HomeTechConigital: Doubts over startup’s £500m funding as staff go unpaid

Conigital: Doubts over startup’s £500m funding as staff go unpaid


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Once hailed as a promising UK autonomous vehicle startup, Conigital captured the attention of the European tech scene last year when it announced it had secured a “landmark” £500m funding offer.

The Birmingham-based company’s ‘megaround’ ranked as one of the largest European funding deals in 2023. It was also the largest ever investment into a UK autonomous vehicle startup, until rival Wayve’s $1bn round last month.

However, a UKTN investigation can reveal that the £500m funding round has not closed – and raises significant questions.

Our investigation can instead reveal that Conigital Group has failed to pay UK employees on time since May 2023 and is now facing around a dozen employment tribunals over owed wages.

The startup, which retrofits commercial vehicles with autonomous driving technology, has also withdrawn from taxpayer-funded projects worth £32.6m due to private sector “funding delays”.

Conigital’s £500m funding “offer”, which has been covered by numerous tech media publications, went on to be added to various startup funding databases as a closed deal in 2023.

That data, which heavily skews funding figures for Birmingham and the West Midlands, has since been included in reports read by policymakers and cited by a member of Rishi Sunak’s cabinet as an example of tech startup growth outside of London.

In a statement, Conigital said: “Conigital Ltd. is in the advanced stages of securing a £500m funding offer from a reputable private equity firm. We acknowledge the employment tribunal decision and are addressing all related matters. The withdrawal from Innovate UK contracts was due to funding delays. Conigital Ltd. remains committed to transparency, compliance, and fulfilling our obligations to our staff and stakeholders.”

‘Landmark’ funding

On 1 September 2023, Conigital’s founder and CEO, Don-Paul Dhaliwal, claimed that the company had secured a “landmark” £500m funding offer from a global private equity firm “after a year of negotiations”.

Writing in a LinkedIn post, Dhaliwal did not name the private equity firm for the “Series A+ funding offer” but claimed it had “£150bn+ [assets] under management”.

He added that Conigital expected to complete due diligence for the deal by the end of 2023. In the meantime, the company would open a £12m “bridge round”.

“As we progress towards due diligence completion by year-end, we are initiating a bridge round of £12m to support our ongoing projects,” Dhaliwal wrote. “We invite interested investors and partners to join us on this transformative journey.”

Nine months later, the £500m funding has not materialised.

Conigital pitch decks – seen by UKTN – state that the release of the £500m funding is “contingent on the completion of due diligence by a ‘Big 4’ accountancy firm”.

A spokesperson for KPMG told UKTN that the firm has not worked with Conigital or the private equity investor on the deal.

UKTN understands that PwC is not conducting due diligence for Conigital’s £500m funding offer. A PwC spokesperson declined to comment because Conigital is a client, but did not specify the nature of their relationship.

A pitch deck circulated with investors in September 2023 claims that Deloitte is conducting due diligence for Conigital’s £500m funding round. However, sources familiar with the matter told UKTN that Deloitte has not performed any due diligence work for Conigital, in 2023 or otherwise. A spokesperson for Deloitte declined to comment.

Conigital pitch deck
A Conigital pitch deck claims theat Deloitte is conducting due diligence. Source: Congital pitch deck

A lawyer from Shoosmiths representing Conigital told UKTN that EY, the remaining Big Four firm, “is not conducting the due diligence for the funding offer but it is being conducted by one of the Big Four on behalf of the PE house”.

EY did not immediately reply to a request for comment.

UKTN provided Conigital, via its lawyer, with the opportunity to instruct the Big Four firm to confirm that they are conducting due diligence on the £500m funding offer, or for the private equity firm to do the same.

Conigital said it was “willing to request whether the PE house will instruct them to disclose” but did not specify when this would be.

UKTN will update this story if we receive a response from a Big Four firm confirming that it was conducting due diligence on the deal.

‘You have to take it with a pinch of salt’

Three current and former Conigital employees, who spoke with UKTN on condition of anonymity, recall feeling sceptical about the £500m funding offer – which the pitch deck breaks down as £200m in equity and £300m in debt – as time went on.

One former employee, who worked for Conigital at the time of the funding announcement, said the “level of investment seemed quite reactive and changing, going up over time” and that “you do have to take it with a pinch of salt and scepticism”.

A current employee said they have “stopped believing in the reasons provided” by Conigital’s management for the failure of funding to materialise.

By taking the unusual step of not naming the sole investor in a publicly announced funding round, it means the only source for the £500m offer is Conigital.

Furthermore, publicly announcing a funding round of any size – let alone one for £500m – before due diligence has completed is highly unusual in the startup and venture capital world because there is a chance of the deal falling through.

Conigital’s pitch deck suggests the company was aware that its approach would attract questions. The document includes an FAQ section explaining why it is seeking bridge funding.

It states: “It serves as a financial buffer to cover expenses before grant refunds are received, ensuring the successful execution of £32 million worth of pre-commercial projects secured with Innovate UK (IUK).”

When UKTN asked Dhaliwal on 12 September 2023 if it was unusual to announce a £500m round while starting the process for a £12m raise, he gave a more succinct answer: “Not if you need the £12m.”

Unpaid staff ‘really struggled’

From May 2023, UK-based Conigital staff have faced delays in receiving their salaries, according to former and current employees and internal messages seen by UKTN.

Over the next three months, Conigital paid staff salaries in instalments. Some employees in financial difficulty were given the option to request emergency funds.

“There were employees that really struggled,” one member of Conigital’s UK team said.

During this period, Dhaliwal remained upbeat with staff and insisted that money would soon be coming into the business.

In a company-wide message – seen by UKTN – that was sent on 13 July 2023, Dhaliwal said: “Great news! Following remittance we received our funds today and have caught up on May salaries and expenses. Additionally, we provided extra support to those who needed it in June. And as a gesture of goodwill, everyone has received an advance of £650 on their salaries, with the remainder and July salary coming at the end of the month.

“I hope these positive developments reassures everyone we are back on track and will soon be on the other side of the tunnel.”

But as summer drew to a close, Conigital’s finances did not improve.

Around a dozen UK-based staff are still owed salary from August 2023 onwards and are now pursuing claims through employment tribunals, three former and current employees told UKTN.

One of those claims has now been settled. In May 2024, a judge determined that Conigital “made unauthorised deductions” from the wages of Vaishnavi Srinivasan, a former technical product manager, and ordered the company to pay her £23,015.36. Conigital “failed to present a valid response on time”, tribunal documents show.

Srinivasan told UKTN that “the situation put me under financial and mental strain”.

Conigital did not deny failing to pay staff on time or the ongoing employment tribunals.

Winding up petition

On 11 October 2023 – just over a month after Conigital’s £500m funding announcement – Dhaliwal sent a company-wide message informing staff they would again be provided partial salary payments “in an effort to ease some of the financial burden”.

Weeks later, Coventry University filed a winding-up petition against Conigital. The petition, which is a legal tool used by creditors to liquidate a company that owes them money, sought to recoup cash owed by Conigtal for a PhD sponsorship at the university, according to one source.

A lawyer from Brachers, which represented Coventry University, told UKTN that the petition was dismissed by the court but did not provide any further details. A spokesperson for Coventry University declined to comment.

As winter crept in and Conigital’s £500m ‘megaround’ was added to annual UK tech funding roundups and reports, staff remained “committed” to the company despite not being paid – and hopeful that the funding would appear.

A former employee said that internally there was a belief that Conigital had a “pretty good approach to the AV [autonomous vehicle] solution and an excellent team to continue development”.

Because of this, many staff “wanted to believe” that the funding would materialise.

Meanwhile, Dhaliwal continued to provide explanations for the delay in funding, such as “an issue with the judiciary system of US and private banking system used by the investors”, another Conigital insider said.

But in early November, staff were dealt a new blow: Conigital had lost its two Innovate UK-funded projects – the startup’s primary source of income.

“In the month of October people were still committed to the company hoping the UKRI [Innovate UK] project will keep the company together,” said one employee. “But after the announcement, it all went downhill.”

Innovate UK withdrawal

In early February 2023 – three months before Conigital’s struggles to make payroll – the startup was awarded government funding for two separate autonomous vehicle projects. They had a combined grant value of £17m, with funding shared between other project partners.

The funding was contingent on matching the grants either fully or partially with industry investment, with the total public and private sector value of Conigital’s projects standing at £32.6m.

However, publicly available records from Innovate UK, the government’s innovation agency and administrator of the grants, show that Conigital later withdrew from these two projects.

According to sources and company documents seen by UKTN – and later confirmed by Dhaliwal – this was because Conigital was unable to secure the matched private backing that was a prerequisite for accessing the full grant amounts.

One of those – called the Multi-Area Connected Automated Mobility (MACAM) competition – is a £15.2m project to establish a self-driving vehicle operation around parts of the West Midlands, monitored by a remote teleoperation centre that could take control of vehicles over 5G networks if required.

The second grant – part of the Project Cambridge Connector – is a £17.4m project to pilot on-demand self-driving electric vehicles that can integrate with existing transport services across two University of Cambridge sites.

A spokesperson for Innovate UK said: “Innovate UK made payments to Conigital totalling £168,978 across both projects before Conigital withdrew from both.”

Skewed UK tech funding data

The fact that the deal has not closed raises questions about data collection for the startup ecosystem.

Many well-known startup database platforms – including Dealroom – recorded Conigital’s £500m round as though it had already closed.

This has created a skewed picture of the funding landscape in Birmingham for 2023. A Dealroom report states that last year Birmingham tech companies raised $643m, with the majority of that stemming from Conigital.

That helped cement Birmingham’s place as the fastest-growing tech hub in the UK between 2019 and 2023 – a data point since quoted by Michelle Donelan, the science and technology secretary of state.

“But don’t be fooled by those who say it’s all about London,” said Donelan in a speech to tech leaders on 16 January 2024. “The top 10 towns and cities that saw the most growth in venture capital investment were actually all outside London, with cities like Sheffield seeing nearly 600% growth and Birmingham over 1,000% growth since 2019 alone.”

A spokesperson for Dealroom said the round was “recorded based on publicly available information, as reported in numerous technology trade press outlets, by the founder alongside key actors in the UK tech ecosystem including the Mayor of Birmingham, Barclays Eagle Labs, West Midlands Growth Company, and by University of Essex, which had supported the startup from its first days.”

They added: “We welcome any further information about the round, and we have reached out to the company to provide further verification.”

Conigital: Dealroom report shows skewed Birmingham startup growth.Conigital: Dealroom report shows skewed Birmingham startup growth.
Source: Dealroom

From £500m to £12m to £500k

Conigital’s website continues to promote the “£500m funding offer”, steering visitors to click on an investment page for its bridge round, which has been reduced from £12m to £500,000.

The bridge round is currently live on SeedLegals, a platform for raising investment. An updated pitch deck uploaded to SeedLegals, seen by UKTN, claims that the “£500m funding offer” is now expected to close due diligence in July 2024.

It provides the following reason: “There is no specific delay, due to the size of the investment we are currently undergoing rigorous due diligence, that the PE firm needs to complete as part of its internal governance and due diligence processes, ensuring a thorough and compliant evaluation.”

It also claims that “following interest from strategic investors they have agreed for an additional £50m in our Series A”.

Anthony Rose, founder and CEO of SeedLegals, told UKTN that the pitch page is “akin to a mini web page that any company is able to create on SeedLegals”. The pages are not required by financial regulations to be vetted and they are not promoted by SeedLegals, Rose said.

He added that the pitch pages are “only available to high net worth and sophisticated investors”, which means they have “confirmed that they have the knowledge and experience to be able to assess the merits of the company’s pitch and that they have the financial background allowing then to make high-risk investments without risk to their personal finances”.

‘Not much of the team left’

Insiders say that barring Dhaliwal’s “inner circle”, many of Conigital’s staff, including its chief technology officer of six years, have left the business since the £500m funding claim in September. Others are in the process of finding new roles.

While Conigital’s remaining employees are embroiled in employment tribunals, Dhaliwal has continued to present a positive front on social media, including posing for pictures with former West Midlands Mayor Andy Street.

Dhaliwal has continued to court investors, pitching to family offices and high-net-worth investors at PwC’s London Embankment office in early May.

A PwC spokesperson declined to respond to UKTN’s questions about what due diligence the firm has performed on Conigital before taking it on as a client.

PwC ConigitalPwC Conigital
Conigtal pitched to investors at PwC’s office in early May. Source: LinkedIn

Current and former employees lament what they see as a wasted opportunity. They point to successful projects in the early years after Congital’s 2015 launch, including a self-driving shuttle bus service trial at Southampton Airport.

One remaining employee said Dhaliwal “is still quite ambitious with regards to the possible success of the company… and ignores the fact that there is not much of the team left.”

Do you have any information about Conigital? Get in touch confidentially: robert@uktech.news 

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