Monday, 23 May 2016

Solar Cloth promise the world and deliver nout. Crowdcube stand by and allow it.


When Corwdcube promoted Solar Cloth with the following, did they really think allowing this sort of hype was sensible?

The Exit Strategy
Exit strategy 
Our aim is to sell The Solar Cloth Company for £100 million in three years' time. This is based upon our target of achieving a turnover of £40 million/year, giving an EBITDA of £6 million, This equates to an investor IRR of 440%, and a 2.5 earnings multiple, which we believe is in line with the Renewable Energy Services & Equipment Industry IPOs such as First Solar, Inc and SolarCity, Inc. Potential buyers of The Solar Cloth Company could be from three sectors:
- Upstream Solar cell manufacturers 
- Power generation and operation companies

- Construction companies
The Financials
These notes should be read alongside the Financial Snapshot
SALES:
We plan to invest heavily in sales and marketing, with over £100k spent on lead generation and branding in the first 12 months.
Key drivers: Sales will benefit from a combination of a higher company profile, increased install base, and intense lead generation activity from an enlarged sales team.
Sales estimates: Sales forecasts of £7.5m, £40m and £48m over the next three years are in line with other new entrants to the photovoltaic industry. A B2C installer of solar panels demonstrated a similar rapid growth over three years of £0.2m, £7.5m and £26m.
Basis of modelling: The company sales forecast has been modelled on industry averages. Sales projections are conservative and within reach of the company structure. A current pipeline of over £4.5m has been achieved with only one full-time sales professional.

Its plain BS and a lot of so called sophisticated investors (Crowdcube's term not ours) were taken in, hook line and sinker. One guy, Charles Shale (is that name a joke?), invested £500k. What a clutz.

The guy behind the pitch, Perry Carol, an industry expert according to the fully vetted Crowdcube pitch, clearly saw this coming and jumped ship in December last year. How is that possible?

Surely time to put away the wrecking ball that is Crowdcube and let professional people get on with using and promoting ECF responsibly. It is possible but certainly not the way they do it. 

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