Monday, 9 March 2015
Information on some current pitches
Ineed - This company has raised money on Crowdcube before and has missed its projections by a long way to date. Its due to publish accounts to 08/14 in May 15 and we wonder why these accounts, which from previous filings will not be large, have not been brought forward to allow potential investors a look at them? Its also worth noting that they changed the accounting reference date from a year ago - then it was 02/14 so these accounts would have had to be filed by now.
JustPark - We recommend that investors check out the small print with regard to the powers that the VC investors have in relation to the Crowdcube nominee investors in the future - specifically their right to alter and override existing agreements without reference to ordinary shareholders. Its all there if you click the right button, although its not made evident in the pitch. Dilution on a grand scale is a given with this investment - check out the same VC's recent activity with BLABLAcar.com
Flavourly - This company raised £116k on another ECF site Angelsden in February 2014. Its progress since has not matched the projections used to sell that equity. It uses heavily discounted Groupon deals to build an instant subscriber base - then promotes these figures as the key driver for its future success when it pitches for ECF. But the reaction to the Groupon deal was very mixed, with many complaints about the service or lack of it. Also it seems to us that using this method will not play well when it comes to retentions. This method of building a subscription base is also used by another Crowdcube funded company Beer52, which has a noticeably similar management to Flavourly.They have both also raised money on Angelsden and Crowdcube.
One final point on this pitch. The use of ''overfunding'' by platforms in general but in particular by Crowdcube, should be stopped. Investment is made on the information (correct or not) supplied. However it appears that it is Flavourly's stated intention (not stated in the pitch we should add) to raise not the stated £300,000 but up to £500,000 in this round. So you guarantee this one will overfund.
More will follow.
The general rule when dealing with Crowdcube pitches - if you want to have a chance of success - is to check out in very great detail all of the claims the pitches make. See if they have raised ECF before, if so where and when. Although the original pitch's projections will no longer be available, these companies tend to go large on PR and cant resist bigging themselves up. So scanning the web for articles usually reveals their anticipated plans. Compare these to the figures given in the current pitch. More often than not you couldnt make it up.