Monday, 7 December 2015

Do we need another me2 Equity Crowdfunding site?



The one thing the UK is crying out for is a new look Equity Crowdfunding site.

One where pitches are thoroughly vetted, by an experienced team. One where the valuations are sensible in terms of risk and reward. One where projections are ambitious but not ludicrous. And one essentially where we can start to build sustainable SMEs with the Crowd's money, rather than building ECF platforms for their own sake.

Investden has just appeared on the radar.

The team behind this venture appears to have plenty of business experience or so they tell us. The evidence on the site tells a different story.

Once again we have inflated valuations and financial projections that can be seen from space. Most of the live pitches have very few 'investors' putting in large sums. For example one pitch looking for £1.4m has only one investor to date who put in just over 1m. What the..?

You can see how carefully the platform has considered its offer in the way it presents its financials. For all Crowdcube's many failings, they do at least know how to present. Investden have gone for the RAW technique or to put it another way they havent bothered to change the excel sheets at all. Each pitch has different excel sheet data presented in an essentially unintelligible form.

One aspect of the platform that intrigued us was the attempt to create a secondary market. Attempt might be too strong a word here but at least they have recognised the problem. They have two trades on offer, both in shares from ex Crowdcube pitches. Amusingly the reason given for 'selling' these shares is liquidity. The value of each transaction is £100! Its impossible to take it seriously. 

So this new player is just more of the same old rubbish. Surely we can do better.  

4 comments:

  1. On the secondary market for Shoot it says "Shoot is already profitable and operates within a market worth over £5 billion in the UK alone." The current pre-tax profits is -£199,701. The share price is £100!! Lacks common sense!!!

    ReplyDelete
    Replies
    1. Think that possibly these two 'trades' are 'samples'. The share price is not £100 thats the value of the equity for sale. As both are the same it does seem a rather odd. Whole site is a little uncoordinated.

      Delete
  2. If these companies believe in crowdpower and the sophistication of the so called investors as much as they say they do then surely every pledge should come with a negotiated equity stake. That would control the valuations somewhat and offer some balance. Then the average of all equity asked for would be picked. Example - I value the company at 1,000,000, Investor B values it at 1,100,000, investor C values it at 850k etc and makes an offer based on that. The companies should not be valuing themselves in my opinion. - FTJ

    ReplyDelete
  3. Yes some sort of barter system is needed. After all real stock markets work on a simple supply and demand when it comes to share prices. The current platforms havent the imagination to think about this and it would curtail the easy access, retail aspects of their offer - which would be a good thing for us but not for them.

    ReplyDelete