Monday, 25 July 2016

Earlybird breaking all the rules

Earlybird have raised money on Crowdcube twice, tried to raise money on Angels Den and are now trying again on Envestors at £2m pre money. We have written many times about them on here.

We have been sent this plea for help from the CEO of Earlybird ( via a friend) -

From: Oliver EB <>
Date: Sat, Jul 23, 2016 at 11:13 AM
Subject: URGENT - Requires Immediate attention. EarlyBird
To: .............................

Dear Shareholder,

EarlyBird requires urgent investment as our large funding round has been unexpectedly delayed.

The EarlyBird business is performing well: The product is loved by the market, customer retention is on target, and we have new board members joining the company in the autumn bringing expertise to help us grow - including the founder of ...............................  However we now face an urgent funding gap as the funds we are seeking will take longer than anticipated to come through.

We are asking our investors to help us bridge this gap in return for a significant stake in the company. Please note we are asking for initial indications by Friday July 29th.

Please read the attached letter and do not hesitate to get in contact with me if you have any questions.

Oliver Pugh


Below is the text from the letter - 

Dear Shareholder,    

We need your help.     

EarlyBird’s product is in a great position and is loved by the market, we have significant funding  lined up to grow the business and new board members bringing expertise to help us grow.  These funds will take longer than anticipated to come through and so EarlyBird faces ​ an urgent  funding gap​ .    We are asking our investors to help us bridge this gap in return for a significant stake in the  company. Please note due to the urgency of this gap we require indications by ​ Friday July 29th.    

As I’m sure you’re aware, we’ve been raising a significant funding round that will allow us to  scale our subscriber base and to launch the product into new markets both online and offline.  So far the funding round has been extremely successful with £150k of new money indicated,  and a further ­350k in the pipeline. However this money is insufficient to close the round  now.    

We have also lined up amazing new board members that will help us grow the business and  raise money in the future: .................................... and .................................... These board members are lined up to join ​ assuming  that we raise sufficient funds.    All that said, we are almost out of money and so we are asking our investors for urgent support  (investment). We planned to close our round before the summer July/August, but key investors  have held­off investing due to the current uncertainty in the UK market. This has pushed the  closing until after summer (September/October). In order to get there we need a bridge: We  need more funds now to give us the time to pursue this additional investment. This is why we  are asking our investors for urgent support.    

To reward our investors continued support and encourage investment now we’re lowering the  pre­money value of this round to £660,000. This represents the best value for investment in  EarlyBird. Current investors can buy shares up to their pro­rata investment level at this valuation  and ​ existing investments in this round will be converted to this valuation​ .    

Please see the pro­rata schedule for this round attached below (the number in the third column  means if you invest that amount your % holding will stay the same). For this round, for example, 
a £10,000 investment would yield a c. 0.9% stake in the company post­money. We expect (but  cannot guarantee) the round to be EIS eligible.    

Thank you for your support to date, it has allowed us to build what our customers are telling us  is a truly game changing product not just for the market but for the way people perceive and  consume healthy snacks.     If you have any questions please do not hesitate to contact me on:  Email:​   Phone: +(44) (0) 7796 193 711    

Please send indications of interest by reply to this email.    

All the best,    Oliver Pugh

So Earlybird are offering two different deals at the same time - one here to existing shareholders and one at a much higher price to investors at Envestor. Im sure Envestor members will be delighted by this. Envestors have confirmed that they didnt know anything about this.  Ignoring this duplicity, the facts are that Earlybird do not and have never done well - see review here

Yet again equity crowdfunding shoots itself in the foot. This is totally unacceptable behaviour even if it is not illegal. And it all stems from the first two nonsensical raises which Crowdcube facilitated. 

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