Why are so many ECF reports so poorly informed?

NESTA is a highly reputable organisation. They teamed up with University of Cambridge and University of California, Berkeley,  to produce a definitive report on Crowdfunding in the UK - http://www.nesta.org.uk/sites/default/files/the_rise_of_future_finance.pdf.

In it they state UK equity crowdfunding, as opposed to the much larger P2P lending sector, is producing encouraging results from the funded companies; no evidence was supplied. In another extract, they stated that ASSOB, which has been helping Australian unlisted companies raise capital for the past 8 years, showed just how ECF in the UK could produce winning companies.

Taking the first assertion, not one of the 200 plus companies that have raised ECF in the UK since 2011 has returned a single penny to investors. Of 100 or so that we have records for or that have filed accounts since their raise, only 2 have come close to meeting their projected sales targets - the ones so colourfully published to sell their equity. At least 15 of these companies have already gone bust, not only losing investors all their cash but also creditors and the taxpayer theirs too. What Nesta have failed to highlight is that the data they are using includes the much larger P2P lending market - a market with far lower risks and as similar to ECF as chalk to cheese. This misinformation has already been jumped on by the hyper active ECF PR machine and recently appeared in a BBC report - http://www.bbc.co.uk/news/business-30101365. So now it is a fact - only its completely untrue.

The second NESTA assertion  - that UK ECF is in some way very similar to ASSOB is quite simply baffling. Even more so when the association is blatantly used to state that as ASSOB has only seen a 15% failure rate in its participating companies, that this somehow means a similar rate is relevant to the UK ECF market. ASSOB have very strict rules which no UK ECF platform's come close to. They tend to help Public Co's and have very little to do with start ups. Companies must report quarterly post investment and they operate a secondary market. They are more akin to AIM than anywhere close to the razzamatazz of equity crowdfunding. It is also unclear as to whether investors through ASSOB have seen any ROI - we have not found any examples.

We can only assume that NESTA knows this and so have chosen to misinform.