Wednesday, 20 February 2019

Monzo and Crowdcube try to change investors rights. Are they being totally open about the consequences?

 In a request we have seen from Crowdcube, concerning Crowdcube's Monzo Nominee SHs, investors are being asked to agree to a series of fundamental changes to the their original shareholder terms. These changes, it is declared, are in the best interests of SHs.

We dont wish to go into what is a private matter between SHs and Crowdcube/Monzo on here but if this clause or something pertaining to it, was to be found, for example, in the new terms, would it worry you? The nominee would in this case be Crowdcube - if this was in fact a real clause from the changes - 

Save in respect of the Nominee’s fraud, negligence or default, the Nominee shall have no liability whatsoever to the Investor and may use any assets it holds on trust to cover any loss, liability, damages, costs and expenses incurred or suffered by the Nominee in the due performance of its rights and obligations under this Declaration of Trust.

The Monzo forum for these things is buzzing with investors asking what these changes mean, many of them declaring that they don't have time to read through them or indeed if they have, that they simply don't understand them. Apparently Monzo did not see fit to include an email of their own. You can see the forum here

It looks to us as if Crowdcube have handled this very poorly.  And as if by magic, CC have now posted a long explanation (their idea of one) which includes this - 

Can Crowdcube use the value of our shares held in their trust to cover any losses they might incur for fraud, negligence or breach of the terms?
This term has not changed and was included in the existing Declaration of Trust.

Do Investors ever read the DofT? 'Any losses'  - so for example if they lost a case against them from SHs in Emoov or Sugru? This strikes me as crazy. Plus there is the new issue of CC being able to slap expenses on without aksing - even though they say they wont. If they wont why do they need the permission? Is there a lawyer in the house? 

Monday, 18 February 2019

Richard Branson lends his face to a crazy world

Image result for richard branson

Branson referrals are two a penny or so it seems. Having his mugshot on your website telling everyone that he applauds what you are doing, must be a positive driver. Even if he was referring to a now dormant company back in 2012. 

The company in question was Bnktothefuture; now registered as a non trading, dormant company at CH. It was this company back in 2012 that the great man was talking about. The director Simon Dixon has long since legged it to Hong Kong where his Caymen Islands version of Bnktothefuture, seems to be doing very well. 

So you have to ask why he is using the Branson quote and a large smiling dicky pic on his current Caymen Islands owned website? And you have to ask why he has a source button for it that refers you back to the slightly embarrassing article by a certain young financial journalist, who has fortunately moved on and is now a very highly regarded part of the financial journalists elite. Clearly the article dated 2012 has no reference to what Dixon is doing in Hong Kong or to the vehilcle(s) he is using to do it. It is simply untrue. 

On the same current site, Dixon has a BBC (London local) news item interview with him on Bitcoin. The eatery that is used in the clip as a place that takes bitcoin has now closed down. Oh well, why let some facts get in the way of fantasy.

Isnt it about time someone started cleaning up the internet. There is so much fake news and down right lies out there. Dicky could start by taking action against people who misuse his face. 

Sunday, 17 February 2019

P2P lending sector starts to unravel. Havent we been here before?

With news that Crowdstacker have outstanding loans with Amicus Finance, now in administration, coming hard on the heals of their loans with BurningNight, also in administration, looking likely to fail, Seedrs investors in Crowdstacker must be a little worried.

If there is one thing P2P lending platforms hate, it's loan defaults. One is unfortunate but two side by side is careless. How many more out there are waiting to go?

Seedr's investors put £800k into Crowdstacker - one of the UKs leading P2P companies - in July last year. Now, with two large partial defaults on outstanding loans totalling £4m and £7.5m, Crowdstacker doesnt look quite so appetising. 

According to some good research from the Times, Crowdstacker was also borrowing money from Amicus, as well as lending to it. Here

Calls for better regulation and more transparency in the P2P and equity crowdfunding sectors, led mainly by private investors, have fallen on deaf ears so far. Is that about to change? Or will it take another train wreck like 2008 to get some reaction. Seriously, when will we learn. 

We wrote about Crowdstacker here. The Amicus administration has not yet filed relevant documents but the latest on Burningnight suggests that only a fraction of the 'secured' £7.5m loan will be repaid.  

Saturday, 16 February 2019

Finally the Cgon saga ends in liquidation. Another Crowdcube success story.

Cgon raised £180k on Crowdcube in 2014. Next week it goes into liquidation. Their projections showed profits for £14m by now on a £20m turnover. Where will it all end?

Cgon dont seem to have done much since 2014; except make losses. We have covered their progress here.

Hard to know what to say to investors. Maybe  - 'Loss relief is finally available'.

Their website tells visitors to go here for servicing Qs. 

At a £20m valuation, Den's new Seedrs funding round poses an interesting question.

Den are overfunding on Seedrs, having set themselves a very low target. The valuation is £20m for a company that has only just started to sell a product. Its major competition is having a 50% off sale and saw revenues fall in its last FY.

Should that ring alarm bells?

We think so. Den are late getting to market and have already raised around £5m to get to this stage. It is far too early to tell if the product is a winner or not but you wouldnt know that to read their pitch.

Their main competition has been selling into this market for a while now, is a plc and has had £12m invested. And still it has come out with its YE Sept18 numbers looking distinctly damp. Revenues were down from £3m to £2.8m on a falling GPM and a huge rise in expenses. The directors and various NEDs have been taking out large sums considering the lack of any profit.

All of that maybe an advantage to Den. But not if the falling sales figures are part of a market retraction, rather than poor management. That we dont know...yet.

We still think a valuation of £20m is bonkers. But what do we know. And why set a target a touch over £200k, with large investors putting in £50k sums. How is that equity crowdfunding and how is that transparent? We wonder what the real target is?

Having remote light switches may well be useful but is it really required? Does it really do some good for our lives and for our planet. As a child I was taught to turn out lights. What happens to all those children who have this remote system when they live in homes that are without it? They leave everything on because they were not taught to turn it off. When did we become unable to turn off lights? So is this really the next big thing?

Of course if our ECF.Buzz forum was up and running, as it will be in July, you could all discuss this without fear of the investor platform removing your comments. So if you havent already, take a look and sign up now whilst the 50% discount is still on - here 

Friday, 15 February 2019

Kokoon launch new Seedrs. Will investors listen again?

Kokoon make sleep assisting headphones. They presold thousands of them in 2015 on Kickstarter, many of which have still not been delivered. The Kickstarter forum makes for interesting reading.

We haven't seen the terms of this latest raise. Im not sure we want to. All you have to do if you are interested in this company as an investment, is look at their KS campaign, the claims they have made over a number of raises, on Seedrs and Crowdcube and then look at what has in fact really happened. The last Crowdcube round was at the end of 2018 - a private round  - we do not know the outcome.  Given that they are now on Seedrs, maybe it didn't go so well?

We now understand that they have raised (18 Feb 2019) another £800k from existing backers. The Seedsr round is about to launch.

Everyone knows how difficult it is to get a new product to market. Everyone knows how many delays there will be with tech product iterations until they become scaleable and saleable items. We all know all of this. Clearly Kokoon didnt.  As if they had they would not have sent forth projections to gather funding which now look ridiculous.

We have been writing about them for a while - here 

They seem to be best at ignoring the obvious. That tactic may yet work but please dont be fooled by what you read in their pitches.

You can find the KS campaign here - 4338 comments and counting. The KS campaign attracted just under £2m from 8,400 punters with a delivery date of September 2015. How many exactly of these have received their headphones by 2019 is not clear. What is clear is that many have not. Those that have, seem on the whole, to be satisfied or maybe that is just knackered from 3 years of insomnia.

Thursday, 14 February 2019

Justpark's new shareholder 'request' illustrates the need for ECF.Buzz

Justpark have asked shareholders to click a box to allow them to raise loan finance. Which is fine apart from the total lack of information, the chance to ask questions in a forum and the information that is supplied being less than symmetrical.

Justpark are a regular on Crowdcube, having raised over £6m so far. Now they are telling shareholders that bank finance is a cheaper way of funding and it will have less impact vis a vis dilution. Eh? Well if you read the notice sent out to SHs, via Crowdcube, it goes on to explain that the bank in question will have rights to shares as well. So that isn't equity finance and wont that cause dilution? No mention of the price paid for these shares is given. Nor is there any mention of the amount being raised.

The company, who have struggled since 2014, are now making progress and certainly reviews have improved in the last year. However I'm sure investors will want to know why they chose to share the B2B revenue metric and not share the parking revenue metric? And guys using percentage increases is really pointless and can be misleading. A Year on Year increase from £10 to £20 is a 100% increase but it's not something to celebrate.

As a general rule, we always tell people that more often than not, it's what the company doesn't tell you that is important, especially if they start using odd metrics and percentage increases with no base figure. Just an observation we have come to from 8 years of looking at ECf pitches.

Losses to date have been large. But that has all been put down to gaining traction. That is the new normal.

We think your shareholders deserve better - they have after all put you where you are now.

ECf.Buzz will help investors get the real information so that they can make an informed decision rather than guessing.