Mind Candy, the London-based company behind Moshi Monsters, has avoided potential bankruptcy by renegotiating a critical loan repayment and securing $1.5 million in new funds from existing investors.

Mind Candy, founded by entrepreneur Michael Acton Smith, rocketed to success after creating the Moshi Monsters brand in 2007, becoming one of the most prominent startups in the U.K. capital’s technology scene.

But the company had difficulty managing the transition from desktop gaming to mobile and failed to come up with another hit on the same scale as Moshi Monsters. Between 2012 and 2015, Mind Candy's revenue fell from a peak of £47 million to just £7 million.

According to Mind Candy CEO Ian Chambers, venture capital firms Accel Partners and LocalGlobe led the investment round with participation from other existing investors.

Chambers said Mind Candy has seen good growth with its new product, Petlandia, which enables customers to create avatars of their pets and then order personalised story books that feature these avatars which cost about $30.

Of the 650,000 people who created avatars in the fourth quarter 2016, over 40,000 had ordered the personalised books, and that the company was exploring licensing and merchandising opportunities with other pet-focused products and brands, including so-called celebrity pets – cats and dogs with large followings on social media.

The company has also been in the process of relaunching Moshi Monsters with a focus on four-to-seven year old children, a slightly younger age group than the company originally targeted.

The new, free-to-download Moshi Monsters Egg Hunt game mobile game lets children create a catalogue of different monster characters and has attracted 500,000 players.

Chambers said the company had been happy with the results of that relaunch so far, and that the company has seen monthly revenue growing year-over-year for the first time in several years.

Silicon Valley-based investment firm TriplePoint Capital agreed to a two-year extension of the £6.5 million pound loan to Mind Candy. TriplePoint took a £2 million markdown on the value of the loan to account for these new terms, the investment firm said on an earnings call March 13.

“In conjunction with them raising more capital, we’ve agreed to extend the maturity date of our loans,” Sajal Srivastava, TriplePoint chief operating officer said.

If Mind Candy had been unable to extend the loan terms the company might have been forced into bankruptcy, the company had said in filings with the U.K. business registry Companies House in October.

“TriplePoint and the existing investors all said we need to give this company all the oxygen it needs because there are some very exciting things happening here,” Bruce Golden, Accel partner and Mind Candy board member said.

“This isn’t a situation where hope is our strategy,” Golden said of Accel’s new investment, adding that investors are confident in Chamber’s vision and leadership and that Mind Candy’s new products were showing promise.

“No one is declaring victory, this company has been through a lot and has a lot to prove ahead of itself, but we think it is on the right track with the right team and the right plan.”

Moshi Monsters toys were distributed in Australia by Hunter Products and Mind Candy brands were represented by Fusion Agency.

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