Mattress maker Sleeping Duck’s legal victory over serial entrepreneur and investor Adir Shiffman has shone a light on the importance of a productive founder-investor relationship, and just how messy things can get when that relationship sours.
Shiffman, who is based in Melbourne and is currently the chairman of sports tech firm Catapult, says he helped build Sleeping Duck from a “loss-making, ‘amateurish’ outfit” that could not find investment into a profitable, financially successful company worth nearly half a billion dollars at its peak. He says the mattress maker’s success started to wane at the same time he was beginning to be excluded from its management.
“I really enjoyed my deep involvement in building the Sleeping Duck business together with the two founders. Along with a strong leadership team we all succeeded together, made money, had fun, and it was a wonderful few years,” he says. Shiffman also disagreed with the co-founders’ decisions to turn down multiple investment offers, including a December 2020 investment offer from furniture retailer Temple & Webster, a January 2021 investment offer from private equity firm TA Associates to buy 30 per cent of Sleeping Duck, a February 2021 offer from homewares retailer Adairs to buy 40 per cent and a CPE Capital offer in October 2021.
The relationship’s rise and subsequent collapse was crystallised in a message Shiffman sent to Sleeping Duck co-founder Wijeyeratne on October 9, 2021.“In 2019 you told everyone at the Christmas party how much I believed in you and Sel when the business was basically dead,” he wrote. “You only get him involved in a business if you want that,” he says. “That’s what you’re shopping for, someone to complement your skill sets and help you out with some of these issues. For sure that’s not for every business.
Square Peg's Melbourne team, from left, Dan Krasnostein, Jenna Sheils, Paul Bassat, Leila Lee and Ben Hensman.While declining to comment specifically on the Sleeping Duck case, Krasnostein said a key lesson for both start-up founders and their investors was one of constant communication. “We’re ultimately investing in founders and companies as a package, so it’s critical to make sure that the founders are there and motivated, and that we’re supporting them.
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