Cupid beefs up board as co-founder Max Polyakov quits for new US venture

Max Polyakov, the Ukrainian doctor who set-up Cupid with serial technology entrepreneur Bill Dobbie in 2005, has signed a deal to sell only part of his 23 per cent stake. Polyakov has the option of offloading some of his shares before June to help fund his new venture, but will then have 12 months in which he cannot part with any more stock.

Cupid has brought in Ian McCaig, former chief executive of travel website Lastminute.com, and Russ Shaw, ex- vice president of European operations at video conferencing firm Skype, to beef up its board as Dobbie looks to take turnover to £200 million a year from £53m in 2011.

The firm said Polyakov’s duties as business development director will be split among the existing management team and that the co-founder will remain a consultant to the firm.

Dobbie told The Scotsman: “Max has been in the business development role since we floated the company in June 2010 and I’ve always known he has wanted to do other things. He’s a classic entrepreneur, who likes doing these things, and he sees an opportunity in social gaming.

“For the past couple of years, we’ve been building a business that performs in a much-more resilient manner. We have six senior managers, who report to me, and a group of 20 people, who report to them. So we’re very confident with our plans.” Dobbie said the company now had about 420 staff, 390 of which are based in the Ukraine, with the others split between the head office in Edinburgh and bases in Munich and the United States.

He said the loss of Polyakov would not affect the company’s structure, with the technical work for the websites continuing to take place in the Ukraine. Dobbie expects to grow the firm’s presence in the US this year from three staff to about eight.

Paul Morland, an analyst at Peel Hunt, said: “It looks to me like Max Polyakov hasn’t been that heavily involved with the day-to-day running of the business for the past six months or so and, particularly in the past two months, Cupid has shown it can still return impressive growth figures without him. He’s a very entrepreneurial guy, but often that’s not what you need to take a business to the next level. The two non-executive directors they have appointed more than balance out his departure. They have the experience to help the board grow the business towards its aim of £200m turnover a year.”

News of Polyakov’s departure came as Cupid posted a 69 per cent rise in pre-tax profits for 2011 to £7m, on the back of a 109 per cent jump in revenues to £53.6m. Turnover in the firm’s established markets – in the UK, Australia, Ireland and New Zealand – rose by 38 per cent to £30.5m, but Dobbie hailed a 534 per cent leap in revenues from emerging new markets such as the US and western Europe to £22.2m. The rising profits allowed Cupid to recommend a final dividend of 2.25p, up from 1.32p in 2010. Analysts noted a strong start to 2012, with £12m-worth of sales in the first two months of the year alone, prompting upgrades for this year’s profit forecasts from Numis and Peel Hunt.

Ivor Jones, an analyst at Numis Securities, added: “There is clearly scope for further upgrades during the year although we would expect to see management prioritise revenue growth over margin when there are so many territories where Cupid has only a modest market share so far.”

Brazil and India are among the markets where Jones eyes growth in 2012.