There is something odd about a current pitch on Crowdcube - Wrap it Up. They are looking for £400,000 for 6.25% - so valuing the company at a mouthwatering PV of £6.4m.
Wrap it Up Ltd has been closed and Wrap it Up Holdings is owed £1.1m by this closed company. They both have addresses related to the current pitch. How this sum is allowed to appear in current debtors on the balance sheet when it is noted as a long term debt is questionable - but then the accounts are not audited.
According to the WiU website, the company is run and owned by World Gourmet Restaurants Ltd - set up in 2009. According to the current pitch on Crowdcube , this operation turned over £2m in 2013. The accounts do not reflect this although it is impossible to be sure. There are a whole group of sole traders listed as Wrap it Up whose addresses correspond with the units listed by World Gourmet Restaurants. World Gourmet Restaurants Ltd last filed accounts showed a current debtor for £76,000 as 'cash deposits' for securing leases. Again as with Wrap it Up Holdings, this should not be in the current assets. The accounts are unaudited. In these accounts there is no company structure to suggest a legal connection between the sole traders and the World Gourmet Restaurants.
The Founder of WiUP and World Gourmet Restauarants, has a good list of closed companies. Not quite a cricket score but certainly getting there.
Wrap it Up are listed on Trip Advisor at 3.5 with only 23 reviews - a small number for a company that has been trading for 8 years. As 6 of these are 'poor' and 'terrible' they clearly have some work to do. The accounts show 4 years of trading with losses for all 4, accumulating to just over (£200,000). Where does that leave a current valuation of £6.4m??
The company has had £125k pledged to date but £100k of that is from one investor. As usual on Crowdcube, this we are sure would have been an prearranged deal so 'nout to do wit crowd'.
We think that companies pitching for public money on ECF sites, whilst also benefiting from EIS and SEIS tax rebates, should be required to produce at least one year of fully audited accounts. Crowdcube's due diligence has been shown time and time again to be mere window dressing; so something needs to be done.
I don't think Crowdcube actually does any DD. They have gone from bad to worse. It's seriously shocking how many bad businesses have funded on CC. Give it another 12 months or so and there's going to be some serious questions raised about them. I don't think people have cottoned on that's it's almost damn near impossible for an investor to actually make a return from a private company especially when you own <0.5% of it like most ECF investors.
ReplyDeleteThat was the idea behind this blog - to get some attention of the facts. There are a whole host of Crowdcube funded companies sitting out there queueing to go bust - at least £3m has been lost already. I dont care about idiots wasting their time and money if they want to but i do mind about the government giving away our hard earned taxes on this type of nonsense. Say Crowdcube have raised £80m to date, 95% of that is due tax rebates of between 30 and 50% via EIS and SEIS. That in terms of austerity is just crazy - i blame that idiot Vince Cable who has been a huge supporter of Crowdcube et al. It will end in tears.
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