Sunday, 21 October 2018

Readers endorsements - always good to know the work is appreciated


Forgive the self congratulations. But we think it is worth pointing out to new readers that what we write here has some value and is reliable. You may not agree with it but it helps to make an investment decision in the round.


These comments are from a Seedrs forum today for an active campaign we have written about recently. Editing has been carried out to avoid names etc. Spelling mistakes are not mine (for a change)........................................

I'm sure XXXX is well on this but it would probably be very sensible for him to drop a quick note to Rob at fantasyequitycrowdfunding . I've read his blog for ages and he's a bit of a Marmite character - some people love him and others hate him, but one thing he's very good at is spotting discrepencies in crowdfunding pitches and raises.
...........................Rob has a lot of readers and good connections with some of the more sceptical financial journalists and it's always worth avoiding becoming a mention in that sort of story!
Well said XXXXX! I am also following the blog and despite the aggressive tone and clear bias (don't mention Crowdcube!) he is often spot on. I think he is doing a great job for the crowdfunding sector with his blog.
Thank you to the readers. Long Live Marmite. 

Wednesday, 17 October 2018

Crowdcube success Movem is sold to Barbon Insurance Group for £3m - most Crowdcube investors lose out



Great news for investors in Movem - an exit. Just a month ago Movem was taken over by Barbon in a deal which leaves the CEO in place and Movem in tact. So did investors make any money?

Addendum - sales price was a smidgen over £1 a share so a total value of £3m. First rounders did ok and second rounders wasted their time. Maybe that's why Crowdcube have ignored it? Thanks to SHs. It looks to me like another Ecar Club or Camden Brewery rush to exit before implosion. Reading some comments on Crowdcube, this will have done them more harm than good. Investors in round 2 feel used  - a cheap bridging loan to enable founders to exit is one interpretation. And for what risk? Im sure we can do better than this. Our new forum will be the the place to get the information (like this) that CC bury. 

Movem had two successful rounds on Crowdcube in 2016 for £199k  and then 2017 for £395k. The first round valued the company pre money at £800k and the second at £2.4m. Now we dont know the numbers for the takeover but we do know that a SH invested £3000 and received £7811 on the sale. - Well we do now.  

As we now know thanks to SHs getting in touch - Movem was sold for £3m. As investors in 2017 paid £2.4m with a post investment valuation of ~£2.8m there aint much profit in that. Investors were not given a choice in this. As one disgruntled investor put it  -  a very cheap loan to get founders to a sale where they cream off the money. It was also mentioned that there should be a list of people who make claims like 'Im in it for the long term' and sell investors out 12 months later - a list where future attempts to make the same claims can be challenged. We will be offering such a list on our soon to be launched new site. Welcome Peter Ramsey, Philip Screeton and Richard Totty. 

No wonder CC have not PRinged this big time. 

Monday, 15 October 2018

Clippings reports losses of £1.5m after raising around $15m in the year.


Clippings raised £845k on Crowdcube in 2015 and has raised around $15m since the end of January 18. Two key investors were C4 Ventures and Advanced Venture Partners. 


The company which offers contemporary design furniture on line was only due to make a loss of around half its actual £1.5m. 

It will be interesting to see if an investment of this size will be able to turn things around. The involvement of C4 might suggest an explosion is due. 

Sourced Market back on Crowdcube selling equity



Well well. Sourced Market sold their £1m bond on Crowdcube in 2016. To achieve that they produced financials showing their expected progress. Now they are back on Crowdcube with a valuation of £10m, raising £750k in equity or more likely far more than that. 


So how have they performed since 2016? Well they tell you that things are going great guns - but then they dont tell you what they told you last time. 

So they have 4 units and four units is what they projected. That is pretty well where the good news ends.

Turnover was supposed to be north £9m for YE March 18 but is only £6.4m. Revenues for YE March19 were forecast to be over 11m. EBITDA for YE March 18 was supposed to be £500k but is in reality, minus £800k. Even on £6.4m (a figure they told investors was expected for YE 2017) they showed a positive EBITDA of £300k. What has gone wrong - well nothing apparently. 

Now reading the current Crowdcube pitch, you wouldnt have a clue about any of this. We are not saying this company wont be a success, we are just pointing out the facts which seem to have been missed in the latest attempt to raise more cash.

This campaign is almost complete at the £750k level from just 35 investors. 

Oh and the bond is still o/s as are various other long term debts. 

Sunday, 14 October 2018

We are launching ECF.Buzz - a one stop goldmine for all things ECF for both investors and companies.



ECF Solutions is launching a new site - ECF.Buzz - A subscription site, including this blog with free access, where investors and companies can read and download guides to and reports on all things ECF. Plus a forum so you can a have a safe and sensible place to discuss experiences, ideas and find what did happen to that investment!


Knowledge is Power - we have the knowledge, you need the power.


Fantasy Equity Crowdfunding (FECf) will have an annual subscription, a one off fee option for guides and reports, a separate forum subscription option and a one day, read only, use of the forum facility. We believe we are uniquely positioned as an independent source of relevant information in the sector. We intend to offer that information to subscribers. Since 2011, when ECf was created in the UK by Crowdcube, we have been writing about it. We have been correct in pretty well all of our assumptions to date. We know our advice is pertinent, as current downloads and feedback on our DD guide and our advice to hopeful ECf companies, both show this. 

Guides (~40 in total, updated and regularly added to) will use real data collected over the past 35 years and will include  - 

  • The Art of Due Diligence
  • Investing via ECF - what you need to know 
  • How to make sense of small company balance sheets
  • Reading what's really happening in a projection sheet
  • Analysing a Business Plan and Pitch Deck
  • Spotting a winning team
  • SEIS/EIS guide
  • Best practice for creating a successful ECF campaign
  • Telling the difference between fact and fiction.
  • Using SM to find out the facts.
  • Avoiding Overtrading
Annual reports using our data set will include

  • ECF platform analysis - independent!
  • Sector analysis 
  • ROI and analysis by sector, exit method etc
  • ECF Europe and ROW - developments and opportunities
  • The Regulation Landscape - what to look out for.
There will also be an information centre which take all of the data we have currently on companies that have raised, failed to raise, the people involved and the outcomes and allow you to search for what you are looking for. Additionally there will be a resource library with links to hundreds of useful resources and reviews of some of them. This may take a little time to get up and running as it will be manual for us to start off with. This will link into a purely fact driven information centre on live pitches - again allowing investors a level of information that they could not hope for without our service.
We would like to know if you have ideas that should be included. If we havent already thought of them then we will offer you free membership for a year if we use them. Dont post them here but instead send them direct to me at rob@ecfsolutions.co.uk. We are also keen to talk to potential partners who may have something to offer to this project. So please do get in touch.

We hope that with traction this will develop into a site that will be able to run an annual get together for networking etc. A community of SMEs and investors, with a common goal - the success of UKplc. 

If we can help make investors more savvy and help companies choose the right time and strategy to use ECF, then we will all be winners. This will force the standards of investment opportunities higher, make the businesses more sustainable and cut out the dross.  

The aim here is not make a lot of money. The aim is to help preserve ECF as a functional way to create sustainable SMEs in the UK. The fees will be small. To give you an example a single download will be ~£9 and 12 months full membership will be ~£36. This is still WIP.

Help us make a change for the better.


Saturday, 13 October 2018

Macrebur have parallel funding rounds on Seedrs and Angels Investment Network.



Macrebur, the maker of a recycled plastic additive product for roads, is currently over funding on Seedrs and is just over halfway to its £4m target on AIN. Neither campaign appears to mention the other one. 


It is a little confusing.

Following our piece here and some Qs to the company from Seedrs investors - the AIN camapign has been removed. When asked on Seedrs what this was all about, the CEO of Macrebur claimed that they had not put up the campaign on AIN and that this was merely a collection of HNWs all linked via a FB page. That'll be news to AIN. Confused? 15/10/18 

Just to make things even simpler, we now discover that a deal is also on offer via Greenbackers - here - .https://www.greenbackers.com/the-pitch.html - this time we have a screenshot.  They pitched to the Greenbackers on 11 October according to the platform. In this pitch the total being raised was not £2m, it was not £4m but £6m - £4.8m of which has already been raised. This £4.8m does seem to include include the £500k from Pontaq that is listed on Seedrs as part of their campaign - so this has been double counted. On Greenbackers there is a new amount of £1.8m already funded by Instarnac - something that is not mentioned on Seedrs. 

To help clear up any misundertsnading and to explain the CEO's claim that we have facts wrong re the £1.8m Instarmac investment in Macrebur  - here is a copy of the slide (slide 8 of 9) that is downloadable as Macrebur's PD on the Greenbackers website - 



So the CEO can hardly claim we are wrong - Greenbackers maybe but that would have involved them putting this PD together for a pitch that the Macrebur CEO has readily agreed he went to. It states VERY clearly ''investment so far'' and then lists the £1.8m.

This may well be all perfectly fine but it does seem a little confusing. There are certainly claims on the Grenbackers PD that do not stand up to much scrutiny - this one in particular - 'MacRebur are not aware of any other company in the world using a mix of waste plastics to replace bitumen in asphalt'.  See 

https://www.smh.com.au/environment/sustainability/plastic-and-glass-road-that-could-help-solve-australia-s-waste-crisis-20180802-p4zv10.html

and to counter Macrebur's claim that somehow one of their distributors is responsible for the Austrlian article/product here is a little more on their product - which makes no mention of Macrebur or its products. Which begs another question - about the patent??

https://www.closetheloop.com.au/wp-content/uploads/2018/06/Fact-Sheet-for-Plastic-and-Glass-Modified-Road.pdf

If a company is going to use multiple online ways of raising the same funding in the same round, it doesnt seem too much to ask that they use the same information each time. Macrebur's claim on the Seedrs forum that we are wrong is completely untrue - check out the facts; they are all correct. As AIN have now removed this pitch, there is now no issue.  We wish them and all who invest the best of luck.

Both campaigns have a pre money valuation of £14.5m. But AIN is not, strictly speaking an investment platform. It promotes campaigns and then investors get in touch directly with the company and invest. According to the AIN Macrebur page, £2m of the target £4m has already been invested. As AIN state in their own words, this investment simply goes straight onto the company - there is not minimum level requirement as with ECF platforms.

So to cut to the chase - a pre money valuation of £14.5m would be the same as a post money valuation, after this £2m has been 'invested', of £16.5m. But the Seedrs valuation is also £14.5m. 

According to AIN that £2m has already hit Macrebur's bank account. According to Seedrs it has not. 

AIN are not FCA regulated although their new ECF platform, Seedtribe.com is. 

The Burrito Bond is back - Dónde va a terminar


Chilango have issued a new bond - this time on their own. Burrito Bond 1 was issued through Crowdcube in 2014 and is now due for repayment. As the company is someway off all of its targets, this new bond will do the trick.


Chilango had 6 restaurants when they issued the first bond in 2014 and had a total of 10 ready to go by the end of that year. Now they have 12 - 4 years later. Revenue for FY 2017 was a mere £10m compared to the projected ~ £20m (date changes make a like for like difficult). No profits were due and no profits have been delivered but the losses have been considerably higher than anticipated - aided by the slow progress and closure of one unit. Losses of around £250k have turned into losses of £1.4m.

Chilango also raised £3.7m on Crowdcube from over 2000 investors, in 2015. Maybe the lack of progress has meant that a new equity round was going to be hard work. According to the accounts to YE March18 they raised around £1m in the year and another £28k after YE. 

Since the 2014 success, the company has lost its battle with HMRC over a £700k vat bill, lost one of outlets and its central kitchen and pivoted the whole concept, costing many millions. You can read about all of this here. Reviews of their food are stubbornly stuck at average.

In an amusing twist, the company's auditors are Grant Thornton, whom you may remember recently missed a £20m hole in Patisserie Valerie's accounts. Room for a few burritos there. 

The current balance is in the red and company as at 31 March 2018 was short on cash with heavy debts and still struggling to break even.

In the Bond Offer document back in 2014, they told investors - 

Q - What happens if you can’t open any new restaurants?
A - Although our plan is to open new restaurants, if we can’t our existing financial position would be        strengthened as our current restaurants continue to mature. 

Well that didnt work too well. They forgot about closures, bad choices and rising costs. 

Given the above, what are their chances of raising more on this new bond? 

Well as with almost all things to do with ECF, astonishingly, they have, after just a day or so hit their minimum £1m target. Of course none of the information above was readily available to investors.

On she sails.