Tuesday, 27 October 2015
Are Syndicate Room really as transparent as they claim?
Syndicate Room have made a strong case for being seen as the most honest and transparent ECF platform. And they should be applauded for that - if its true.
On their platform right now is a pitch by Cell Guidance Systems. Its already completed a £250k raise and is heading for its overfunding total of £500k.
There are various points about the way this pitch has been presented that cause concern. If you take into account the platform's claims about openness then they should really take another look at themselves.
Firstly CG Systems raised £290k on Crowdcube back in 2013. These projections showed that the company would not need to raise more than £100k in that round and would not need to raise again. They also showed a £10k loss for 2013, actual loss filed £240k and a 2014 profit of £100k; actual loss £73k. Projected profit for 2015 was £450k and the actual loss according to the Syndicate Room pitch is £60k.
So not exactly what you would call going to plan.
None of this is mentioned in the SR pitch. In fact the whole Crowdcube raise is not only ignored, it is rubbed out. In the financial section of the SR pitch it states very clearly that there has been NO private equity investment in this company. The Crowdcube money is listed as Angel Investment, with the private equity box left very obviously empty. This is wholly inaccurate and very misleading.
What's more the lead investor in this SR pitch is one Dr Steve Chambers. It transpires that he was one of the largest investors in CG Systems pitch on Crowdcube in 2013. SR fail to make any reference to this and it is left up to us and one of the Q&As to winkle it out. Its important because this 'lead investor' has given various statements about the company that are simply not true. He states that they have been sensible with their projections and fulfilled them - no hyperbole. Sorry but the information above makes this look very foolish. Of course it is material to a new investor's decision that the so called 'lead investor' has a massive vested interest already in this company.
It is also worth noting that the description of this lead investor's experience is in our opinion misleading. It claims he was a founder of Adgen, when in fact this was originally founded by the SAC and was later spun off. He was listed as the sales director.. See - http://craigcorporate.com/cc/paul-yacoubian-othermenu-128/the-adgen-journey.html and here http://www.neogen.com/Corporate/PR2003/2003-03-06.html. The description on the SR platform is not in line with the story told here. Whats more when Adgen was acquired by Neogen, a company it already had a major distribution deal with, its turnover was only $1.6m. These facts would be more useful to potential investors than the hyperbole used to describe Chambers' career. You might also think that if SR call this guy a lead investor then surely we all could be?
According to CH CG Systems has two directors, according to SR they have 3. Its not that important but we do love some degree of accuracy.
So it seems that Syndicate Room are just as apt at not telling investors what they dont want investors to know, as Crowdcube et al. How very sad.