Is Crowdcube's poor Due Diligence in the company's DNA?

There is a lot to be said for leading by example. However it does depend on the example set.

On the Crowdcube site this is the bio for their CEO, founder, and winner of multiple awards,  Darren Westlake -

Darren Westlake, CEO, Co-founder
A serial entrepreneur, Darren started his first company aged 26 and has since built and sold two companies. His background is in telecoms, technology and internet.

Darren Westlake's main recorded (CH) business activity is with his own ID Telecomms Ltd from 2000 to its collapse in 2006, subsequent pre packed sale and final closure.

This company was sold for £50k by the Westlake brothers according to the liquidator's report, on 15 January 2006 to Telecomplete Ltd, who then two weeks later, put it into administration and repurchased its goodwill and chattels for £20k. All very, very strange.

There is little record of Telecomplete Ltd but what we have found suggests the company was incorporated only a few days before it 'bought' ID Telecomms and was then closed. One report shows Telecomplete became part of the The Fused Group Ltd which went into administration and was closed in 2010.

According to the liquidation documents, ID Telecomms had made a little money initially in 2003; an £80k profit on a t/o of £7m.  It had not been able to change with the market trends and was soon being undercut and making substantial losses. Its unclear why Telecomplete purchased it in January 2006 to only put it into administration on the 1st February, having paid £50k for the shares. The report states that The Westlakes had been having discussions about a possible sale with Telecomplete during 2005. Records show Telecomplete was incorporated on 16 December 2005.

The report also states that mounting losses were the cause but that makes little sense in looking at the dates. No share transfer to Telecomplete or anyone else is filed at CH. Darren Westlake is reported to have resigned from ID Telecomms about the time it was sold but there is no filing at CH.

According to the final accounts for ID Telecomms, £152,000 had been invested in its share capital. So even ignoring all of the above, a sale for £50k is still a large loss.

Apart from this company, Westlake has no successes prior to setting up Crowdcube that are recorded at CH. There have been a number of non trading companies and three other insolvencies. Post 2006 he went to work for KCom Group.

It is of course possible that the successes were not with Limited Companies. Naming them would help settle that issue.

Its in the nature of business that people will fail - nothing wrong with trying something even if it doesnt work. Better to have tried and failed than to have not tried at all. But ignoring or embellishing the facts is wrong. It is certainly wrong and unacceptable if you are promoting this information for commercial gain.

What investors would like is for the information on sites like Crowdcube to be transparent. So when a claim is made that so and so is a serial entrepreneur and has sold three businesses, can we please have the names of the businesses and the dates.

Its easy now to explain why so many of the pitches on Crowdcube do not follow this procedure and have what can only be described as floral bios for their founders - its in the Crowdcube DNA.