular members. They had consulted a lawyer regarding the agreement and came to the conclusion that it was a disadvantageous agreement for the two founders. This meant that Tobias and Alejandra were under the wrong impression that they would able to make the decisions since they held the majority of shares of the company. During the time they were on sick leave, Kent Lörd, who was the MD for the daughter company Concellae—Apicellae, did not have any concrete business activities carried out for the company, according to Alejandra. Lörd shared that he felt quite sad about their decisions made to remove the board members. When he joined them as chairman of the board in 2008, he worked to help include two other universities (SLU and Lund University) as board members in 2012.

Together with Rolf Bjerndell, he thought they had a good mix of experience to help Concellae in the innovation process. However, when the pair took leave, as they were diagnosed as burned-out, Lörd considered it quite puzzling.

In Lörd’s line of work and experience, being burned-out was not a common phenomenon and was one that was quite new for him. While they were on leave, he continued to manage the more practical aspects of the companies, but it was quite frustrating as the founders were quite important to the company. He also invested his time in helping to manage ApiCellae on the packaging aspects and in managing the Spanish and Swedish suppliers. The first was for SymBeeotic. This is a product that “could help protect against diseases behind bee colony collapse, another pressing concern within the scientific community” (Reuters, 2014) The second was using the product on treating wounds (such as Equine Pastern Dermatitis [EPD]) on horses. The former had shown promising results from the market while the latter produced very good results in initial trials. They had hoped to continue with human trials, which if successful “could help doctors overturn the growing threat of antibiotic resistant bacteria, in both First World countries, and also in the developing world where fresh honey is more readily accessible than antibiotics”

(Reuters, 2014).

Lörd shared that they had tried to suggest investors who would take an interest in the company so that the founders could concentrate on research.

However, he felt that the founders might have taken it in the wrong way and

acted impulsively. The H13 range of products that were manufactured based on their research were selling exclusively on the website (http://doktorhonung.se) and not on other types of channels, limiting the reach of the product. The board members felt that having professionals step in and run the business side of the company could help in the growth of the company. The founders instead felt that they had been provided bad advice by the board members and they felt trapped by the agreements and contracts they had with the board. Things got even more complicated when Tobias and Alejandra returned to work after their break. The plans that were formulated in their absence raised concerns for them. They tried to share with the board members 1) their opinion that Lörd was an ill fit for Concellae and should not be the MD, 2) their concerns regarding the clause in the agreement about two-third majority, and 3) that if they went below 75% ownership of the company, it would mean that the other members of the board could make a majority decision. Tobias and Alejandra also wanted to close down the daughter company to concentrate on the main company, Concellae AB, and also to get back their health and to work in a more manageable manner.

SLU holdings and Kent Lörd, who had shares in ApiCellae, wanted compensation in terms of more shares in Concellae AB, even though, according to legal obligations, they were not entitled to them, as the company was not performing well. The founders voiced these concerns to the board but were pointed to what they had signed on the agreement: that they needed a majority in the board to act on these concerns. The founders were also urged by others to act on moral grounds to compensate with more shares in Concellae to those who invested in ApiCellae if they closed down ApiCellae, even if they were not legally obliged to. However, Tobias and Alejandra were not happy about the agreement they had signed. When they approached the board in January 2015, they were still met with disagreement. That was when they made plans to dismiss the board and start over with just Tobias and Alejandra on the board before taking on investors again. They announced a meeting in February 2015, but no one from the board came except for one representative from Lund University. Since they still had the majority of the shares at this point, they could get rid of the board, and they planned to close down ApiCellae in February/March 2015. This was the only way they saw they could start off with a clean slate for Concellae without the burden of the biased agreement.

As the final board meeting was not attended by most of its members, Lörd claimed that they did not know why the pair wanted to close down ApiCellae.

However, he felt that there should have been some form of “compensation,”

especially for SLU holdings that had invested money into ApiCellae. He maintained that Alejandra and Tobias were adamant not to offer them shares in Concellae in lieu of closing down ApiCellae and also that the products that were in storage were of no value. This created a conflict in the board. SLU holdings had checked with their legal department and the founders, who were the majority shareholders, had the legal right. They eventually stopped pursuing the matter, as the shares that would have been offered were not a significant amount.

LUIS also disappointed the two founders in terms of the help that they needed when they were applying for a patent in 2014, which the board members knew about. That was at the beginning of their sick leave: they had information and material for the patent and needed help to file it. They needed to file the patent as they had research articles that needed to be published.

They were recommended to LUIS, as they had patent officers. However, LUIS called and told them that they could not help, as any new patents would belong to Concellae AB, which they were already part owners in. This was the point of contention that they raised at the board meeting and they had to file the patent while they were on sick leave without any help from the board. The overall impression was that they were not getting help from the board, but the board was holding the agreement over their head to comply with their business plans.

After the dismissal of the board and subsequently of ApiCellae, they planned to take stock of their products under Concellae and ApiCellae. Lörd mentioned that they wanted to keep in contact with him and Rolf Bjerndell, which they were willing to provide at a later stage, as they wanted the best for Concellae even though they did not understand where the pair was going with the company. They will try to raise capital for Concellae and those they need to take care of the administrative aspects of the companies before they can proceed with funding activities.

I dokument Connecting the Nodes An interactive perspective on innovative microenterprises in a mature industry SIA LJUNGSTRÖM, CLARISSA (sidor 141-145)