Monday, 21 September 2015
In search of the Holy Grail ECF has lost its way
Here's the thing. When you have pitches on what purports to be a serious FCA accredited platform, asking for money from the public - you are entitled to expect these pitches to be vetted and sensible in their aspirations.
You only have to take a five minute look at the pitches on Crowdcube to see how this is not the case.
Take for example one pitch - a brand new start up with predicted growth of over 50 times or 5000% in year two and an overall average growth rate over three years of 2500% or 800%pa. This all achieved on a promotions budget of under 10% of revenues.
To take another example, a pitch where on the Q&A (which Crowdcube reminds everyone is not vetted!) the founder gives out what is at best highly misleading information about the company in its previous form, which was liquidated. This new company has already raised on CC and is back for more - just a month or so before their accounts are due out. So why you might ask have they not been required to provide these accounts now; they must be ready.
Another pitch back for more cash seems to find figures a little challenging. Claims made about customer retention and accumulation certainly do not stack up withe the figures provided. But hell, who would let some figures get in the way of good story; certainly not Crowdcube.
And so it goes on...........and on and on.
Newgalexy Services, which raised money on Crowdcube in 2013, has still not filed accounts which were due almost 3 months ago.
Pitches which have only a day to go suddenly have 14 days to go - no way of telling this unless you have been watching. If the time frame is entirely flexible, why have one? Well because Crowdcube know that pitches often get a surge towards the end of their run. It is essentially a marketing con. It most certainly is not transparent.
Crowdcube needs pitches to complete - its their revenue. They now run an outfit which is burning £2m pa minimum in overheads. They will essentially go to any means to get those completions. Over valuations are the norm, misinformation is riff and its all a bit of a mess. But people are still investing - why?
There is still no evidence they will see a penny of their money back. So it must come down to the SEIS or EIS tax reliefs and the lottery mentality. All seekers of the Holy Grail are required to be a little nuts - as it doesn't exist.