Saturday, 21 November 2015
What the fudge are Crowdcube playing at?
The Lifestyle Hospitality Group are raising £500k on Crowdcube, valuing themselves at just over £8m. As valuations go, that one went.
Its hard to know where to start with this one - complicated company structure, connection to some 'consulting' firm in Dubai, £200k redeemable pref shares which CC have wrongly described, advice from CC that anyone investing should get independent legal advice, a brand name they seem to have sold to a third party..........and reviews for their restaurants which include some of the worst we have ever seen.
Lets start with the redpref shares. CC fail to mention that they are redeemable at any stage with a 51% vote by A shareholders - ie the related owners of the business. 75% of the £200k is owned by an OVM Consulting in Dubai. They have no record anywhere on the net and appeared when the previous owner of the shares left the company. For all we know this could be a front for the existing owners, who own the other 25%. At any stage £200k could be taken out of the company.
So thats clear - what about the CC steer that all investors should take independent legal advice on this one. So for example you want to invest £500 and take this advice, which costs you £1500 in fees. Why, well because CC couldnt be bothered to do the DD themselves. I suppose its helpful in one way, as at least we now all know that CC agree with us that their DD stinks.
Then there's the reviews. Bit of thorny issue web reviews - can they be trusted? Well probably no, so what we do is look at a selection of the good and the bad and see what they say. Now for a company predicting world growth, you would expect the reviews to be good to great with the usual smattering of whingers. Here we have a large number of average to poor, to down right catastrophic reviews, from all their venues. Many of them very recent. It doesnt look like they have tied down the model quite yet.
Its surprising that CC would offer this company up as an investment for its group of loyal followers. Its suggests an ever increasing desperation on their part but people really arent that stupid.......are they?