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Friday, 30 December 2016

More sticky business for equity crowdfunding

Sugru's recently published accounts show why we need to change the way company accounts are filed.

Sugru raised almost £3.4m on Crowdcube last year. 

More recently they tried to raised more equity funding via the Envestors platform. 

The problem here is that their accounts were due out about the time that the Envestors round was live; September 2016. But they were not filed until afterwards - or to be exact 2 weeks ago.

Now in the brief summary for the Envestors pitch the company showed a series of actual numbers for the financials which included YE December 2015 (the one they had failed to file on time). The 2014 'actual' accounts tally with the ones filed at CH - which they would have to as these were readily available for all to see.

The 2015 certainly 'actuals' do not.

One crucial figure, which is the main driver for all businesses, especially those in a rapid growth phase, has been incorrectly given to potential investors by the company and the platform. Assuming the platform have to work on the information given to them, then the responsibility lies with the company. The miscalculation is so large it is hard to believe it is a simple error.

The GPM for 2015 turned out to be only 42% against a given 'actual' figure on Envetsors of almost 51%. Now a difference of 8-9% on turnovers heading north of £3m is highly significant. Not just in cash terms. The projected GPM for future years is crucial to Sugru's progress and if the 50%+ figure is not attainable then investors should be asking why? They cannot ask if they are told it is 50% 'actual'. On the 2015 revenue figure, this 8% shortfall would lose around £280,000 of gross profit. In reality they were £306k down on GP for 2015. 

Losses were in fact lower than the 'actuals' shown by Envestors - by cutting the overheads by around £300k. This in itself should be of interest to investors, who were given the wrong figures. But the main point here is that the future 50% GMP for 2016 and beyond must now be in doubt. With projected turnover for 2020 of more than £28m, a change in the GPM of this magnitude will not be welcome.

At the end of November 2016, the company arranged three new facilities with the Clydesdale Bank - we'd love to know which figures it was working off.

If, as we have been demanding for sometime now, all companies raising ECF had to produce up to date filed accounts, then this wouldn't and couldn't happen. It would be a very simple fix for what is a very major problem - as anyone who reads this blog will know.

Cornerstone's razor sharp Crowdcube pitch blunted by results

Cornerstone raised over £860k on Crowdcube in 2015. Results for YE December 2015 show losses more than double those projected.

We had expected this. A company using free give aways to build its client base on line is bound to hit the wall when they try to charge - unless the product is good. Reviews seem very nixed. Mind you that didnt stop over 200 people investing very nearly a million.

Its too early to tell for now. 3 of the original directors have left - never a good sign. Will Hobhouse is their Chairman - the man who built up Whittards Of Chelsea; colloquially known as 'House of Cards'.

Whittards was one of those companies that kept expanding and expanding in the late 80's and 90's but never seemed to make any money for any length of time - making what seemed to be some disastrous decisions along the way. And then it was sold for £21m in 2005 (how they managed this is the stuff of business legend) and went into liquidation on large losses at the start of 2009 - Whittard owed over £5m to trade creditors and was employing around 950 staff, when it ran for cover. In a pre packed deal (here we go) the remnants were bought out and it still occupies our High Street. Its eventual losses were many millions.

Maybe a lesson there?

Ouch - bloody cheap razors!

Thursday, 29 December 2016

Hop Stuff completes its Crowdcube raise of £500k - glass half empty or half full?

Hop Stuff will be the one to watch in 2017. Prudence has left the room.

Despite being only loss making since it raised funds on Crowdcube in 2013 and having an estimated turnover of just £1m for YE April 2017, Hop Stuff have smashed their £500k target with more than 3 weeks to go. Well actually this pitch was extended but lets not quibble about facts - this is CC after all.

Congratulations to Hop Stuff for what is either a great business or possibly one of Crowdcube's best examples of just why their system stinks. Only time will tell.

The pitch was full of interesting figures - ones stretched to their limit - see here  . After we wrote about them, many were removed or altered. Some are still elastic.

We think that this will either be a remarkable success or a catastrophic failure. Their plans leave little room for anything else. On their projections, they borrow another £500k by April 2017 - or that is the plan. They then pay over £100k pa in interest which wipes out the next year's profits. Burn rate for 2017/18 is almost £2m - much of this in the fixed cost column. 2017-2018 revenues triple, partly on the back of a Swedish deal which the founder has himself admitted has not been concluded - but only when asked. 

All of this on top of the fact that as far as we can see there is no experience in the team at the £3m t/o level. Sure the beer is popular but that's just one relatively simple step. 

There is no room for error here - the 2018 profit will evaporate if the GPM increase of 2% doesnt materialise and we all know how difficult GPMs are to project accurately at an early stage. If they over trade and require more cash  - this round's valuation is likely to prevent any new equity funding. They are already highly geared, so missing revenue projections is not an option.

400 trusting souls have jumped in. Here is a toast to you all. Brave or foolhardy - we will know by the time 2018 is over. We hope that the new year brings Hop Stuff much success - god knows Crowdcube could do with some really good news.

Affresol cements another bad year for Crowdcube

Affresol Ltd have just posted their results for YE May 2016.

This company, which created a synthetic concrete for buildings, raised a small amount on Crowdcube in 2013 and has since raised over £1.5m in equity finance  - giving it a current equity funding of £2.4m.

In the Crowdcube pitch - it was shown as being in profit from 2014 and made a handsome £3.8m profit for YE November 2015 - so we assume that 2016 would be even more productive.

This was not a brand new venture on 2013; the Crowdcube pitch showed the company had completed its 5th iteration of its product in 2011. It had sales and was paying its directors £36k pa each. It also had backing from Finance Wales by way of long term loan.

So what has gone wrong?

Well we cant tell you that - its not something that basic one page balance sheets reveal. However we can tell you that to date they have racked up losses of £2.23m with 2015/16 accounts showing a large drop in debtors and losses of over £400k. The long term debt on the books has been reduced to almost zero from £260k in the previous year. The cash raised in 2015 has been invested in what the balance sheet shows as fixed assets but this seems to have generated falling sales and increased losses. There was no cash in the bank in May 2016 and no new cash has been filed at CH since.

All in all not looking too good for 2017.

Wednesday, 14 December 2016

Crowdcube's Stakis Daycare Nurseries delivers more empty promises for yet another year

Diapers, you might scream if you had shares in this company.

Stakis - founded by the famous Hotelier's son, has now spent all the money it raised on Crowdcube and to this date has delivered not a single place for babies and toddlers to be kept safe.

In fact all it has done to date is spend the cash. On what.....who knows.

The last filed accounts for YE March 2016 are looking like dormant accounts.

We have written about them previously here 

Would Crowdcube care to comment? It was after all on their platform that the company raised over £100k in 2013. They no doubt go down in the Crowdcube portfolio as a success as they have not yet closed. The company was unreachable and Crowdcube dont speak with us so your guess is as good as mine. Fraud comes to mind. If that is the case, then what will Crowdcube actually do about it.

Here is what we expect Luke Lang, the CC Pring man, to say - 

'Investing on these start ups is high risk. We carry out thorough due diligence using our team of well trained interns - no sorry lawyers - to scrutinise every company. We have more lawyers than most law firms! (that is a real quote from Luke!!) Only 1 in 10,000 applications get to list on our platform - we are that meticulous. If people are stupid enough to invest via our site then that's their issue - we make money anyway we can. Are we off air??!!''

Thanks Luke.

Cookoo cancels its Crowdcube campaign

Cookoo have cancelled their £1m Crowdcube campaign - leaving empty handed.

This company went into liquidation on 25th February 2017, with all hands lost. Maybe if they had asked us first??

Cookoo, a platform that links cooks with consumers, launched a Crowdcube campaign about two weeks ago. It was a quite a decent effort although you had to wonder at the valuation and the projections.

The one thing that killed it for us was the use of a geezer on their video, This guy claimed to be some big noise in the world of start ups and his slot on the video, where he backed the company, was the gravitas that made it work . However a fairly rudimentary check showed he had achieved nothing and his Linkedin page was what could best be described as wholly optimistic. One thing we do know for sure is that he is not and never has been the MD of Virgin Care as he claims.

Why Crowdcube didnt pick up on this we will leave to your imagination. 

The business isn't a bad idea per se, although scaling it in the time given, is in our opinion not something the two girls who run it, are capable of. It may go on to great things at a slower more considered pace which in the long run will be to everyone's benefit.

We imagine they gave up because they found, as we did recently, that Crowdcube do not deliver. We helped a recent pitch, which also cancelled early, and they reported back to us that the investor event that Crowdcube put on for them and others, was largely attended not by investors, but by other businesses (potential CC clients) and a whole host of would be consultants trying to sell their wares to the unlucky pitching companies. No doubt these geezers had been charged by CC to attend. It was, according to this well established, profitable company, not only a waste of time but also extremely irritating.

All in all yet more proof that Crowdcube need to close down or change the way they operate.

Tuesday, 13 December 2016

Hop Stuff inflate their figures on latest Crowdcube pitch

Hop Stuff is a Crowdcube success story - no it really is a Crowdcube success story

It is one of the only companies that has raised money on the platform that has achieved or exceeded its revenue projections. So why in its latest Crowdcube pitch for £500k, has it felt the need to play around with the truth?

This is what they say on the pitch - 

We have a demonstrable track record of beating our own forecasts. In 2013 we forecast Hop Stuff would be turning over around £480,000 by this year, we’re currently on track to double that.

This is highly misleading.

In fact the 2013 projections showed a turnover to August 2016 of £417k against an actual turnover to April 2016 (their filing date) of £524k. The claim to be on track to double the £480k is made up based on firstly an estimated figure of £480k for 2016 (Jan to Dec) - which is not a figure they ever published and the use of a large chunk of 2017 - which has not happened yet. What they dont highlight is the crucial fact that in the 2013 projections they had a 2016 forecast EBITDA profit of £166k whereas in reality they made a loss on EBITDA of £84k. 

Would you think that this loss is the more significant figure - or rather how it came about bearing in the extra revenues? Maybe a look at that 2013 projected GPM of 83% might help. This 2016 figure was actually rising over the 3 year projection.

Then just when you think you have clearer picture of what has actually happened, you find this footnote on the pitch - 

The actual figures (12 months to Apr-16 and 5 months to Sep-16) have been prepared by the Company and represent consolidated figures of Hop Stuff Brewery Limited (08471474) and Yeomans Pubs & Bars Limited (09539108) which at the time was not a Hop Stuff wholly-owned subsidiary.

So we are really comparing Apples with Elephants. Totally transparent. 

It is still a success, certainly in terms of  Crowdcube, but they really dont need to make things up. They have most certainly exceeded their 2015/16 projected revenue figure. Part of the confusion has been caused by Crowdcube allowing companies to use different projection dates to their filing dates. Something easy for the FCA to stop? 

As usual, the valuation is stupendous at £5.5m - for a company yet to make a penny of profit but then that's why they have to make these claims. Oh and you might want to ask about that debt. 

A word of caution

We notice that the forum for this pitch is crammed full of hyperbole - from the founder. He claims that the company has done very well for its first round funders, that growth will be such and such etc etc. This is all fantasy - at the moment. Shareholders in round one are no better off than they were the day after they invested. The value of the company is entirely make believe - there is no market for the shares and the company makes losses not profits. Sure the future looks interesting but please take a good look at the hype here before jumping in. 

And on top of this, the founder has now admitted that a deal with an overseas importer which is given a big push in the pitch is NOT confirmed. He goes on to say that due to this, they have only put 50% of this deal's revenues into the projections - apparently that is prudent!!!! Come on please.

And a final update - 

It seems someone reads this blog as the Hop Stuff pitch text has been changed  - in line with our comments above. That's much better guys now we might believe you :))

Sunday, 11 December 2016

FCA Interim review is still looking through the wrong end of the lense

So now we have the FCA's interim report on alternative finance. Will it make any difference?

In the 21st century, you would have thought we might have learnt how to engage regulation with a new vibrant form of business finance. From the outcome of this turgid, starchy interim report from the FCA, its clear we have not.

For starters, if you look at the who the FCA are asking for input, it is mainly those parties with the most interest in minimal interference. So much so in fact, that this is one of the more inane comments that The FCA saw fit to include in the report -

Other matters 4.21
Five industry respondents said the FCA should not refer to blogs ((: and market commentators in the media, which may be sensationalised or subject to their own conflicts of interest. Instead, they recommended we focus on industry data.

Our response (FCA not us!)

We will continue to analyse due diligence standards in the ongoing post implementation review. As set out in Chapter 5, we are considering consulting on further rules on disclosure and may consider options for specific disclosures about the due diligence process, even if we do not go on to prescribe minimum due diligence standards.
To gain a rounded picture of the market, we will continue to consider all sources of data, including social media, consumer feedback and media commentary but will not give undue weight to any one source of information.

The key problem for the FCA is that they are looking to control the investors rather than the platforms. They try to limit the access to the platforms but under voluntary guides rather than rules - this will never work. People are too arrogant and or ignorant to admit they are not capable of knowing what to invest in. 

Control of the platforms in the form of making them more accountable, stopping them from using glossy advertising and restricting the use of third party FCA licences would be more appropriate here. This is business finance not some Saturday evening entertainment show.

Leave investors to fend for themselves - voluntary restrictions are doing that anyway. Get to grips with what the platforms offer investors and you will have a far better outcome. Crowdcube, the worst offender by far, is still producing the most ridiculous projections and valuations. Its advertising spend is massive and this is managing to hold the company up - despite the growing list of failures and lack of any real success. Their model needs to be banned - no due diligence, no post raise accountability, massive glossy misleading advertising, poor or non existent shareholder communications, poor or non existent S/EIS communications. But now we have Seedrs joining in with their Annual Portfolio Report, supposedly showing the majority of shareholders are doing well. It's a total fabrication.

The FCA needs to get together with HMRC and come up a new way of SME's filing accounts, listing their directorships etc etc. The current system is way behind the new business environment. Due diligence is made so much harder. As an example a recent pitch on Seedrs had a company looking for £1.5m as a loan. But the company was late filing accounts - so late it had had its first notice to be struck off. How does that happen? In fact this company had already moved its filing date, so it hadnt filed any accounts for 30 months. To add to the irony, the company declared it had applied for and was waiting for its FCA licence to allow it to carry out its main activity - raise money for businesses. Is someone taking the Michael?

The FCA seem powerless to do anything. They have kowtowed to big guns like Balderton, who have sunk large sums in to Crowdcube, and are now pussyfooting around the real issues.

Just by of example here is a little piece of the FCA report -

Due diligence standards on platforms 4.18 

Three respondents said that current due diligence standards are below those that would be expected for professional investors but most respondents said that standards are appropriate.

'Most' said DD was appropriate. In the time we have been running this blog and for the 4 years prior to that, we have not come across an investor who thinks the DD is appropriate - it stinks. It isnt just below a professional standard, it is criminally negligent. That's why we have companies going bust having never done a thing, why we have directors who are banned, why we have phoenixing like it was going out of fashion, why we have lies (promises) all over some pitches and why we have videos with fake entrepreneurs promoting the pitch. Platforms do not carry out anything but the briefest DD. It's all catalogued in this blog - the blog that respondents didnt want the FCA to read.

Our guess is that the final FCA report will just like the 2015 effort - a hands off whitewash which leaves 99% of all this just as before. 

Saturday, 10 December 2016

GoCarShare thinks about calling it day

GoCarShare has raised equity finance on Seedrs twice - in 2013 and 2014. 

Now the company has written to shareholders to say that things are not quite going to plan - or to read between the lines they are not making money. Or rather they have lost it all.

Its quite an upbeat communication talking about two potential offers to take the business forward. You feel quite sympathetic reading it - here are some guys trying to do the right thing for the planet and mankind whilst also running a business.

However the sympathy bakes tinder dry, when you realise that they are well overdue with their 2015 accounts. So running a company is clearly not what they are doing. And they shouldnt have had access to equity crowdfunding finance. Their 'plan' has evidently been a flop.

In the great Seedrs Portfolio Report, we wonder where these guys appear in the graphic - doing well most probably. Well it just reiterates the pointlessness of the whole charade  - they are not doing well or even hanging on - they are waiting to close. The CEO has been forced to take on another job - thats how well they are doing.

Get the basics right first guys - do your accounts and file them on time. Then you might have an ear. 

Wednesday, 7 December 2016

Crowdcube customer service goes missing

Crowdcube sent an email to the unlucky investors in Flavourly, saying how sorry they were for their loss. Oh and giving them no advice on the state of their EIS relief.

Flavourly funded on Crowdcube in 2015. £500k was invested by over 300 people. A few days ago the main shareholders and the key Directors sent a one line note to investors to say they would now be forced to sell their shares - at a ~85% discount to the price they paid for them just over a year ago. We wrote about it here.

Today the same investors received an email from Crowdcube - see below - 

Hi [...],

We understand that the major shareholders of Flavourly Limited have issued a drag along notice to all other shareholders. As the value offered for each Called Share under this notice is less than the price paid by you during its Crowdcube round, you may be able to claim loss relief (if eligible).

If applicable, you should have received your EIS3 form to enable you to claim any tax relief you may be entitled to and if you haven’t yet done this, we recommend you do so. Income tax relief can be claimed within five years of the year you made the investment.

If appropriate, loss relief is also available under EIS. You should seek professional advice if necessary. For more information about EIS, please visit the HMRC website:

 HMRC - 'How to claim EIS tax relief'

Once again, we understand your disappointment and if you have any further queries please do let us know.

Kind regards,

The Crowdcube Team

We put a comment on this post that referred to the loss of the EIS relief as the shares had been sold within the 3 year period. 

To be more precise and to help Crowdcube investors who do not have access to expert advice, we have looked into this further and have found the following - 

1. EIS relief at 30% that has been claimed on this investment will be lost on the proceeds of the sale not the initial investment as the sale has resulted in loss. So for example if you invested £10k and have claimed 30% under EIS, you will have your EIS income tax relief withdrawn based on 30% of the sales proceeds ie ~ 30% of £1500 or a withdrawal of ~£500 of the initial £3k. The loss you can claim is then reduced by the balance of the relief you claimed ie ~£2500 will be taken off your loss claim.

2. So for example someone who invested £10k and had claimed £3k. They would now have £500 of that withdrawn so they could claim only £2500 against income tax. The loss they made when they received their sale proceeds of £1500 is £8500. But they have to reduce this by the relief not withdrawn ie £2500. So they can claim loss relief on £6000 only.  

3. If you have deferred capital gains into this EIS investment then this will also have to be corrected.

You should of course check this with a tax expert. We did. But we are not experts.

So the net result seems to be it would have been better for the company to close. You would then have kept all the relief and be able to claim on the full loss. 

Oh and what about the service from Crowdcube on this? There is none. The interns at Crowdcube simply dont have a clue. Sad but there you are. They really dont give a fig about their investors - but we do :))!!

Monday, 5 December 2016

More Horlicks anyone? SUPERWOMAN crashes.

The Glentham Fund saga roles on. It might one day become a film produced by Derby St.

We helped with the piece in the Times tomorrow - today now as we promised to hold this post back.

Someone here is taking the P and it aint us.

We cant think of another situation where you could take £400k off investors on an FCA regulated site, spend it, promise to provide another £250k and not deliver and end up a with a promised $250m fund that has precisely nothing in it.

Well we cant think of a legal situation anyway.

Hats off to all involved for legally ripping off 569 investors. Nice. We can hardly wait to see what Horlick does next.

The only piece of good news is that thanks in large part to the work we do here, Horlick was unable to get away with this sham. Seedrs are, belatedly and only because of pressure from us (see here), being forced to chase her for the money.

According to Jeff Lynne, Seedrs CEO, Horlick will be selling an asset to cover the missing money. But in a strange quirk, he states the asset is not very liquid, so she has been given until March 2017 to cash up. Well she has already had 12 months and has done nothing  - apart from spend all her shareholders' investment.

In a move that wouldnt go amiss in Crowdcube's office, Lynne, who was put on the spot this week by the Times, has issued his version of events to Crowdfund Insider, which is essentially the mouthpiece of the pro Equity Crowdfunding 'No matter what they get up to' faction - here. Its hard to make this farce look good, but they give it a go. Just by way of illustration this is how they describe Horlick in the opening paragraph - ''a renowned investment manager, film producer and CEO of Money &Co''. Really? Have you seen 'In The Blood', the accounts for Money&Co or the Glentham Fund? Infamous maybe.

Read this if you want to see Nicola's PRing machine in action - http://citywire.co.uk/wealth-manager/news/nicola-horlick-wins-inaugural-champion-of-change-award/a821092 or this if you like one star film reviews http://www.rogerebert.com/reviews/in-the-blood-2014

The CFI piece goes on to conclude -

While it is not clear yet as to how the 569 investors will make out some progress is better than none at all.
Investing in early stage companies comes with few guarantees regardless of who is at the helm. While we hope this one works out for all investors it is a cautioning reminder of the intrinsic risk involved.
Is that really the conclusion we take from this? Surely the conclusion is dont believe a bloody word they tell you, whoever they are and however many times they promise and do chase up all promises using Fantasy Equity Crowdfunding to get the best results. We would love to know what progress CFI are referring to here. Read my lips......There - is - NO - Fund. Or Refund for that matter.
The same CFI journalist druelled all over Horlick in a piece he wrote about her in July 2014. Here is a Q&A that was part of the piece, which makes for interesting reading given Glentham Funds current zero position - 
Crowdfund Insider:  The share price for the 2nd round has increased from £10 to £12.  Please share the progress made at Glentham that justifies the higher valuation.
Nicola Horlick: We are a long way down the road in terms of launching the first fund, Glentham Film.  We have an anchor investor who wishes to invest $20 million when the documentation is ready.  There is no absolute guarantee that they will invest as nothing is signed, but they remain very enthusiastic.  We feel this is sufficient progress to justify increasing the share price  
$20m now that would be great. Hey how about $2m or even $2k. No? 20 cents? .................. In this post truth world, this makes for a wonderful piece of evidence for just how easy some people find it to manipulate half truths and innuendo into fact. Full article here

To top it all, Nicola was involved this year in the Crowdcube fundraising attempts of Twelve London Ltd, a newco of which she is a director. We assume it would have been difficult to use Seedrs. This was without doubt one of the worst failures ever on a crowdfunding site - we wrote it up here. In the CFI piece on her, the last Q reveals much about her relationship with the truth -

Crowdfund Insider:  You have been very busy with Money&Co., Glentham Capital, etc.  Do you have any other projects in the pipeline?
Nicola Horlick:  No! I have more than enough to be getting on with.

 Maybe the birds are finally coming home to roost.

What, we wonder, will Jeff do with his 'agreement' if/when she doesnt pay up? Seedrs will then clearly claim they have done all they could. We hear a future 'denial of responsibility' resonating from the Seedrs Pring Dept; one they will no doubt copy straight from Crowdcube's broken record.

More importantly, why after 3 years is there still no Fund?

Lots of eggy faces here.

Our advice - if you see Horlick coming over the hill ....RUN LIKE HELL.

Saturday, 3 December 2016

Last orders for London Distillery and Dodds Gin?

The London Distillery Co raised money on Crowdcube back in 2012.

We have written about them before here 

Its now unclear how much they raised on Crowdcube. The original Crowdcube site stated that they had raised £250k  - which in 2012 was a great success for the platform and was overtly used by it to promote Crowdcube. This now appears to have been a lie. The current CC platform states that they only raised £95k.

Who is surprised?

Anyway, whatever they raised, they have not managed to deliver much. Despite having new equity backing of almost £1.4m, they continue to make large losses. YE March 2016 showed a loss of £350k.

Recently the company set up Dodds Gin. This is 98% owned by LDC.

Dodds are very late with their accounts and have had a compulsory strike off placed on them. They did try to raise £1.5m via help yourself equity crowdfunding portal Envestry, which is part of Envetsors. Seems to have failed from filings at CH.

Drink Up.

Flavourly snacks leave a very bitter taste.

This is really hard to believe.

Flavourly, a very poorly run snack subscription service, initially raised money on Angels Den and then in 2015, over £500k on Crowdcube. The Crowdcube investors bought in at £1.2m - which for CC is low.

We have written a lot about Flavourly here. It has been disaster since day one so this should really come as no surprise. It's the way it's been done that takes one's breath away.

Now shareholders have received an early and very unwelcome Christmas Present from the directors/majority shareholders of Flavourly Ltd - Andrew Veitch, Ryan O'Rorke and Kevin Dorren - remember those names.

These directors/shareholders have gone behind the backs of the Crowdcube shareholders and triggered the Crowdcube Drag Along clause, which states that all shareholders must sell their shares if the majority holding agrees to the sale. The text is below

We, Andrew Robert Veitch, Ryan Lrwin O'Rorke and Kevin Matthew Dorren (the "Selling Shareholders"), together holding a majority percentage of the A Ordinary Shares of the Company, have agreed to transfer all of our interest in our shares in the Company (the "Sellers' Shares") to the Proposed Buyer (the "Sale"). We, therefore, constitute the Selling Shareholders for the purposes of article 10 ("Article 10") of the articles of association of the Company (the "Articles"). Pursuant to Article I O, we, the Selling Shareholders hereby give you, the remaining shareholders of the Company (the "Called Shareholders"), notice that you are required to transfer all of your shares held in the Company (the "Called Shares") to the Proposed Buyer. This notice, therefore, constitutes a "Drag Along Notice" (as such term is defined in Article I O) and is given pursuant to and in accordance with Article I O (the "Drag Along Notice").

No one was asked but they are now having to agree that they will sell their holding - at a massive loss. In fact the email we have seen says absolutely nothing by way of explanation or apology. These 3 geezers are exactly what Crowdcube promotes.

The 3 directors/shareholders of  Flavourly have sold all the company's shares to Drinkshare Holdings Ltd. The total sum made from this sale is to be £118k - against the 2015 valuation put on the company at the time by the same directors of £1.2m.

Wait there is more.

Drinkshare Holdings was incorporated in November 2016. It has no trading record. The sole director is one Alistair Duncan Stewart, whose record speaks for itself. The company as yet has no shares issued. Stewart is listed as an investment  specialist who seems to get involved in liquidating companies.

So what is going on here?

Why didnt Flavourly follow the normal process and just close down like so many Crowdcube funded companies? This way investors do at least get some money back, but it seems unlikely to us that Drinkshare is going to turn this company around and if it was, why couldnt CC shareholders have a piece of the action?? They did after all hand over in excess of £500,000 to Rorke and his mates. That has all now gone where?

Utter shambles. Or Scam? The 2015 valuation was low to entice £500k into their bank. We have to assume that most of that has now gone. It's all perfectly legal of course....for the moment.

Finally, as a reader kindly pointed out, anyone who claimed S/EIS with Flavourly will have to repay HMRC. Nice.

Friday, 2 December 2016

Brewdog issue 7.5% 4yr Bond via Crowdcube to fill funding gaps in USA

Brewdog have launched what looks like an attempt to raise much needed funding for their US development - on the back of the US fundraising failure.

No one could argue about BD's success and the style they used to get it. 2015 EBITDA of £5m speaks for itself. 

But the US adventure may have been a mistake. They have a half built $30m facility in Ohio but do not have the money to finish it or pay to run it. Running costs in the UK have increased and higher turnover is producing flat profits. 

The US fundraising, which has been running for many months, has only raised $3m of the intended $50m. They announced this week that they are offering some ludicrous double or quits deal to try to PRing the raise into action. It has just really made them look a little silly.

Does the Brewdog message really translate into American? They wouldnt be the first UK success to fail over the water. And the US has had its own craft brewery explosion, so its not like BD are offering anything new.

Now in another attempt to breech the cash gap, they have announced a Bond with Crowdcube. Whilst this is safer than equity investment in principle - it gets paid back in 4 years with annual interest of 7.5%, if Brewdog dont manage to get the US facility funded and up and running then all bets are off. 

If the company gets into trouble then the bond is just as at risk as the equity in terms of repayments. It will be interesting to see how it goes.

One question worth asking is was this Bond in the plans a year ago? 

The other one is why is the Bond's minimum investment only £500k and max £10m. What difference will £500k or even £3m make?

According to James Watt, this is 'Funding for the 21st Century'. Well that maybe so but the basic business model of cash in and cash out hasnt really changed much since the 12th Century. If you run out of cash you go bust. 

BeerBods rapdily losing its friends

Beerbods, a subscription beer delivery club, raised £150k on Crowdcube a couple of years ago. Since that time is has reported two years of losses against two years of projected profits.

Who knows why? Only thing that is certain is that this a yet another example of Crowdcube inflating expectations in order to gain investment and their commission. We wrote about then before here 

You have to ask how many times are they going to be allowed to repeat this before something is done about it.

Projections for Beerbods showed profits of well over £100k for 2016 and the real loss reported to YE May 2016 is £41k. Profits were also forecast for 2015 but the reality was a loss of £53k. Beerbods do have a holding company but results here do not seem to reflect trading.

Thursday, 1 December 2016

Brewdog US fundraising enters realms of pure fantasy

Brewdog - The UK's fastest growing food and drink company, is now offering investors a chance to double their money by playing roulette. Is this a Dead Dog bounce we ask?

Brewdog have been trying to raise money for months in the USA to support their new brewery in Ohio. We have written about this several times here - the campaign has been nothing short of a disaster.

According to Business Insider, Brewdog have only raised $3m of the $50m target. http://www.crowdfundinsider.com/2016/11/93153-red-black-brewdog-equityforpunks-usa-offers-investors-chance-double-stake-lose-roulette-table/ 

So now they have introduced this ridiculous gimmick. If you have invested in Brewdog you get one chance to gamble using roulette's red or black to double your money and if that fails you lose your shares. What? The way this will work is that its supposed to entice possible investors to take the plunge - its only for US Brewdog enthusiasts. This isnt the stated aim of course! But then they are desperate.

That James guy needs to see a shrink. Where are the SEC? How is this not rigged?

Look, the people of the USA voted for The Donald, so theoretically anything is possible. Sensible it aint.

After the slightly farcical Brewdog share sale held recently on Asset Match, where the price of the shares was well below the last Crowdcube raise until the last few minutes when one large purchase was made, this is surely confirmation that the founders have lost touch with reality.

Crowdfund Insider have Watt, the co founder, saying that they are fucking Wall St and putting the small investor in charge. Has he ever played roulette?

It's a gimmick of the worst kind. Desperate and ever so slightly embarrassing. We dont expect the Dog to get up this time.

Tuesday, 29 November 2016

Savvy Foods heads for liquidation and a quick rebirth - blink and miss it!

Savvy Foods raised £85k on Crowdcube in the Summer of 2015. Now they have liquidated.

All Crowdcube shareholders will either receive new shares in the new Co or be refunded, according to the company. 

Not really sure how any of that works as you are not supposed to put a company into liquidation with the stated intention of buying its assets and starting again, without any of your creditors. Otherwise everyone would do it! Investors also received SEIS, so what would happen to that?

Crowdcube funded companies probably have special dispensation from HMRC as they do seem to do this quite frequently. I think their Out to Lunch Department have a direct line to HMRC Insolvency Filings - must be red hot. 

Here's hoping they get a better result second time round. 

PS - the company are apparently looking for funding for the new venture (well the rebirth) so do get in touch if you want to throw more of your money away before Christmas. 

London Business School and Pizza Rossa cook up a fine mess.

Pizza Rossa funded on Crowdcube in 2014 and 2015 - a total of £600k. Its big claim to fame was its London Business School Entrepreneur Business Plan of the Year Award. 

The specialist square pizza fast food 'chain' filed accounts this month for YE November 2015 - showing a loss of over £300k and leaving the company in the red with accumulated losses so far of  more than £630k.
The guy behind the pizza is an Italian, Corrado Accardi, who was on a MBA course at LBS, when he stumbled on a great idea - build a chain of pizza joints. Funding? No problem, with the emergence of the new equity crowdfunding platform Crowdcube. By using an award won at LBS for this stunningly original business plan and his entrepreneurial flair, Pizza Rossa was able to massively overfund on Crowdcube. See here for the LBS trumpet blast that accompanied their success.

The business won Crowdcube's Entrepreneur of the Year or some such tin can and was away. A little while latter all the wheels had come off. Plans to have opened 5 units by now and be in the realms of £300k plus profits, have been well burnt. They have 1 unit open as we write and are producing enormous losses with it. 'The Latest News' section of their website has not been updated for a year. As chains go, its on the small side.

We have written several pieces about them here

Their arrogance and stupidity are in equal measure. In the original LBS 'award winning' plan they had Saturdays as City trading days. Even though it was pointed out at the time on the Crowdcube forum by us and another helper, that Saturday in the City was not a great place to sell pizza, they ignored the advice. The response was, well we won the LBS annual award so we must know what we are doing. Then once all the money had been wasted, they admitted that Saturdays in the City were not strong trading days for pizza - in fact they had the cheek to blame their awful performance on this! They did open a second site but it was closed within a year.

All in all, we think that this has been one of Crowdcube's biggest ever calamities. Based as it was on the very shiny medal issued by LBS  - see this video if you want to have a laugh here. This guy is just taking the P. He hasnt a clue what he is doing and nor do LBS from this evidence.

So can we learn anything from Pizza Rossa? LBS shouldn't get involved in enterprise and certainly shouldnt allow their brand to be used so blatantly for such a farce. And simply do not believe what they tell you. We were warning about this outfit from the get go - it was clear the guy had no idea.

The final joke is that in 2015 Crowdcube raise, the valuation for Pizza Rossa had gone up 2.5 times - so that should make all shareholders feel so much better! Che disordine.

Monday, 28 November 2016

That Glentham Fund is a right Horlicks

Glentham Fund, run by the Capo di Tutti Capi and media star, Nicola Horlicks,  has raised money a number of times on Seedrs. To date the company has done nothing and has raised little if any of the promised £50m investment fund. 

In the last raise, which we wrote about here, Nicola Horlick stated that there was an investment of £250k from an external investor, that had already been agreed. This money has never materialised. 

Geoff Lynn, Seedrs CEO, when questioned in October 2015 by The Evening Standard, stated that the money would be in place by the end of the year. He is quoted as saying that he was not worried because ''Nicola will be putting the money in herself if for any reason the external investor falls through''. http://www.standard.co.uk/business/anthony-hilton-nicola-horlicks-film-investment-vehicle-is-making-slowmotion-progress-a3084996.html

Not only has the Glentham Fund done nothing since its inception - except totally change its MO and spend its £393k equity cash, but the assurance of its CEO and founder is, more than a year later, looking a little flimsy. As is the forceful statement issued by Jeff Lynne in October 2015.

We wrote to Jeff but he was out, so passed us onto his PRing. She wrote back today - 

'Thank you for your email Rob. 
As nominee shareholder on behalf of the Seedrs investors we are comprehensively dealing with this matter and are keeping the investors up to date throughout this process. 
We are in the middle of working through a solution so I don't feel it's appropriate to get into our private discussions at this stage. 
Best wishes,
Lucy Sharp
PR & Communications Director | Seedrs'

Thing is Lucy, we only got to hear about this because one of your investors contacted us yesterday saying that Horlicks had not paid the money; despite Seedrs chasing her all year for it. Seedrs had emailed shareholders to tell them this. Maybe that is what Lucy means by 'comprehensively dealing'? He was clearly not impressed, which is why he came to us.  

Maybe Seedrs should be stumping up the cash as they were the ones who promoted the whole scheme in the first place? The only people suffering here are those who were stupid enough to believe what was in the Seedrs Glentham Fund pitch. As we are repeatedly told that these Seedrs people are sophisticated investors, it has to have been quite a comprehensive misdirection that persuaded them to part with their cash.

In the end the lack of the £250k matters not a jot, as the whole scheme has been a farce from the start. There is no fund and therefore there is no business. 


Saturday, 26 November 2016

Lovespace boxed in by large losses.

Lovespace stores things for you. Its just a shame that it doesnt seem able to store or handle its own numbers.

Lovespace has funded twice on Crowdcube once in 2014 when they raised £1.5m and then again just 5 months ago when they raised £700k. 

As you can guess, the gap between what was projected in 2014 and what happened in 2015 is large. Crowdcube projcetions showed losses for 2015 of just £327k. Actual losses filed are sitting at £1.7m.

No real surprise there you might say - this is Crowdcube we are talking we talking about after all.

What is slightly more worrying is that the raise completed in July this year, had a loss for the 2015 (YE December) of only £1.577m - so about £120k less than the figure filed a few days ago. The difference appears to be in expenses - the turnover is roughly the same and the depreciation is well below the predicted figure.

Its really not possible to tell exactly where this overspend occurred - Directors' salaries were £182k for the year up from £100k in 2014 but the Crowdcube projections do not break these down.

In the Crowdcube 2016 pitch, the 2015 figures are given as historic. So you might quite rightly expect them to be accurate - to say within a couple of thousand pounds. 

Well this is clearly not the case. If the company cannot get a fairly small set of accounts to add up 5 months after the YE, then the company is in trouble. We have written a few posts on Lovespace here 

Il Capo di Tutt'i Capi, Brett Akker, left a month ago.

Friday, 25 November 2016

Bluebella makes the most of EIS pants.

Bluebella has just completed a £500k raise on Crowdcube and will most probably go on to stretch that to a far higher figure.

Its a sound enough business, good stockists, good team and quality product. It has moved away from licensing and intends to sell its own brand on line and in stores around the world.

All of that aside, with Christmas coming up, the deal for investing just £100 was a no brainer. The company is EIS eligible so your investment is already just £70. The company then offer you a 25% on a purchase. So lets say you need some new lingerie or lots of lovely Christmas pressies (not for your Granny), all you have to do is buy £300 - or roughly 10/15 items - and you have already made a profit even if the company goes bust tomorrow. Now that's exactly what HMRC had in mind when they set off EIS - cheap underwear.

If you invest £2000, then you get 35% off for a whole year. So all you have to do, is spend £4k in a year on all your girlfriends (and who knows maybe you might like to try some yourself) and again you have made money even if the company goes bust the following year. 

£25k gets you a lifetime offer of 40% off. Of course the lifetime offers do depend on the company lasting that long. As the stated intention is a trade sale in 3 years these 'lifetime' offers seem a slightly dubious.

It's a been a very well organised campaign where the rewards have made a massive difference - if you like designer pants and things. And for once Crowdcube have not hidden (well its not that well hidden) the fact that £400k of the £500k had already been raised by 'cornerstone' investors. Hey ho.

It only received one gold and two silver medals from CrowdRater but has been an enormous hit with the Christmas Crowd. Or at least with £100k of them! You might be inclined to think it's yet another sign we are up the crack without a paddle. 

Lawbit continue with more losses.

Lawbit T/A Lawbite, the online law experts, who raised £400k on Crowdcube in 2013 and another £170k in 2014, have filed new losses for YE May 2016 - against what were their Crowdcube projected profits for YE November 2016 of £3.7m.

Still they have managed to raise another tranche of capital which should see them through another year. 

If its not going to work after 4 years and £1m of losses, then when is it going to work? 2017 of course. Losses for the last year at £120k, are smaller then previous years, so just maybe this company has turned a corner. However nothing can hide the embarrassment about their projections.

Thursday, 24 November 2016

Virgins up the Swanee

We think its about time Richard Branson had a real look at the sort of tripe Virgin Start Up are promoting. 

Under the heading

Virgin Startup Masterclass - How to Mastermind an Equity Crowdfunding Campaign

Virgin are selling tickets to an event purporting to have a level knowledge about this topic - https://www.virginstartup.org/content/virgin-startup-masterclass-how-mastermind-equity-funding-campaign

The expert guy giving this expert advice is one the typical modern crop of self promoting geezers who has no real experience in business whatsoever; despite his claims. No wonder people have had enough of 'experts'. A brief search through records shows no evidence of any hard yards or even real experience in this specialist field.  As if that wasn't bad enough, he is backed financially by Virgin, so we are now in the realms of Agent Orange.

The tickets cost £35..............each. I know. Better to put that on the dogs.

Just to convince you, here is an eample of a Virgin backed enterprise where if Branson knew what was going on, he would surely put a stop to it. 

Branson's gleaming smile can still be seen on the Home Page of Bank to the Future with a quote from 2011. Bank to the Future was involved in some highly irregular equity crowdfunding dealing in the early days. It is now operated off shore from Hong Kong as the FCA licence in the UK 'expired'. 

Mara Seaweed slides onto Morrisons Supermarket shelves

Just over a year after Mara raised £500k on Crowdcube, the Scottish based seaweed producer has announced that two of its products are to be listed in 400 of Morrisons' stores.

Despite filing accounts for YE Dec 2015 that show considerably larger losses than the Crowdcube pitch projections, the company now has a chance to crank up its sales and deliver on sales forecasts which we thought at the time were very optimistic. We have written quite a few posts on their CC raise which had some interesting quirks - http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+mara

Of course as anyone who reads this blog will know, getting a listing is just one foot in the door. As Righteous found out to their cost, being delisted is easier than falling over. Can Mara cope with Morrisons' consumers - price conscious and on the whole. well below the premium target that one might expect this product to be aimed at? It will be fascinating to see.  

We will probably not get a good idea until September 2018 when their YE Dec 2017 accounts are due. It seems unlikely that Harrods, which is currently listed as one of just 100 places you can buy their products, will want to be associated with Morrisons' produce.

In the meantime hats are raised here for this achievement. We will certainly be buying some of their Furikake. After all, if we are wrong about them, then better to be eating their seaweed than our hats. 

Twenty Nothing.

Twenty Something London Ltd raised £157k on Crowdcube at the end of 2014. The Crowdcube projections showed them raising another £500k in 2015 and £600k in 2016.

Problem is, they have only managed to raise another £30k since. Their site seems to have gone a little dark since mid September when the new marketing director left. Of three directors, only one remains.

Anyone with any news on this company please get in touch.

We would also like to hear from the guy who sent us a very supportive message via the blogsite but didnt leave any contact details. You clearly have very important information on equity crowdfunding and we respect, of course, your anonymity but we cant take what you have told us any further without first checking the facts - we are not like Crowdcube.  So please do get in touch via rob@ecfsolutions.co.uk

Tuesday, 22 November 2016

A Righteous Offer

This is a bowl of Cauliflower rice - it takes about 3 minutes to prepare fresh. As an alternative to rice rice, its been around for quite sometime. It's very good for you.

You could of course choose the instant, packaged option which is prepared by Cauli Rice, using a patented system, which is now sold in 2800 UK supermarkets. That you would have to agree, after a few teething problems, is a success story. Personally Id choose the fresh version every time but then I enjoy cooking and never eat pre-prepared food. Ignoring the price difference, to me there seems to be an inherent contradiction between a pre-prepared packaged food and something so simple to make fresh.  

Cauli have run out of cash  - again. And they will shortly be back on Crowdcube asking for more - despite the last raise bringing in over £1m against their target of £500k. To date they have raised almost £2m on CC in three tranches - none of them predicting the need for a another raise and all of them using projections which have proved to be pure fantasy. Still as they are keen to stress, who knows what will happen with a new product and a start up. To be fair to them, listings in 2800 stores is a great achievement. 

Interestingly, we went to an angels investors evening recently and listened to an astute, experienced engineer pitch his patent protected widget. He had  had statements of intent from large multinationals and when asked after the pitch why his year 1 and 2 sales figures were so low, he stated that in his experience, promises and intentions have to be aggressively watered down to deliver a realistic sales forecast. Better to under promise and over deliver, he said. It was very refreshing and the way we believe projections should be prepared. Of course it's not a sentiment shared by anyone on Crowdcube.

The same couple who run Cauli, Gem and Jamie Harris, run Righteous, a salad dressing range that we recently wrote about. Righteous has now been delisted by the UK supermarkets - 4 years after its first listing. Righteous promised a lot but delivered little in the end and who knows what the future holds. You have to take a view as to whether Cauli, which was started when Righteous was still a fledgling, will fare any better. 

Gem was quoted in Management Today in February 2015 '''The great thing with Righteous is that it's been four years running so now it's running quite a lot on its own.'' Maybe it needed a little more attention? Still for now she is concentrating on Cauli.

Back to the heading of this post - The Righteous Offer. For once we can say that this is a genuine and wholehearted attempt to put things right for their investors. Gem and Jamie are offering to give Righteous SHs stock in Cauli Rice from their own holding, to replace the Righteous shares they hold. We dont know at what value this offer is being given but assume its at the new CC campaign value. Which does call into question the whole valuation of Cauli......but that's for another day. 

For now we raise hats to this bold and generous attempt to repay shareholders' trust.  

Thursday, 17 November 2016

Seedrs latest portfolio Report is out and things are looking great!

So Seedrs have now produced a follow up to their initial portfolio report and according to the figures presented, on average, they are showing paper gains for investors.

We were curious about how Seedrs find out the information that enables them to place each company into each category. These categories are the mainstay of the report  - they are Appreciated, Depreciated and Even. They are self explanatory.

So for example it is quite easy to see if a company has 'appreciated in value' post a Seedrs funding round, if it then raises more money at a higher paper valuation. We get that bit. And we assume it takes into account the dilution factor.

How though, do you go about assessing if a company is in the Even or in the Depreciated section? Depreciated includes those that have closed.

We asked Jeff Lynne the CEO of Seedrs and he was quick to respond - he said that where they believe a company is a zombie company they mark it down to zero and put it into the depreciated segment. He was also quick to point out that the methodology they use has been passed by EY. 

But how do they 'believe' that a company is a zombie? For this post a zombie company is one that is still open at CH but is trading at a very low level or not trading at all. 

We find it quite hard to believe that these companies, if asked, will come clean and admit that their plans have gone west and they are treading water. Why would they do that?

We gave Jeff a specific example, which will remain nameless for now, but he declined to comment on it. The company has done little since raising finance on Seedrs in 2014. 

Where is the information this Seedrs report is grounded on actually coming from? Jeff says if they 'believe' a company is a zombie they will write it down. But that isnt a fact, it's a guess. According to the information provided they have 3 ways of achieving 'Fair Value'. 

1. If a company (they call them investments) has raised new funds since its Seedrs' round, then the new valuation is taken and indicates an Appreciation. 

2. If a company has not taken on a new round, but was Seedrs funded in the last 3 years and it is believed it is still trading, then it is considered Even. 

3. If a company has not taken on any funding within the last 3 years, then Seedrs carry out what they call a substantive valuation - they dont say what that means. This group are then marked as Declined. The explanation here goes on to say that none of 375 companies have been subjected to this analysis. This is hardly surprising given that 3 years ago takes us back to September 2013 and Seedsr was only  a year old.

Seedrs go on to state that because of the share structure they operate, they have access to all the latest trading information from these companies. What they mean is they have access to the information that these companies want to give them. 

So the whole Report is based on paper values made up around whether a company has refunded or not. If you havent then you go into the Even Section - why? Well because you havent refunded of course. Eh?  But why does a new funding round indicate a real increase in value and equally why does not having a new funding round indicate you have not increased in value. 

We have examples of companies that have refunded at increased values and then gone bust. In this report, they would be in the Appreciated section if they were trading in September 2016. We also have examples of companies that have not refunded but are clearly doing quite well, ie they would be worth more if they chose to re-fund. In fact they dont need to re-fund precisely because they are doing well. Re-funding, unless it was in the plans, is often a result of a miscalculation by management - not a success story. 

In the entire Seedrs Portfolio, 375 deals in total,  Evens represents 56% of the total, so over half of all the companies are in this segment. They are there simply because they funded in the last 3 years on Seedrs, have not re-funded and have not gone bust. 

If you take the three segments and move some of the Evens over to the Declined side, you get a very different picture to the one Seedrs conclude with. You could also move them to the Appreciated side - after all they are only in Evens through their lack of new funding activity. You cant hide this fact behind the corporate massif that is EY.  Its mainly all pure guesswork.

To conclude the most interesting diagram in the whole report is on p24. Here they have divided up the three segments discussed above into 4 aged sections. This very clearly shows that as time progresses, the Evens section is initially by far the largest, then recedes and we end up with a fairly even split between Appreciated and Declined - for the figures we have so far. So Evens are totally distorting the real outcome. 

We like Seedrs and think they are doing a much better job than Crowdcube. But this type of PRing is really unhelpful. 

Wednesday, 16 November 2016

Early Bird Resurrection

The saga continues.

We really cant be bothered with this outfit any longer. Anyone dealing with them needs locking up. 

Here is the latest version http://www.earlybirdtea.com/all_about_us  which claims to be the old one transformed. In case you dont know the old one lost shareholders and creditors a shed load according to the liquidator's SoA. They are now emailing their old list with a tea offer - the list the liquidators gave them?? The liquidation is not yet complete let alone cold. It's all so very wrong.

How is it possible for the website to be claiming that this new company is recommended by Vogue and the Times? Or is that EarlyBird - the company in liquidation - that was recommended before it went bust?

The question is - Is the Bird Dead or just resting awhile? 

Where are They Now Part 2 - More of the Same

As the results roll in, we get a better picture as to how equity crowdfunded companies have fared.

Property Moose 

Raised £160k on Crowdcube in 2014. In 2015 they made a profit - which is we think a first for a Crowdcube funded company. Before we all take off our clothes in celebration, this was a profit of £75k against a projected profit on Crowdcube of over £800k. When assessing their achievement you also have to take into account that 2014 saw a loss against a projceted profit of £400k and shareholders have been diluted several times - again no mention of this on the Crowdcube version of events.

You should also know that James Cadbury, who resigned as director of Moose, has opened a new chocolate (surprise surprise) venture Love Cocoa, which he intends to crowdfund (surprise surprise). He appeared in the Crowdcube Moose campaign as one of 3 key team members. Only one remains. 

Scaramouche and Fandango

UPDATE 22/11/2106

We have now received more information on S&F. They are in fact doing rather well and will most probably be ahead of the Crowdcube projections for 2016 - yes that was ahead. So firstly many congratulations on what will be a first for Crowdcube and apologies for not being up to speed  - although we cant take too much blame as we can only report on the information we have. Thanks to the SH who shared this info.

Now renamed the Galileo Group, they seem to gone off map. According to the Crowdcube projections (where have we heard that before?) 2015 saw the company make a small profit. 

Well, accounts filed for 2015 report a £150k loss, on top of accumulated losses of £250k, which means the bank was empty on their BS. S&F raised £150k on Crowdcube in 2014 and have raised more funding since, despite not forecasting this in the CC pitch.

Sorry the news is all the same but we can only report what actually happens  - we leave Crowdcube to make things up. 

Free Agent

Free Agent raised £1,2m on Seedrs in 2015 at a valuation of £30m. They have just completed an IPO on Aim at a  pre money valuation of £26m. But apparently at least now the shares are liquid. Maybe investors should wait for the IPO before investing in the future? Institutional investors seem to have benefited. Of coure what the management of Seedrs have ignored (we presume on purpose as they are not stupid) is that you cannot simply sell your shares now unless you want to make a net loss. EIS dictates that you must hang on to them for 3 years - so 2018 would be the earliest you could sell and keep the 30% rebate. So no Seedrs, these shares are not now liquid. Privately Seedrs have admitted that this is a down round. Hmmm.

Tuesday, 15 November 2016

Where are they now? 3 of the Best - Our version.

Just Park raised £3.5m on Crowdcube on a business model that has now been shown to be a little fluffy.

The Crowdcube plans showed the company making losses in 2015 but only £400k not the £1.7m just filed.

We said at the time that the main flaw with their car park sharing model was that the people projected to make all the money were not the owners of the spaces but Just Park. This has proven to be spot on. There are numerous examples for the past year of people booking a space and arriving only to find that the space is taken and there is no way at such short notice to sort out the problem. Some people end up with £100 parking fines as a result. Customer service appears to be poor. Looking at Trust Pilot reviews, we are struck by the complete contrast between the 5 start reviews and the 1 star reviews - not much in between. A bit like Marmite.

When we questioned JP on this flaw they just said na - it's not a problem. We now have £1.3m of extra losses to prove it. They may yet get to grips with it but we doubt they will be able to scale to a level that will see any CC investors getting returns. Their main hope now must be that JP don,t fold just yet. There has been more money raised and will no doubt be more in the future - all diluting the CC shareholders. 4 of the Directors left in 2015.


Yet another internet business that only makes losses, Grubclub or Klub, showed exceptional growth in their Crowdcube pitch when they raised £288k in January 2015. They used the unlikely metric of GMV to big up their sales pitch or show traction as they put it. GMV for those not in the know is the total sales value for a company that is say commission only based and gives a highly misleading image of a company's size. So for example the GMV for Grubklub in 2014 was a projected £400k (which at the time of the pitch was in reality an historic figure). The real sales value as reported in the filed accounts at CH for this was £34,994. Now the 2015 accounts are also filed and show a net revenue of £34,189. In the Crowdcube pitch this 2015 figure was given as £157k on a GMV of £1.7m. From the figures it looks like the real GMV was around £400,000 - so zero growth.

We emailed Grubclub and were told that our numbers were all wrong; although when asked they failed to provide the numbers that were correct. Either the filed accounts are wrong in which case this is for HMRC to look into, or they are way off target.

Angel Berry

Raised £190k in 2014 on Crowdcube. Despite the fantastic projections that Crowdcube allowed them to use to sell the equity - Angel Berry have made actual real losses of over £340k to date  - breaking most records in 2015 by filing losses of £150k against Crowdcube projections showing EBITDA of £612k. That's worth a gold medal surely.

Monday, 14 November 2016

I'm an empty teapot, short and stout, where's my handle and where's my spout?? Is this Vapourware?

Look it really is time for investors on Crowdcube to wake up. Brew promised a tea pub opening in Balham in Autumn 2015. Over a year later, the tea has gone cold waiting for something to happen. 

In what has to be close to a con, the Tea Brew pub business that raised £180k on Crowdcube over a year ago has done nothing in 12 months. Projections showed a turnover of over £500k in 2016.

We contacted Brew to see what the story was. Apparently they are really close to opening their first unit - more than a year late. This story put about by the Brew PR gurus illustrates the problem -http://www.standard.co.uk/goingout/bars/somethings-brewing-specialist-tea-pub-set-for-balham-10313667.html.   and is dated June 2015. He claimed in it that they would have the first unit open in Balham in 2015 and then role out 9 more units in 4 years - well that is now 10 units in 2.5 years.

Investors have been misled. 

Why when there are a few good investment opportunities on Crowdcube - one on there now in the form of Happy Finish, do you insist on investing in this tripe?