Thursday, 19 April 2018

Crowdcube's Affresol raised over £2.5m and is now in liquidation

Affresol created a new building block out of recycled materials. Their problem seems to have been a lack of business skills to solidify their own foundations.

Back in 2013, Affresol used Crowdcube to raise £130k. Since then they have had repeated rounds off platform, taking them to a share capital of over £2.5m. Accounts(the latest ones were never filed) show consistent losses and in a recent email we have seen, their last attempt to persuade investors to help out again went unanswered. Investors had seen enough.

Their projections were rich but the concentration on their core client Network Rail has never produced what they said it would. Sales have never come close to any of their projections, whilst costs have. QED the money has gone.

The company received considerable funding from Welsh Government grants - one for £245k in 2015.

We predicted its demise long ago but have had to wait until now for the result. Whilst it's good to right, yet again, this is a business that we think should have worked. It was just very poorly managed.

We wrote about the company several times here

Sympathies go out to all those who lost money.

Wednesday, 18 April 2018

Are Crowdfunding investors leaving themselves wide open to abuse?

A recent example on Seedrs comes to mind. Society pitched and successfully raised a heap of cash on the Seedrs platform in January 2018. Now investors have been told they dont want the cash - they have sourced it from somewhere better.

How do you investors feel about this  - really?

On checking out Society we came across a far more serious example of potential abuse.  The company recently suspended its M&A clause on pre emption rights by voting on a special resolution. That's fine as it was only going to affect the founders. But what if this happens when they have a Seedrs nominee account holding hundreds of Seedrs investors. These investors form only a small part of the overall share capital in the company. So the majority ownership by the directors could do the same thing whenever it chose.

Roll that fact out across all of the Seedrs and Crowdcube investments and you wonder why people bother with legal agreements. We have already seen a few cases where investors have had their pre emption rights removed.

What can investors do to protect against this?

Crowdcube's Award Winning Flossonic crashes out despite awards.

In 2013 Flossonic won Crowdcube's Product of the Year. Along with a whole host of other winners who have departed this world. It also took £126k off Crowdcube punters, claiming SEIS and EIS.

Since then it has done nothing. Flossonic was supposed to be a special electric toothbrush. Well it either never existed or it couldnt be sold as revenues were next to zero for all years since 2013 and now the company has been struck off by CH.

In summary, the 100 plus investors would have been better investing in a new wooden spoon manufacturer.

In 2013, Crowdcube struck a very rich vein with the award winners they selected and PRinged everywhere -

UPDATE - since writing this a day ago , Affresol has fallen off and is now in liquidation.

Righteous                            - Founders now moved onto Cauli Rice after massive de listing
Front Up                              - Bust
JAM Vehicles                      - Very slow see KS comments
Kamm and Sons                  - Had to change name and still very slow sales.
Green and Pleasant             - Bust
Ovivo                                  - Bust
Pizza Rossa                         - Bust
East End Manufacturing     - Bust
Inspiral                                - Hanging on
Solarmass                            - Bust
Wild Trail                            - Bust
Quantock Brewery              - Bust
HAB                                    - Doing OK
Seek&Adore                       - Bust
Ineed                                   - Bust
Affresol                               - Hanging on
Lawbit                                 - Hanging on
E Car club                           - Sold to Eurocar for small 3X ROI on £100k invested.
Carbonlights                        - Hanging on.
Cell Guidance Systems       - Hanging on
Fantoo                                 - Little idea, coupled with Dell.
Asset Match                        - Hanging on
Red Advertising                  - Hanging on - have been back for 5 more rounds.
New Galexy                        - Hanging on
Flossonic                             - Bust
Zovolt                                  - Some crazy accounting!

Dont forget these are Crowdcube's award winners; not some dross off the street. Hanging on means just that - not good at all.

26 in total, one sale for small returns. 11 bust but with 13 others heading that way. One doing OK but not close to an exit. Would you invest in these now?

 Since 2014 Crowdcube have stopped PRinging their awards. You can see why.

Tuesday, 17 April 2018

Is this another smash and grab on Crowdcube?

Jewelstreet is back on Crowdcube. It last funded here in 2014 and promised sales of over £30m in 2016. Sadly it has only just managed around a hundredth of this. Maybe this time round they will get to have a better go.

There has been a complete refurbishment of the management suite, led by the main shareholder, Guernsey based businessman Paul Fraser. Mr Fraser is a very busy man so how much time he will spend on this company is questionable. In fact Jewelstreet doesnt even get a mention on his Linkedin page. (Well it may now).

I suppose this all depends if you believe what they say in the pitch. The hard evidence we have is that for 3 years it has been a complete flop. But that is the same with pretty well all of the Crowdcube businesses. Yet you still fund them.

In the first pitch, which smashed its £100k total and finished on £180k, the company told investors via an article in Insider Media, here, that a likely exit date was 2016.

We wrote about them before here

 Non omne quod nitet aurum est!

Monday, 16 April 2018

Vita Mojo had some spare shares

Vita Mojo raised £3.2m on Crowdcube. Now it has offered those shareholders a time sensitive share offer at the same price for £300k worth of their shares. 

Vita Mojo puts a whole new meaning into laptop food. Their software allows them and you to create your own food.

The idea is new and it will be a while before we know if it works. But having raised over £3m via Crowdcube, shareholders were surprised to find an email asking them to buy more shares - an allotment that the company says was time limited and in total came to an investment of £300k. The minimum investment was set at £7,500. That time has now passed. 

Quite why they would be time sensitive was not explained. One idea we had was that this could be a case of an investor/s pulling out after the campaign closed? 

We dont really know - do you? 

Friday, 13 April 2018

Bactest succumbs to the classic start up flaw. Cash flow.

Bactest funded twice through the Syndicate Room platform; around £1m in total. Now with the cash gone and sales unable to meet costs, the company has put itself into liquidation.

There are two kinds of failures with start ups. Genuine companies that do everything in their power to trade and make money and companies that take the money and never had a chance. Bactest is firmly in the former camp.

As the name suggests, the company developed and sold equipment for testing bacteria levels in water. 

Its products did sell and the company won several industry awards. Since funding, it had added to its portfolio. But therein lies the problem. Maybe more concentration and spending on driving sales of their original products and less on R&D and this story could have turned out differently. Either that or deeper pockets. But the investment line ran dry and that gave the company little choice.

It is too early to know the state of their accounts but there is sure to be value in their IP. 

This is one failure that it seems fair to put down to death by natural causes. Both the company and Syndicate Room are helping with investor enquiries.    

Have you met The Russians? Revolut and Telegram have.

We were asked to provide some good news by a reader. That's quite difficult if we want to give you the facts. However this is an interesting illustration of the problems all things Russian have today.

As Im sure you all know, Revolut is the baby of a Russian parent. Recent news, which we were told was good news, reveals that there is a possible funding round for Revolut being led by DST, founded by the Russian venture capitalist Yuri Milner . This, if it happens, would push Revolut almost overnight into the Unicorn Club. It would also give Crowdcube investors a theoretical return of 30X.  You see we can do good 'news'.

But 'stoy' we cry. A recent development with the Telegram Chat App has led to the Russian Government blocking access. Telegram claims 9m Russian users. Telegram is owned by a Russian, Paul Durov. It recently completed a £1.2bn ICO. The reasons given for this block is that the company failed to give the Russian authorities access to the data of its subscribers. This is a so called security measure. The company originated in St Petersburg but left and is now in Dubai.

So when you hear that the company you invested in, Revolut for example,  has Russian connections, you should maybe factor this into your investment decision. Crowdfunding investors in Revolut came from Crowdcube and then Seedrs.