The British tech start-up whose success story seemed too good to be true – because it was

David Richards was on top of the world. As the British entrepreneur flew from Manchester to New York last month, his software company Wandisco was making plans for the same trip.

The company was preparing for a US listing that could value it well above the £900m its UK listing did.

Shares in the big data specialist have nearly quintupled in just 12 months, valuing Richards’ stake in the business at around £25m. His new fortune would boost a charitable foundation set up by Richards and his wife Jane, who a year earlier had been awarded an MBE for donating laptops to pupils during the pandemic.

Wandisco’s rise to become one of Britain’s most valuable listed technology companies, a decade after it floated and in a year when other software companies were collapsing, seemed too good to be true. On Thursday, the company confirmed this.

In a surprise update to investors, Wandisco said it had discovered “significant, sophisticated and potentially fraudulent irregularities” in its accounts related to a single employee, meaning the company had dramatically overstated annual revenue.

An investigation found that its revenues were actually 60% lower than previously reported, leading to “significant going concern issues”.

The company’s shares were suspended pending a further investigation, which the company said would be handled by outside counsel.

Only when trading resumes will the full extent of the damage be revealed. But the alleged fraud is just the latest chapter in a years-long drama – as well as the latest cloud hanging over Britain’s tech industry.

Richards, the son of a Sheffield steelmaker, is a serial entrepreneur who founded Wandisco in 2005 with Yeturu Aahlad, a computer scientist he had met at a cocktail party. The company’s software allows information to be constantly updated on different computers and is used in corporate databases (the name has nothing to do with dancing and actually stands for Wireless Network Distributed Computing).

Richards played the salesman, while Aahlad provided the science. The company was based in Richards’ hometown of Sheffield, with a dual office in Silicon Valley. Investors snapped up shares in the company when it listed in London in 2012, lured by the promise that it would give them a piece of the “Big Data” revolution, one of the tech industry buzzwords at the time.

As the company signed up clients such as British Gas, the stock rose to a value of £300m. Richards disappeared, building a £2.4 million home in the shadow of California’s Mount Diablo, east of San Francisco, with a private community golf course and his own vineyard that reviewers said produced a bottle respectable red. He has also agreed a season-long sponsorship deal with his beloved Sheffield Wednesday.

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