Sunday, 17 June 2018

One we missed. Rateragent closes down after some very odd Crowdcube numbers induced investment.

This is the Crowdcube model in action. Rateragent made several claims and produced some very interesting numbers in their 2015 Crowdcube pitch. It managed to raise £134k from 133 people who really should be ashamed of themselves.  

The company then filed one set of accounts for 2015 and has filed nout since - being closed by compulsory strike off in December 2017. Con? Well you judge. Revenues went from £170k to £2.6m in 2 years - well of course they didnt but that is what Crowdcube agreed to print so they could claim their commission. We will never know if there were any revenues  - losses for 2015 were more than double the Crowdcube figure. Our ridiculous accounting system means that we cant learn much from their filings. 

We called this back in 2015 - here. 133 of you didnt listen. Crowdcube made around £6k, everyone else lost the lot.

Its worth noting before you read the final paragraph that the company's strapline is -

Rateragent - Where transparency is Key. 

In a final baffling twist, Rater Agent Reviews Ltd, with the same logo, is now operating here. This company was incorporated in August 2017. Joshua Paul Rayner is the sole director and shareholder and was until a few months ago a director of One Moment Ltd - the parent of the original Rateragent and the company Crowdcube investors put their money into. Ring any bells?

Yet another Crowdcube moment and groundhog day.  

More poor results for Crowdcube funded companies keep pouring in.

Saying everything is brilliant when in fact you know its all over, is not a sensible or rational act. But is happens too often.

On the back of some alarmingly bad results for Crowdcube itself, Crowdcube announce that have they just had a record year. Well here is some more good news to add to that - 

Powervault - still in test phase and reported £1.5m loss for year when they had a loss of under half that in their projections. Time will tell.

Health-Connected - Further losses of £71,000 filed against profits of £3.6m 

Cauli Rice - as already reported way off even the altered projections. Excuses excuses.

Freetrade - Still in trials. Supposedly with revenues of £3.7m for YE Sept18.

ISO Spaces - live on Crowdcube and going nowhere. Filed loss of £250k against Crowdcube projection of £2.6m profit. Is it any wonder people dont believe them?

Witt - as reported, way off targets. 

In all, we have files on 37 companies due to report in May and June. Not one of those that have filed, have come even close to the projections used to sell the equity on Crowdcube. Not one. We have a waiting room of overdue accounts and our experience suggests most of these will go to the wall. We are not making this stuff up - it is real hardcore fact - no spin, no PRing. 

When something is so obvious, how can people still be stupid enough to swallow up more of the same. Equity Crowdfunding might work, but Crowdcube's model doesnt. It is centred on Crowdcube making commission, not on creating viable businesses. 7 years on and that is an indisputable fact.

Saturday, 16 June 2018

Crowdcube 2016/17 results are out. Revenues fell!!!...................

Crowdcube have  filed their accounts for YE September 2017. The news is not good. Revenues fell by 5% over the 12 months and the company filed yet more large losses - £4.626m. So where do they go from here?

The company managed to raise another £1m in May 2017 but this was at the same valuation as the previous public raise in September 2016. You can hear the massive wheels grinding to a halt as the bearings explode. 

The only good news we could find is that the loss for the year was lower than the previous year but when your turnover is falling  - what does it matter? Falling revenues are the result of falling funded completions - a 5% fall at this so called 'growth stage' is a disaster. We didnt expect to see that sort of collapse.

In a good piece in the Sunday Times, Luke Lang of Crowdcube is reported to have said that the year was record breaking one for the company with £90m invested via the platform. So £90m produced £3.8m revenue. That's an average commission of just over 4%. But we know their standard rate for SMEs is 7.5%. So smaller companies are paying for the larger ones? We had heard a rumour that Revolut used Crowdcube for free - maybe we can see that might be true from these numbers.

At that rate the company needs to be completing well over £180m in funding just to cover its costs of £7.5m. That simply is not going to happen using their model. This all comes at a time when recent disasters like Sugru and Thevibe are putting Luke et al into the limelight for all the wrong reasons. More disasters are in the wings - see next post.

Someone asked if the ECF sector was seeing a fall in activity. Well we are not sure but Syndicate Room reported a doubling in their deal flow, which suggests if you have a decent model and are honest, you can still make good things happen. 

This is what Crowdcube said about its progress in a recent shareholder update - 

This has led to an exceptional year where we’ve significantly increased the volume and speed of launching pitches, which has positively impacted other key metrics. 

Is it just me or is that statement totally at odds with their filed accounts? The referral to the exceptional year must mean exceptionally poor? Increased volumes must mean that they have for some reason been forced to reduce their commission rate? 

In this report they also state that the 2017 revenues will be £4m - the largest revenues since they started. This is clearly either misleading or wrong. We dont know what the figure could be if this refers to the calendar year 2017, but we do know the accounting year to September 2017 saw revenues of £3.776m. In a update to your own SHs, you would think the date reference would be the accounting year. Why would a finance company use the calendar year unless to mislead?

It doesnt even bear thinking about the original Crowdcube pitch projections for itself - the numbers are so crazy out of kilter we cant bring ourselves to print them here. 

The fall in losses is a direct result of a reduction in costs of £850,000 - that must mean Darren and Luke have forgone their bonuses.

Upbeat references to increased deal flow - ie more pitches than ever before, ignores the essential point we keep on making. Pushing out lousy businesses with fantasy plans and numbers, will not lead to success. Increasing numbers of failures, with many having more than interesting stories attached to them, are a direct result of pushing through over valued, poorly managed companies for the sack of their own revenue. Now even that is falling. Why - well to the state the bleeding obvious, investors are wising up. 

There is talk of a new funding round in 2018 - there is just enough cash to carry the company through to September without one. Given these results it will be interesting to see where they go for money. The profit and loss account is at minus £17m and counting. Meanwhile all indicators are heading south. It's not a ship I would want to be on.

Of course non of this will get into the ECF fake news press and probably wont make a dent in the national newspapers. If you are an investor, we'd like to hear your take on the way these numbers stack up and the way Crowdcube have managed their release. Get in touch via email as we need to be able to verify you are a SH. All off the record and anon. Thanks.

Friday, 15 June 2018

Farmdrop could be Crowdcube's watershed?

Farmdrop raised another £10m recently. They appeared on Crowdcube at the start of their journey and raised £750k. Now the valuation is five times higher. What's not to like?

Well for one thing they dont seem to be able to make up their mind what they are. Since the Crowdcube round, where they were hub based and pick up orientated, they now deliver. Using electric vans for the last few yards. A completely different business really - more of a dig it up and move it than a pivot. It has certainly delayed their progress.

In the Crowdcube pitch they stated that in 2017 they would have revenues of £70m. So as we all know, these are projections and cant be taken as fact. But you would hope they would be on the same planet as the real figures - wouldnt you? Otherwise, what is the point?

In their latest PR -  - they state that they are on target for £10m annualised revenue for 2018. This is a claim made with some considerable pride - one we should be applauding. Well guys when you compare that with your sales pitch for selling £750k of equity in your business, it looks well past its sell by date. 

Best we can say is; long way to go. I personally never believed that the UK shopper gives enough of a to take part in the Farmdrop revolution and if they did they would be already be out there supporting farmers markets. People's main anxiety these days is having it now, with as little effort as possible and as cheaply as possible. A very small percentage of us care enough to bother with this. The delivery is incredibly expensive to manage - much like the Deliveroo model - and profits will be elusive. It really doesnt have a USP and barriers to entry for existing food suppliers/delivery co's are low - if the model was ever going to be a success.

Then of course you have to consider the dark clouds of Brexit - which were not even on the horizon when 351 piled money into this via Crowdcube. Small farmers - the core of Farmdrop's supply chain - will be hardest hit and will likely go to wall in numbers in the first 5 years of the chaos we have brought down on ourselves.  

Might well be wrong but the numbers suggest not for now. 

Tuesday, 12 June 2018

Now we know - Thevibe or Vibe Tickets went bust because Luke Massie, the founder, failed to pay HMRC and owed them £57,000 on going into administration

The more we get to know about Thevibe's demise and resurrection as Vibe Tickets, the less we like it.

Not all the information is out - yet. But the initial filing shows Luke Massie's company owed HMRC PAYE and NI £57k. For a small business that suggests some seriously poor management. All his excuses turn to dust as we find out the real reason he called in the administrators. Debts to HMRC, once out of control, do tend to have this effect. 

We note that the total deficit is only £87k so the 'sale' of the company back to Luke Massie should leave that cleared up. We will have to wait and see. We will also wait to see if his promise of free shares in his new venture (well the old one rewrapped) Vibe Tickets, for all Crowdcube SHs, comes to pass. 

If I was an investor, which I wouldnt be as his ability to run anything is highly questionable, then I wouldnt want shares in this company, I'd just want rid of him.

Luke's PR keeps on purring as he gets Steve Bartlett - the wonderkid of SM - to interview him about how the poor lad has been hard done by in the press. FFS get a life. The interview is over a hour long and riddled with inconsistencies, lies and half truths. Bartlett should be ashamed of himself peddling this type of nonsense, when he removes comments and refuses to respond to Qs about why he has ignored the facts. Mind you, Bartlett says he thinks one of the most valuable lessons an entrepreneur can have is cold calling selling double glazing - essentially nuisance calling which is or should be illegal. The guy is a flake. Maybe one day Steve you will join the grownups and make some money but from looking at your accounts it wont be anytime soon. 

Monday, 11 June 2018

Stakis Daycare Nurseries - never opened and is now dissolved.

For all the use Stakis was  - it may as well have been a plant shop. Evros Stakis, the founder and son of the late Stakis empire builder Sir Reo Stakis, took £101,000 off Crowdcube investors in 2013 and spent it - but he never opened a single nursery.

This story is nothing unusual on Crowdcube - made up business with fictional plans and then a 3 year delay whilst it slowly dies. We will never know what happened to the money or indeed the idea if there ever was one. The plan was to open 80 nurseries. His other company Stirling UK Ltd has also closed.

This is what Evros said about the company's exit plans on the Crowdcube, FCA regulated, platform -

The Exit Strategy

In terms of exit, Investors should be encouraged to take a 3-year view given the Seed EIS cover, which they would forfeit if they exited within that period. Having said that, once it has built a story and track record, the Company intends to list within the next twelve months on the London-facing Danish exchange, GXG Markets. That, of course, does not preclude a trade sale in the interim to a recognised player in the childcare sector.

Yet another one to cross off my list.

Wednesday, 6 June 2018

Witt Energy top the Crowdcube pile of May disappointments

Witt raised £2.4m on Crowdcube in 2016. Their projections, used to encourage this investment, which was over 3 times their target, are now in pieces. Other companies also followed the trend in the month of May. 

Witt is a serious company creating a very serious renewable energy facility. Why then, you have to ask, are their financial projections on Crowdcube a total joke? There can only be one answer, the same one we have been giving for 3 years here - it's to get investors hands deep into and out of pockets.

There is one very consistent feature with all Crowdcube pitches. They dont just miss projections - they totally blitz them on the low side. When something is so bleedingly obviously wrong, why is it it cannot be corrected?

Witt had forecast profits for the YE August17 of £394k. They made losses of £470k. Whats more, this year, they have projected profits of £4.08m. How's that going Witt? And as we are on the topic, the one we never get off, how is this fair and not misleading?

Witt declared a £200k loan in the Crowdcube pitch, which was due for repayment in November 2018. This loan was in fact repaid in April this year in full. Obviously as the company raised an extra £1.65m on Crowdcube, they have cash. But it does seem a little odd to be giving £200k back 8 months early, when the company will need more cash soon. 

Other members of Crowdcube's over subscribed Disappointment Club for May are - 

Pallet Eater
Tidy Books Europe.

Plenty waiting in the wings for June and plenty late filing.