Wednesday, 18 October 2017

Pavegen fails to light the world with kinetic energy.

Pavegen raised £1.9m on Crowdcube in 2015. Their power generating footfall slabs are excellent at creating PR if little else. Is it just a vanity project for their star actor, CEO and Tom Hiddlestone look a like, Kemball-Cook? 

This is one we saw coming - we are not there yet but shouldnt take much longer. 

Pavegen claims be part of the solution for one of  the world's most pressing crises - energy use.

It was sold on Crowdcube in 2015 as an energy alternative. Or you could say it was over sold.

So to date the tiles have been used in some very high profile locations but as promotions not power generators. The Pavegen team all sing in tune off the same sheet and it sounds great. They are as slick as Hiddlestone's suits and not shy of comparing themselves to Tesla. The product is of the now but does it really help anything?

If you can stand it, watch this Apple launch style video - and you will get some idea of the paf. The CEO says as at one stage 'So what do we call this'. We have our own idea. In this display, given to an audience of investors and hangers on, the CEO very proudly announces the first full time commercial installation - a major break through for the company. No ifs, no buts, no maybes. The venue is to be the Westfield Shopping Centre at the old Olympic Park Stratford City, we are told. He goes on about this being one of busiest sites in the world, which it may well be. The problem really is that this installation never took place. Despite the exciting announcement Pavegen never installed a single tile.  It was all nonsense. 

As an investor, we'd be worried about a few other things.

Firstly getting the price down to their stated level - the same price as standard flooring is never going to happen unless we have a critical global flooring shortage. The company has made some headway - the last figures we could find suggested £600 psm. So a long way to go.

The second issue is the power each step generates. Pavegen claim that the new triangular version which can generate off all three corners, produces 200 times more power than its original. That's fine at 5watts per step but it just means the original was nonsense. Can it get better? Well that is the billion dollar Q.

This level of power generation isnt really going to solve anything - its more of a gimmick for PR stunts; which is precisely how it has been used to date. Whats more, watching people walk over a section of them makes you wonder how long it would be before the lawyers would be involved over elderly sprained ankles or worse. The 5mm downward and back up movement cannot be comfortable. 

In any high footfall situation you also have to wonder what happens when litter, grit and general dirt gets down the gaps between tiles and if someone is already on one side but leaving and another person is just treading down - how do the tiles/people respond? None of this has been trialled as they have no high footfall sites that are in long term operation - despite the announcement. Used on pavements, we may find people walking on the roads.

The one thing that Pavegen should be applauded for in all of this is their ability to get people to focus on the crisis. Alternative power is the solution but just not this hype. 

And we almost forgot its new use - as a customer data collection tool. Im sorry but this has to be one of the most expensive ways to collect footfall data ever invented.  

Finally  - the one thing Pavegen have a proven record of, is the generation of large losses when they claimed they would be making large profits. Filed accounts show losses of £1.5m against Crowdcube's figure of a £280k profit for 2016. Dilution a go go; all the usual Crowdcube features apply. 

Mind the gap in more ways than one. 

Scaramouche and Fandango way off Crowdcube targets.

S&F or Galileo Group Ltd, have just filed accounts for YE Dec2016. According to the first HY update for 2016, they were on track for a record year. So what went so wrong?

The HY report that we have seen states that the company is on track to break through its Crowdcube 2016 revenue projection of £2.2m and is aiming for £2.8m. You have to dig a little to get the real figures for Galileo - the word Group in the title does not refer to the accounts. We have found a YE revenue of £2.15m between the Group and Galileo Products. So not close to the anticipated £2.8m. The Crowdcube projected profit of £658k on a £2.2m revenue, is filed as an overall profit of just £60k.

At the end of 2016, Galileo 'bought' the industry leader, Watermark Ltd. Actually they gave them 230k new issue Galileo shares and around £200k for the deal. Watermark had been making losses since 2000 and was technically insolvent by 2016. Restructuring, including a capital injection of over £6m, in 2007 enabled a small profit for two years but then it was back to heavy losses. Formed back in the 1980's to service the then growing corporate gadget market, Watermark had made substantial annual profits and paid juicy dividends. But expansion into the travel accessories market seems to have brought with it problems that were insurmountable. What is the point in having to service low margin contracts (Watermark's own description of its core problem), just to have a multi million pound turnover? If there is a message there it might be -  Drive for show putt for dough. As we keep on pointing out deals with he big boys at low margins are not really for small turnover companies - the impact on the cash and profit line is too severe.

Why the purchase of Watermark took place isn't exactly clear but may become so with another year's accounts. Watermark's 2016 revenues were $14m, down almost $4m on 2015. So there maybe synergies that will give Galileo the leg up it needs and of course a short term windfall may come from the fall in the £/$. Unless of course they bought forward in anticipation of a remain vote, as any sensible business with manufacturing and sales both in dollars would have done. It does give them instant access to some interesting overseas (HK for one) markets and alternative accounting centres.  

Issuing another 230k shares will dilute Crowdcube shareholders as it represents a 20% increase in the issued share capital. But they will be used to that.

A total turnover of only £2.15m for a company claiming to have deals with most the UKs top retailers and some of the world's top airlines seems to be very low to us. Are they giving the stuff away?

It is hard to reconcile such an upbeat shareholder report in 2016 and the accounts filed for the year.  Galileo posted a small overall profit of £60k for 2016, against a £650k projected NP. But more importantly it took out a £250k loan in the year; filed as coming from its shareholders. New updates have apparently not been forthcoming.

Tuesday, 17 October 2017

Please let us help you Crowdfund - you are making so many easily avoided mistakes

Looking at the Crowdcube platform recently, it is obvious many of the pitches have little clue what they are doing. We can help you - for free.

So many of Crowdcube's recent pitches have failed to get even close to 50% completed. 

ECF Solutions, our ECF consultancy, could help you avoid the heartache and waste of time that this involves. You either need to revamp your pitch, look at another platform or choose a totally different route for your financing. 

We will look over your business and your pitch and help you place it on the best possible platform, at the best value to achieve the capital raise you require and in the best possible shape to be a success.

We can do this effectively because - 

- We are totally independent.

- We have 30 years experience in creating SMEs

- We have reviewed over 2,000 ECF pitches

- We have been involved in ECF since 2011, are recognised by the FCA as a genuinely independent information source, work for various platforms on a contract basis and have this blog which is read by around 1000 people a week - many if them investors.

- We have called many of the failures on Crowdcube, before they happened and continue to do so.

Our initial service is free. If we believe that your business is suited to this type of funding, we will then charge you a small upfront fee to put together your campaign and help you through it. If it is not, then we tell you that and try to advise on other avenues.

When you are successful, we then take a prearranged percentage as a fee - so the impact on your cashflow is zero. 

With our help, Crowdcube could have a much higher success rate and far fewer very sad looking campaigns at 10% or 20% completed, by the time they end. It's bad for moral and it's bad for business to fail.

Email us now on to have a chat.

Some of the articles featuring us -

Monday, 16 October 2017

Crowdcube, Little Brew, less beer, and the tale of the open company and closed brewery.

Little Brew raised £109k on Crowdcube in 2013. Crowdcube decsribed it as 'Little Brewery with Big Plans'. They were wrong.

This a classic tale of Crowdcube's incompetence. We had this comment from a Little Brew shareholder - 

Little Brew are a disgrace - it's been over 6 months since the founder emailed shareholders saying that he had sold all of their equipment and that the only realistic outcome "may" be to wind up the company. That's more than enough time to either create a plan for the business, or announce a wind up. Instead we have no news, and investors cannot claim tax relief. He says that he takes investors' money seriously, yet he is happy to deny them loss relief through silence. 

Crowdcube, as you would expect, have been utterly useless. They should just send an intern up to have a chat to him (surely they have his home address??) - a cheap way to keep credibility. Instead they just try emailing him at an account that has been closed. 

Little Brew are now 17 months overdue with their accounts and other filings. As you can read above, they seem unlikely to be making any revenue again. The brewery has been closed in all but name for at least a year but CC SHs are unable to claim their loss relief because there is some reason the company hasnt actually been closed. CC are either unwilling or unable to find out why. Its a zero service game for the people who trusted Crowdcube to pitch them a reasonable business. 

As with so many of Crowdcube's businesses, it is no the fact that they have failed but the way they have failed and the total incompetence of Crowdcube to offer shareholders any help. Read through our posts and it is by far the most common theme. 

It will continue until the only people who can do something, do something. Hello the FCA - which should really stand for Failing to Correct Anything.   

Sunday, 15 October 2017

Jam Vehicles eventually provide accounts -

Crowdcube funded Jam Vehicles have now filed accounts for YE April 16, just a few months before the 2017 ones are due. 

These accounts show losses of £200k, little cash, negative CA and a BS that is £240k in the red. Around £430k has been raised since in equity finance. 

According to their KS campaign no bikes have been delivered yet, despite various promises and updates. The estimated delivery date for the bikes these people bought was April 2015.

Are we yet again seeing Crowdcube funding being used to fill the hole left by KS creditors - ie unfulfilled orders. You would think that at some stage people will learn that this is not a great idea as an investment. 

Judgement reserved until the next accounts arrive in January 2018 - if they do. The good news for CC investors is that the paper value from the last funding puts the company at around £2.2m, so well ahead of the CC campaign's £700k. They just need to provide a bike or two. 

Square Pie and the mystery of the Disappearing Restaurants

When Square Pie managed to get £650k off 324 Crowdcube punters for their 4 year mini bond in September 2015, they promised mass openings. Now in October 2017, they have fewer restaurants than two years ago.

We have given these guys some previous coverage - here

The original target for the bond was £2m but that soon looked untenable so they reduced it to £450k. That was a dumb idea. Then they had 6 restaurants in London, now they have only 3. Plus one in Birmingham.

In lieu of restaurants, they have teamed up with Vue - the cinema operators - to offer a pie selection to film goers. They have one Vue in London and one in Bristol. 

The last accounts to YE Dec 16 will not have thrilled SHs - a loss of around £300k against a projected profit of £75k. It is hardly surprising given the change in company's core strategy. 3 of the London restaurants from 2015 have now closed - which strikes us as very odd considering what the Crowdcube pitch said about them. The 2015 pitch showed the company operating 12 restaurants by YE 2016 - with 20 by the end of this year. 

So now they have joined The Eden Project and Riverside to see who can be the first Crowdcube mini bond funded company to fail to repay investors. Square Pie have little cash and now new investment this year. Their reviews remain poor. I wouldnt bet against them.  

Vrumi lose their vavavoom as Venrex zero them.

Vrumi raised just shy of £1m on Seedrs in 2015. Now along with their VC backers Venrex, they have valued themselves at zero as they try to find a way to work their market.

It's not the end but must be close. Vrumi are in the now rather overcrowded shared space market - they were the self proclaimed Airbnb of the work place. Their plans have failed to create the demand that they predicted, so in a move that must be a first in ECF, they have sent SHs an email stating that they have valued themselves at zero, after receiving the same figure from Venrex.

In 2015 they were valued at £3.5m pre money  - so £4.5m post. Why the company has felt it sensible or necessary to follow the Venrex valuation is not explained. It's not very encouraging for the Seedrs shareholders who were told in the pitch that the company had an 'exceptionally strong' management team. One assumes that cash has run out, targets have been missed and Venrex declined to back another round. 

It sounds like another sad ending - one to be shared amongst you all.