Why some businesses don't draw a crowd

Poor business advice is hindering small companies from raising Equity Crowdfunding

We looked at two examples recently of pitches that are not looking likely to get past their targets.

Why were they doing so poorly?

Dassie Artisan is on Crowdcube and has only  few days left to get to £225k - it has not got halfway yet.

Its a small business importing handicrafts and has sales of over £500k in the last year. It has an enthusiastic team, a reasonable list of large stockists and clear plans about the next 3 years.

They have simply been very very badly advised.

Under the section 'Use of funds', the main reason for raising this capital is listed as increasing the stock holding.

Silence..................................guillotine.....................................head.

No one is going to invest via ECf in piles of stock - unless you are Sir Terence Orby Conran and even then its still unlikely.

I remember the old Global Village, a pioneer in importing the most fantastic artisan made products in the 1980's and I remember its demise. In the end the company had years worth of unsold, useless, rotting stock as each year the buyers piled new lines on top of old ones. For so long as sales flourished, the company was a great success but any fractional downturn meant revenues decreased and new stock couldn't be purchased and the old stock wouldnt sell. Curtains. Guessing future trends is almost impossible and guessing future economics is even harder.

The second company struggling is BlakeLDN. 

A perfectly well thought through plan with albeit small sales has been totally ruined by the most ludicrous valuation, backed up by the most flawed reasoning.

When your sales are £66k and projected to be £99k, why bother talking about revenue multipliers for companies that are raising over $100m, as if they are on the same planet as you. Likewise talking about a previous 'investment round' as an example of the validity of the valuation method, when this round raised just £15k is simply nonsense. It confirms what the initial valuation shows; a complete lack of any understanding of how a business works. This in turn makes the business univestible with a capital U.

So where in both of these instances is the advice these companies need? Clearly it is not coming from the platform. Its a great shame as these two could have raised money with a sensible plan and sensible valuation.