The strange failure of a startup. The case of the Genoese Kellify

“What exactly was our artificial intelligence doing? You know, I’m ashamed to say it, but I don’t know ”. The speaker does not want to be identified. But he is one of the employees of Kellify. Developer joined the company in 2021 after investing 100,000 euros in the company. A former employee. Because Kellify, a startup founded in Genoa in 2018 and active on the new frontiers of artificial intelligence, declared insolvency at the end of October.

Too many debts. At home 31 people. Many of these have invested in the company over the years. Convinced, everyone says, by its founder, Francesco Magagnini. Able to secure funding for more 4 million euros to develop technologies of which today more doubts than certainties seem to remain.

Magagnini, according to the documents that Italian Tech has had the opportunity to view, last spring resigned from the position of director of the company. Then he did lose his tracks. No contact since then with the company’s investors about him. The last trace of him is a letter in which he said he was unwell. And to be forced to take a step back. Shortly after the company went bankrupt. And today those who worked on it, those who invested in it, seem to wake up from a long sleep. And accusation: behind the company there was nothing but marketing and communication. In some cases, even blaming his own myopia.

Who is Francesco Magagnini, founder of Kellify

Genovese, 35, Magagnini has been a rather well-known face in the panorama of Italian startups in the last 4 years. Lots of interviews released, many still available online and on Youtube. He told reporters over the years that he studied at the Sorbonne in Paris. Having a master’s degree from Stanford. Of having worked for multinationals before returning to Genoa and launching his startup. Information that is not verifiable on university websites. But to Magagnini, an excellent speaker, he allows himself a bit of everything. Even the curriculum in question. Italian Tech has tried to contact him several times in recent weeks, without success.

“A charismatic character. A superior mind “

His employees want to talk instead. Its investors. Not all, but all under anonymity. They still describe him today as “charismatic”, “magnetic” and “gifted with superior intelligence”. Skills that allow him to convince everyone.

Even the Financial Times which, two years ago, included Kellify among the best Italian startups. Today everyone’s suspicion is that behind his words, behind the promise to create a company capable of scaling the global artificial intelligence market, there was nothing but marketing, media relations and good references.

“They presented it to me in Milan,” says an investor. “Everyone spoke well of it. And we let ourselves be convinced, also because the person who presented it to us is a person with long experience in the sector ”, he adds. He too, business angel of several startups, prefers to remain anonymous.

“We have all put between 50 and 200 thousand euros. The company launched new products. They were made by a physicist, Fabrizio Malfanti, his partner. Then we realized that something was wrong. The debts increased. Office and consulting expenses increased. The turnover is not “.

Kellify accounts. Doubts about consulting and investments

Based on the financial statements that Italian Tech was able to read, in 2017, that is a year after its foundation, the company closed with a loss of 7,040 euros. In 2018 the losses become 483,332 euros. In 2019 751,712 euros. In 2020, the last financial statement that Italian Tech was able to verify, the losses became 1.441 million, against sales revenues of 3,000 euros.

Expenses are increasing year after year. Employees and investors suspect that everything that was spent was done to pay the salaries of the managers (200,000 euros) and consultancy.

The company makes investments. Opens spin off. Buy other companies. Opens offices in New York, Malmo, Seoul. New offices and new hires. It announces millions of investments. To be able to reach a turnover of 25 million by 2024. Every move is accompanied by a press release. From an interview. Meanwhile, the budgets are increasingly in the red.

“Just marketing and media. There was very little product “

“Marketing, he did a lot of marketing” is the answer that everyone gives. Some suspect he was “just” marketing. Also succeeded well. Kellify has won awards aimed at startups. Its administrator has a permanent presence in sector panels. But if you try to understand what exactly he did, the problems begin: “We had dozens and dozens of products. Artificial intelligence applied to sports, the art market, raw materials, wine, advertising. They were creating them all the time. I have been working in this industry for many years. I know the history of Kellify from the beginning. At the beginning I was an investor. Then, when I became an employee in 2021, I realized that there was very little product, ”says one of the company’s first investors.

“What do we do? The innovation of an AI is not knowing it “. Venture funds do not invest

What exactly Kellify did is a mystery. How she did it she is more. An answer can be found in Magagnini’s interviews still available on YouTube. In one, he describes her artificial intelligences in easy speech as something capable of “perceiving the emotional side of an image”. That is, what strikes the user. The interviewer asks for an example: What affects Generation Z? “You see, the innovation given by artificial intelligence is not knowing it. We make the algorithms work autonomously. They don’t know if the horse or the green are more “.” It’s not something we can summarize in one term “.” It acts on a neuroscientific level. “” It’s a superpower that we give to companies and creatives “, he replies . Kellify, despite the enormous media coverage received, remains an unknown.

Kellify did not raise venture capital funding. Those who invested in it say that it tried to enter the radar of some funds, but never passed the due diligence, the verification of the business offered by the managers of investment companies. On the other hand, he collected small amounts from a group of small and medium-sized investors. Convinced by the chain of trust that is often created in this sector. Business angels, family offices, former employees of large multinationals who have put a good exit and some savings into the company. Trust that today many of them say betrayed.

Stories

Six startups that fooled the world

by Giuditta Mosca

July 18, 2022

4.7 million investments. The promise of a climb

The company appears in the news for the first time in 2018. It gets 1.73 million from various investors. Initially, it presented itself as a fintech company (technologies applied to finance). It should be able to understand what users like, and suggest the future value of items such as cars and fine wines. According to Crunchbase, an authoritative compass of the startup market, in the following rounds it collects another 3.

“I think those numbers are pretty inflated, I know everyone who put the money into it, and how much they put in. I doubt that those figures have been reached ”, says another investor, who later also became an employee.

Until a few months ago, Magagnini said he was sure of the future of his company. He seems to have tried to instill his own confidence in his employees as well. “Surprised that the company went bankrupt? For nothing. But believe me: none of us are. None of us ever understood what we were doing. And among the employees certain things are known. Maybe they don’t tell each other, but they know each other, ”comments another employee.

Papers in court. “We believed it. Then we had to believe it “

“In the beginning we believed it. We were convinced. Then things changed. Especially after a few months of work in the company. From truly believing it, we began to believe it by force. Not only our salaries, the livelihoods of our families depended on Kellify, but also our life plans, the sacrifices of previous years ”. How to convince yourself of the reality of an illusion. Enter a world of fiction, with no blue pill to wake up. Now the papers have gone to court.

The site has been taken offline. Kellify’s social channels blacked out. No LinkedIn references. Aside from interviews and videos, it’s all gone. The cards remain. The budgets. Acquisitions and consultancy. Material on which the Ligurian judges will begin to work next month. Which will clarify whether the doubts of investors are well founded, or are the result of a belated desire for revenge.

Twitter: @arcamasilum