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Friday, 19 August 2016

Beauhurst Crowdfundig reports skates around real issues

The new Beauhurst report here on the decline in investment into the UK start up scene in H1 2016, is worth a read for anyone interested in the sector.

By their own admission, the key reason they give for this decline is guesswork. The uncertainty around Brexit, they say, is the prime driver.

They make absolutely no mention of the lack of ROI for Crowdfunding investors, despite highlighting the fact that this financing channel is the dominant one. Surely some consideration has to be given to investor fatigue. Back in 2011, 12 and 13, this was all good fun and early adopters poured in. However the total lack of credible business plans produced in those three years by the largest player, Crowdcube, has led to nothing but utter and total disappointment. Its one thing to tell people that investing in start ups is unlikely to give you a return but if the next sentence mentions Facebook and Dragon's Den, the original warning is lost.

Just look at the facts. Up until the result of the Brexit vote, everyone expected a win for Remain. So on the 23 June, we all got a massive shock. But H1 ends in June so the figures only include 7 days out a possible 180 in the half, when the result could have had a real influence. Looking through the report the deal numbers are holding up well for the first 4 months of H1. Isnt it far more likely that the series of failures and scandals that have marked HI have dented investor confidence? Certainly investors we talk to think so. H2 will show if Brexit is having an effect or not.

Why we ask is this not even considered?

Yet another Crowdcube pitch with misleading information

We really do wonder what the Crowdcube Due Diligence Dept does all day - lunch can only last soooooo looooooooong. 

A current pitch whose name we shall keep to ourselves, claims that the founder has experience in start ups. It's a fundamental claim in any business pitch - this company is being led by someone with real entrepreneurial and commercial experience.

The obvious give away here is that no names of companies that make up this experience are given. That seems to be Crowdcube's new clever way around having to state real facts.

In the forum a straight question 'what experience' is answered with the real information. None.

A couple of 'start ups' one at school and one at university (where it was not a commercial venture and it gained a 1 star rating) do not make up 'experience' in the commercial world. Otherwise we could expect them to be including that dinner they arranged down at the local or their own weddings.

Its just more of the same  from the platform that brought you Solar Cloth Company and 88 Delicious, to name just two pitches that had false information vetted by the Crowdcube OTL Dept and passed as verified.

Tuesday, 16 August 2016

Crowdcube funded Airlander fails to take off.

We recently posted good news about the Airlander - it had manged to leave its hanger. Now the bad news. It didnt manage to fly. 

According to Crowdfund Insider here technical problems - maybe it cant fly?  - were responsible for the failure. Well the problems were unlikely to be pastoral.

Now the weather is too severe. Eh? It's calm and sunny outside my window. What conditions does this bird need? 

One to watch.

NEWS - today - 17 August - the Airlander did take off - here - as we said one to watch. 

Monday, 15 August 2016

A Verto Homes development has defaulted yet again on its overdue Funding Circle loans - you were warned.

Funding Circle loans to develop Towan Heights in Newquay - a development featured in the recent Crowdcube £1.6m equity raise by Verto Homes, are looking decidedly dodgy

Yet another ultimatum deadline has passed and still the loans are unpaid. As we have reported before here, investors who loaned to this development are up in arms at the way this company has stretched the truth about when payment would be made. The stretching continues.

Whilst the loans were not taken out by Verto Homes directly, Towan Heights LLP is the borrower and it was set up by the same two directors as Verto Homes and has them as members. The Towan Heights development was the main image used to sell the Verto Homes equity on the Crowdcube pitch. Verto Homes claimed in this Crowdcube pitch that they were Funding Circle's main client. 

Join the dots. 

Also, as we have said here before, we are simply amazed that Crowdcube did not think it necessary to flag up this connection and the late repayment - which was due back in May, so before the Verto Homes Crowdcube pitch went public. 

If we had not mentioned it here and pushed for it to be brought to the Crowdcube forum - no one would be any the wiser. When asked about it on the Crowdcube pitch, the VH directors brushed it aside as irrelevant - not their loan they said. Really?

There is at least one other Verto Homes' development which has FC loans and the talk amongst those who are owed money via these loans, is of legal action. It also seems highly likely, given the bad PR this has created, that VH have seen the end of their FC relationship.  Now how can that not be entirely relevant for people investing in VH?

Crowdcube investors have a few more days to decide if they really want to give their money to Verto Homes - so we hope to god they read this beforehand. Fine if you then are happy but you should really have this information in front of you.  

Saturday, 13 August 2016

We are sorry to announce the further delay of Airlander flight No. 1 - or any other flight for that matter

Airlander accounts are due at the end of this month. Their second Crowdcube raise projected turnover for 2016 of over £4.5 million. 

In what is becoming commonplace for Crowdcube pitches, Airlander missed its original 2014/15 Crowdcube sales projections by £1,990,000 - which we believe is a world record. Projections of £2 million were greeted with reality of £10k. 

In its second raise this year, they projected sales for 2016 of over £4.5m - YE November 16. As the craft has only just made its first tentative appearance outside its hanger, not in the air we must add,  this looks optimistic.

You would have thought that having missed the first projections by so far, the second attempt might prove better, but our guess is, it will be far worse. What are they selling to the tune of £4 million?

It's also worth noting that as usual the historic accounts given and verified by Crowdcube were wrong to the tune of £250,000. How is that possible?

Are we heading for an EIS disaster?

A very recent Crowdcube raise by Verto Homes illustrates what maybe a hidden problem with EIS.

Verto Homes successfully raised £1.6m on Crowdcube this week. They had no advanced assurance from HMRC on EIS eligibility. However they told investors that they expected to be eligible.

In the course of the pitch, the question of EIS came up. In reply to questions, the founders of VH stated that they had taken advice from the Mill Consultancy's Jerry Davision and that he had informed them that they would be EIS eligible. Jerry worked at Crowdcube previously.

One of the proscribed activities for EIS is property development, which is defined as being involved or having been involved in a piece of land that is then developed for housing or commercial use. Its a grey area as construction companies are eligible providing they are not involved and have never been involved in the purchase and sale of the land they are building on.

One other proscription is that the company must not be providing services to another company that is offering a proscribed service if both companies are controlled by the same person/people.

HMRC retain the absolute right to enforce their own judgements in these matters retrospectively.

In the case of Verto Homes, we dont know yet what HMRC have decided. Verto Homes have distanced themselves from their recent developments - Towan Heights for example. Towan Heights LLP are the developers. But if you dig a little, there seems very little difference between the two. Towan Heights LLP was set up in December 2012 as Verto Group Developments Towan Heights LLP. The sole members at this time were the sole directors and founders of Verto Homes. Only in 2015 did the name change and other members join. Also at this time, the two founders terminated their membership to be replaced by their Verto Homes company, as a designated member. Then in May 2016 Verto Homes resigned as a member to be replaced by the the two founders again. So the development company, Towan Heights was set up by the same people as Verto Homes. Verto Homes and Verto Construction (also controlled by the same two) use their services exclusively to develop land that is owned by Towan Heights and other LLPs or companies that are also controlled (at least in part) by the same two people. 

Another Verto Homes development, according to their website, is Hilgrove Mews. Hilgrove Mews Ltd was incorporated in 2015 and its sole directors are the same two as for Verto Homes and the founders of Towan Heights LLP. 

That looks like a pretty close relationship. Of course the application to HMRC prepared by Verto Homes' expert, may not have filled out all this detail. The bottom line is even if HMRC now grant advanced assurance, they can at any stage change this is if it becomes clear to them that the original application was incorrect. The only people who will suffer from any change will be those who have already utilised their EIS relief as HMRC claim it back with interest. 

You might well ask what the equity crowdfunding platforms do to help here. Well in the case of Crowdcube, not much. We think that in cases that are clearly on the line, advanced assurance should be a minimum before any claim by the pitch to EIS relief can be allowed. But we know this wont happen as it would hinder Crowdcube's deal flow. 

One final point on this. If during the first three years of trading (post investment) for whatever reason, the company changes its operations and these changes take them into a proscribed activity, then EIS relief will be voided and any taken will have to be returned with interest. As we have seen with the recent Wool and the Gang 'exit', Crowdcube investors and it appears Crowdcube,  have no control over what the company chooses to do. So this is yet another potential time bomb. 

It might all end up in a bit of a mess. 

Friday, 12 August 2016

What's really wrong with Crowdcube

People say we are too harsh on Crowdcube. They were the pioneers and have built up a brand that in 5 years has grown to be worth £65m.

Its a fair point. They were the first and as such couldnt see their own shortcomings. However the problem now is that 5 years on, they still cant.

We dont judge Crowdcube by the failures, not many to be honest so far or the 3 exits - all of which are disappointing. We have taken time to collate a great number of the 350 Crowdcube financed companies' projections and compared them to the reality that follows. 99% of them fail to get anywhere close to the 'sales document' issued and checked over by Crowdcube. A number of them have incorrect historic data and dodgy claims about the management teams, inward investment and sales pipelines. These problems are not limited to 2011/12 or 2013. This has happened recently as well. They are very slow learners. 

The PR is fantastic but it cant hide the widening cracks. 

We have had a few people complain that its up to individuals to do their own checking. We agree - of course it is. However it is more often than not impossible for non professionals to access the level of information to do this checking. Take The Solar Cloth Company as a recent example. The CEO was using multiple names with HMRC to hide his business failures. Crowdcube themselves, with all their resources, didnt even know about them. Well that's what they say now. 

As we have said many times, caveat emptor can only work if we have information symmetry. We clearly dont. Other platforms manage better due diligence so why cant Crowdcube? Well the answer is that up till now they have got away with it. Slowly, we are starting to see that businesses that funded in 2012-2014 have not lived up to the hyped pitches and claims. This all takes time to unravel - time Crowdcube have now all but used up. 

We think the evidence is overwhelming that Crowdcube's days are numbered. No real exits so no ROI, increasing numbers of failures and scandals and a current cash grab that has fallen way short of their own expectations, all point to investors' exhaustion. Promises of a secondary market are just that - promises. How can you have a secondary market in failing companies?

In order for Crowdcube to just breakeven, they need to be completing £10 million of raised funds every month of the year - minimum. On today's figures and the way the market is playing out that is just a pipe dream. Dont forget the £65 million valuation is one created by Balderton Capital  and Index Ventures to protect their own backs. It's nonsense in the real world. It seems that Crowdcube investors, certainly in this latest round, are being played.

Despite the thumping, endless PR, if you lift the sheets all is not too well. To date (with 4 days to go) the cash grab has attracted 3,400 investors out of Crowdcube's claimed 285,000 members. So when Luke Lang says he is thrilled that so many of our members are supporting us, is he being ironic? Just over 1% of Crowdcube members are supporting you Luke. 

Personally we will not be sad to see them go. Seedrs, Syndicate Room and Growthdeck are three much better run platforms that do at least have a chance of delivering equity crowdfunding that works for businesses and investors. Crowdcube's continued insistence on making theirs work only for businesses will be their end. After all, without some evidence of substantial ROI, what is the point in risking your cash when you can get good returns (7 to 8%) on secure loans with Funding Circle? The recent farcical exit by Wool and the Gang which has returned 5% to Crowdcube investors, is evidence that Crowdcube investments just dont pay up when they do pay up.  

Thursday, 11 August 2016

Wool and the Gang Sell Out their Crowdcube investors for a penny to Blue Gem Capital Partners

No doubt Crowdcube would be trumpeting this from the rooftops as evidence of a successful exit but details shown to us prove otherwise. It's a total farce.

Wool and the Gang (WATG) raised over £1m on Crowdcube at the start of 2016. The company had already secured investment from Index Ventures and a few other financial vehicles. The pitch talked of ambitious plans; dont they all. We wrote a not very glowing post on them and Index here  - looks like we were spot on!

Investors via Crowdcube paid just over 26p per share for their stake in this company which was valued at around £8.5m.

An email sent to these investors this week and shown to us, states that the company has been sold to Blue Gem Capital Partners and investors will receive 27.358p per share. A gain of approximately 5%. There is no choice here - its a done deal behind investors' backs, without them being consulted. The email uses weasel words to try and cover up the let down but we can all see the reality. This would not be the first time Index Ventures have used Crowdcube. 

This pitch on Crowdcube had EIS advanced assurance; so many if not all investors will have claimed back or planned to claim back their 30% and will now have to undo all that and repay HMRC. EIS reliefs are only allowed if you hold the shares for a minimum of 3 years. In this case they have been given no choice. Surely the company needs to account for this? Shareholders should not and will not be used by VCs to 'borrow' the odd million risk free. Investors can get far better and safer deals from Funding Circle. We would like to know when conversations with Blue Gem started - was it before the Crowdcube raise?

In a move that seems so blatantly wrong, WATG offer shareholders an alternative deal. Instead of cash you can take your whole investment back in credit to be spent with WATG. So for example (to quote the email) an investment of £10 via Crowdcube will give you a return of £10.50 cash or a gift voucher of £15.50. No seriously, they are offering this to shareholders whilst sticking knitting needles in both eyes.  Take that, they scream and here is a nicely knitted beany to cover up the mess. Even Mickey Mouse is blushing. 

The email does not make clear if Index and the other earlier investors are also selling out - they paid 20p a share 3 years ago so would see a return of around 35%. 

Is this what Luke Lang meant when he said that 2016 would see some exciting exits? Well on the upside it is not Rebus or Ovivo or Solar Cloth Company or Crowdcube (!) - at least investors are getting their stake back. But it is not what equity crowdfunding should be about.

Crowdcube stood to make a 7% risk free commission on this deal, whilst their customers were asked to risk all their money for a pathetic 5% return or a couple of woolly jumpers. 

We asked WATG for a comment but the CEO was 'out' at the time and has not got back to us. We'll let you know what she thinks if she contacts us. We have also asked Crowdcube and Index Ventures to comment - nothing yet!

Tuesday, 9 August 2016

Cell Guidance Systems return small loss

Cell Guidance Systems raised finance on Crowdcube at the end of 2013 and then more on Syndicate Room in 2015.

Its too early to know the outcome of the investments but its fair to say that the company is closer to its SR projections than those on Crowdcube.

Crowdcube showed the company making over £400k profit in 2015, whereas the actual figure was a £19k loss. Similarly the historic figures quoted by Crowdcube for 2013 showed the company had made a £188k profit when in fact they made losses of just under £100k.  The SR figures, whilst not entirely accurate, are at least on the same planet.

Just more evidence that only a complete idiot would believe anything published on Crowdcube.

(Our thanks to SR for correcting this post where we initially had the second raise down to the Seedrs platform)  

Smoke mirrors and total lack of any transparency - it's all a bloody mess

When false information is issued from the horse's rear end, then we are all in a real mess.

This article from 2013 in the Crowdfund Insider illustrates the problem

The article states - 

UK equity crowdfunding site Crowdcube announce the successful funding of two companies listed on their site today.  Bike Leasing which successfully raised £80,000 for 16% equity in the corporation by receiving support of 46 investors.  The A shares were listed at £7,500 each.'

The filed accounts and AR at CH show this company has only two shareholders - the founders. So despite what the Crowdcube PRing department were issuing in 2013, this company was not funded on Crowdcube. How many more PRing fibs are there out there? Our guess from the evidence we have uncovered so far is a lot. It's clear now that what Crowdcube were doing in 2013 would now be stopped by the FCA. So do we have to wait another 3 years for the FCA to wake up to what Crowdcube are doing now - or could they actually do something now?

It's an eternal circle of not truths and it all adds up to one hell of a mess. What are the FCA doing about it? Absolutely nothing.

Crowdcube's due diligence just keeps on piling up

Sorry for the repetition. But checking back over our records, we keep finding yet more examples of Crowdcube's incompetence. Is this another case of fraud?

Here is just one of many examples. Orsto raised over £70k on Crowdcube in May 2014. The previous year on Crowdcube, Orsto had failed to raise £120k. In this 2013 campaign,  pitch documents declared the company had invested £1.2m in the previous 9 months. This appeared on the balance sheet as fixed assets. 2013/ 2014 was a time when Crowdcube were claiming they had ironed out any wrinkles from their 2011/12 start up and had rigorous due diligence.  

Well surprise surprise when the real accounts are filed, the fixed assets for the company are £3k. The investment which appeared in the pitch as real and historic never took place. Needless to say all the other figures in the pitch financials are also totally wrong, both historic and projected. 

Are there any investors in the company asking what the hell happened here?

As the money ran out, Orsto reappeared on Angels Den and tried to raise another slug there and has also been on Kickstarter. This blog has some very unfavourable information about him! http://www.eevblog.com/forum/crowd-funded-projects/the-orsto-watch-is-back!/ which suggests that the founder is a serial scammer. Confirmation of this can be found here   - a piece about how the Orsto CEO was flushed out on the Kickstarter campaign and the campaign was closed down. At least KS have a degree of due diligence.

We spoke with the company and they confirmed that the 'smart' watch for which they had taken people's investment, no longer existed. They now sell analogue watches. So yet another case of investors being led very easily up the garden path.

Crowdcube - should be re-branded as The Criminal's Friend. 

Monday, 8 August 2016

The odd tale of non investment in Crowdcube as 'funded' Dine In crashes out.

He has a point.
Dine In Ltd raised just over £300k on Crowdube in January 2014. According to Crowdcube's own list of funded companies.

18 months later the company was toast - liquidated. Nothing unusual there you might think - most Crowdcube funded pitches end this way.

But this one is slightly different. In the Statement of Affairs filed almost a year ago to the day, there is no reference to any shareholder capital. Nothing, zilch - the £300k is just not there. The full list of shareholders is there with their shareholding but the 'total amount called up' column is like the Pearl Harbour sky on 7th December 1941 - full of zeros.

Are any of the the 90 shareholders that Crowdcube still claim put in £300k, out there? Would you let us know what this is all about?

Either the Statement of Affairs is wrong, which if this is the case and the founder signed it, which he did, he will be in breach of pretty well everything. Or the money was never actually collected (possibly as in the case of 88 Delicious) and Crowdcube have failed to correct their records and have a whopper on their FCA regulated site. Neither or both would be a surprise.

The last set of accounts filed, before the Crowdcube raise, show over £60k in shareholder funds already in the company. Yet in the Crowdcube pitch financials, this figure is zero. We have no idea what happened to this. In an article which seems to compare the CEO Graj to the boys behind Deliveroo here , written post collapse and post Crowdcube raise, the story is a sad tale of missed opportunities. Graj is now working for Uber in Singapore. The liquidation has not moved on in 12 months. This smells like another Crowdcube mess to us.

It does fill you with confidence in the systems we and HMRC operate under.

Desperate Darren Westlake bending things on Radio 4's World at One today

Where will it all end?

Desperate Darren was today smoothing his way around a short interview about Fintech on the Beeb's WatO.

Asked how investors are protected from  possible fraud, Darren tried what is to us a new ploy - he stated that getting onto Crowdcube and joining is really very hard.

Sorry but that is total utter tripe Darren and you know it is. You make it as simple as possible -  tick box quiz lasting 10 seconds is all it takes. The questions are so simple I would wager a 10 year could join - we know one who did. The real answer is - Crowdcube dont give a fig.

Then the interview went on to talk the London Distillery - did the female interviewer think to check their credentials? No. Have a look at their last accounts. Since funding on Crowdcube back in 2012, they have gone steadily down hill. That's certainly not the picture painted by the Crowdcube promoted projections they published to the public in their campaign on the platform.

Saturday, 6 August 2016

Smoke and Mirrors at Funding Circle should ring alarm bells for deal on Crowdcube

The Towan Heigths development in Newquay, which was at least part owned by Verto Homes until May 2016, has received a lot of flack from investors on Funding Circle.

The various loans were due for repayment several months ago and Funding Circle have been working very hard to bat away questions from increasingly irritated.investors. These investors were told all 14 units had been sold, but a post just yesterday states that only 9 have completed the 'legal stage'. A promise of a repayment of almost £1m yesterday seems to have come and gone without any money changing hands. 

Meanwhile over on Crowdcube, Verto Homes, who were partners in Towan Heights, have raised £1.5m via equity sales - the amount almost to the letter that Towan Heights owes FC investors. None of this information is mentioned in the Crowdcube pitch.

A description of Verto Homes and its borrowing from Funding Circle (their words not ours) is here on the FC site. This also refers to a new development at Hilgrove Mews - another Verto Homes development. According to Hilgrove Mews Ltd, they have two outstanding charges with FC. Hilgrove Mew's only two directors are the same two founders raising money on Crowdcube for Verto Homes. 

Investors on FC are now referring to the guys behind the Towan Heights development in less than glowing terms. These are the same guys behind Crowdcube's Verto Homes. The forum on this topic is now on page 8 and shows no sign of slowing down - its well worth a read here. In what seems a confusing trail of paperwork Verto Homes ceased being a member of Towan Heights LLP two months ago but the two main directors of Verto Homes signed up as members on the same date. The main picture used to promote Verto Homes Ltd on the Crowdcube pitch is of the Towan Heights development.

Meanwhile in an equally confusing move, Verto Homes have applied for EIS tax relief on the basis that they are not developers. Kevin McCloud's HAB Housing managed to obtain EIS way back in 2014 when they raised money on Crowdcube, again by claiming the developments were not theirs directly. Verto's opening line in their pitch adds to the confusion -

''Verto Homes designs, builds and sells intelligent, sustainable homes,.............''

The problem being that if these companies transgress any of the EIS rules before they give investors a ROI, HMRC will pounce and the tax relief and all interest will be due back in full.  At the date of writing EIS had not been granted to Verto Homes. It maybe that HMRC are beginning to wake up to the holes the policy suffers from. 

The new new deadline for the loan repayments by Towan Heights is the 12 August, which is 2 days after the Crowdcube pitch has closed. Towan have said that an undisclosed third party will fund the shortfall if the properties are not paid for by the 12th. The Crowdcube money would not be available until sometime later so there is no suggestion this is being used directly.

The same crew that are late with Towan Heights were also late with repaying another property related loan via FC. Investors on the forum are now talking about boycotting this company in the future. FC have as yet declined to comment when asked if they would take more business from them. According to the Crowdcube pitch, this company, in whichever guise they appear, is FC's largest client - so you can see why FC are being so cautious about the way this is all handled. Caution, in this case, is not working. 

Just imagine if FC decided not to continue doing business with these guys or when they tried to launch new loans, FC investors refused to fund them. This could have a material impact on the way the company Verto Homes develops and therefore on the shareholders currently oblivious to the Towan Heights saga.

Well now they know. Happy to be doing Crowdcube's job for them.

Friday, 5 August 2016

Forum Questions prove that Crowdcube investors have no clue what they are doing

When Crowdcube members ask these Q's, its clear that their Equity Crowdfunding model does not work.

Crowdcube's model puts ease of access at its centre. How do we know this?

Well its very simple - here is a Q just posted on a current pitch  - we have altered the names etc.

Q - I assume that if I need access to my investment in your company as an emergency, then I will be able to easily get my money out?

A - Please read the company Articles of Association.

The Articles say nothing related to the question. Q clearly has absolutely no understanding of investment, companies, equity crowdfunding, company law etc etc. They should be told to go away (in a nice way). But no, the answer is clearly very ambiguous and highly misleading. The simple honest answer is NO you cant get your money out.

We come across this type of ignorance and misleading response on the forums often. We have even been approached by an investor asking us to buy their shares as they were desperate for emergency cash!!

How did this Crowdcube 'member' get through their mini 'test'? No idea but you have a very short, very easy tick box test so it is possible by pure luck. 

Thursday, 4 August 2016

Cauli Rice and Righteous increase losses

More disappointing results for Cauli Rice and Righteous mean one of Crowdcube's better companies is still a long way from giving investors any ROI.

You cant fault the work ethic behind the founders of Cauli Rice and Righteous. But you might question their business sense.

We have lost count of the number of equity crowdfunding raises these guys have made but it's a few now and each time their projections promise much and deliver less. To be fair, each hiccup has a genuine reason - it's just that these reasons are often foreseeable. Any business acumen would have factored them into the original plans. But then would have dropped the expectations and ensuing 'value' of the shares. Investors in ECF should expect predictions to change but they should also be allowed expect a level of confidence in management that is missing here. 

Examples include a major US buyer taking a sample order and then not reordering. As the projections included sizable orders from this source, this impacted the real revenues. Then there was the problem with winter cauliflowers - they didnt like the Cauli Rice process and this is one reason why these latest accounts are so poor. Instead of a projected £400k profit for 2015, we are looking at a £800k loss. Money seems very tight so we'd expect them back again soon for more.

Righteous has never made money, despite its projections and plans. 2015 shows more losses of around £40k, against a profit projected by the Crowdcube raise of £350k. Righteous is now one the older companies funded via Crowdcube, still alive and kicking. So lets hope they can turn out a profit soon.

Things for Cauli Rice look more promising if there are no more slip ups. Although we feel that the process of making the rice from cauliflower is so simple that people should really be doing it themselves with fresh cauliflower. This product seems to be swimming against the flow. 

Beware - Jon Allen now reappeared as entrepreneurial guru

They say you cant keep a good man down. Ex Crowdcube 3 time failure Jon Allen is now selling his 'success' story to lure would be entrepreneurs. CAVEAT IPSUM EMPTOR.

We have written a few blogs on JA and Up Front Retail Ltd here  - it has been 
anything but up front.

Crowdcube investors lost over £400k (according to Allen's own Linkedin page) when he did a pre packed deal with Lyle & Scott, where L&S got the company for next to nothing. They have obviously now had enough of him so he is on the loose taking money from unsuspecting entrepreneurs in his latest guise as a business guru. Allen had already seen at least one of his companies go down a similar route. 

Reading his CV you would believe that this guy could help you out. But he leaves out the important bits; how he raised money several times on Crowdcube, always promising the earth but failed to ever deliver figures anywhere near to his projections and then closed, leaving all shareholders and creditors high and dry in a deal which gave him a full time job with Lyle & Scott and paid off his business loan. Nothing illegal you understand but then nothing moral either. 

So just in case you run into him, his new venture is called Enploy and The Entrepreneur Test. 

You have been warned. 

Wednesday, 3 August 2016

Yet another Crowdcube pitch with misleading information - is a mess this large really possible?

They just keep coming. We are told that Crowdcube have revamped their DD but that must be just another Crowdmyth.

Dock of the Bay are about to fail spectacularly to raise money on Crowdcube. 

Firstly this begs the question, if as CC continually claim, they refuse to take 75% of the companies that apply, how did they let this one get through?

Secondly and this will now come as no surprise, the information vetted by Crowdcube and then presented to the public as verified, is wholly misleading.

It states in the first few paragraphs of the pitch that DOOB has been 'established' for more than 5 years. Yet we learn from the forum that DOOB has been a non trading company until 2016 - so it has not been established as anything apart from a name on a page for more than 8 months. The main trading company Gtem International Ltd was incorporated in 2007 and has made steady losses; not that you would get that impression from the pitch. We also learn that the founder has a 'wealth' of 'experience' in this sector and we are told, he was the founder owner of Moorcroft Lifestyle Ltd which produced one set of accounts and was then dissolved via administration.

A wholly owned subsidiary of Moorcroft Lifestyle, MC Lifestyle Ltd, of which the same founder was a director, was closed via a Court Order. If its fine to quote the good news in the pitch, why not include the bad for balance. Well the answer has to be that bad news doesn't sell equity and then Crowdcube dont get their commission. Meanwhile, the FCA carry on snoozing. 

Is it possible that the whole of the CC OTL Dept has been on holiday for the past 3 months - clearly no one checked any of this utter drivel. Whilst none of the information is critically wrong and no one has broken any laws,  it is a very slapdash approach and is misleading Why should Crowdcube members be forced to find these things out or as in many cases not find them out until it is too late?

Do investors in the Crowdcube platform, looking at this pitch and its half hearted DD, really believe that the platform can deliver a sustainable level of profit to make them worth anything like £65m? 

Yet again Crowdcube projections are simply WRONG!

You really couldnt make this up - 7 Bothers Brewery by its own admission is selling its equity with misleading financial forecasts, verified by Crowdcube.

We wrote only days ago about how The Hebridean Food Co had financials for the past year that were not accurate. Now we have a similar situation here.

In the pitch forum, 7BB admit that the financials for 2016 which run to October 2016, are not going to be fulfilled because half of the turnover was supposed to be via a bar which hasnt opened and will not open before September 2016. 

So half of the £464k revenues have already vanished - yet the pitch says they are still good to go. What the hell do Crowdcube do on a daily basis? This took us about 3 minutes to ascertain. If the question had not been asked in the forum, are we to believe that this information would have remained unknown?

We all need to have better reporting on these issues. It makes a massive difference that a very small brewery trying to claim to be the next Camden, can take its annual turnover from £50k (actual 2014/15) to a predicted £450k in 12 months. A very substantial leap on a marketing budget of £6k - yup £6,000. Now we learn that this £450k will only be £225-£250k  - meaning that the EBITDA for the year 2015/16 instead of being £(60k) is likely to be nearer £(200k +)  - thereby wiping out the money they have almost successfully raised on Crowdcube.

Are you all mad?

Brexit hits investment into equity crowdfunding

As predicted here, the Brexit vote has slowed the money coming into equity crowdfunding pitches, research from Beauhurst shows. 

This is something we noticed almost immediately the result was announced. Investors we talk to and companies that had asked for our help with their campaigns, started to pause and many have now put it all on hold.

The total uncertainty as to what Brexit means and what the end result may look like is a killer for inward investment in what is a very high risk sector at the best of times. That, coupled with the lack of any real ROI after almost 6 years and an increasingly large wave of collapses and scandals, is taking its toll on the armchair investors brigade.

Crowdcube's now stalled cash grab is proof. 

They raised £6m in 24 hours when they opened (much of it pre pledged) but have only managed another £750k in the two weeks since - despite valiant efforts by Luke Lang's PRing Dept to pick up the beat. Even Luke cannot beat investor sentiment and their brash claims now look slightly foolish. Beauhurst found that the total number of investments offered across the various platforms had fallen by 17% in the first half of 2016 compared to the same period in 2015. 

With no end in sight to the void in information that our government has now hoisted upon us, things are likely to get much worse before they get better. 

Tuesday, 2 August 2016

Crowdcube's JustUs falls over the cliff

The Crowdcube JustUs pitch has bombed. We mean really bombed.

They had raised £427k on Crowdcube before as Emoneyunion.com in 2014 and has certainly not delivered anything that was promised then.

This time around they had a new angle  - apparently. But it must have been too complicated for Crowdcube's sophisticated investors to grasp as they really never got off the ground.

So what happens now to the original 100 investors will be a wait and see.

MindGenius passes £400,000 and 200 investors on Crowdcube

The Crowdcube MindGenius pitch has been extended and we would urge readers to take a look. This is exactly the sort of business that Equity Crowdfunding should be used for.

We helped the company to put their campaign together - so we know that the plans are sound and doable. This is as far from the usual Crowdcube glamour pitch as you can get.

The team behind the company have been there and done it once already - selling a previous company for over £20m. The new product, Barvas, has been very well received by the company's existing customer base and the money being raised will help to launch Barvas in the US, where a market has been identified and the channels to market already secured.

Its not hyped, its not fluffed up but it is all genuine. If company's such as this cannot raise finance via equity crowdfunding then you have to seriously ask what is the point in having this funding channel. 

Monday, 1 August 2016

Verto Homes' Towan Heights has still failed to pay off £1.7m Funding Circle loans

We have written recently about Verto Homes and their development Towan Heights which has overdue loans with Funding Circle.

Funding Circle told lenders that they would consider taking legal action if the loans were not repaid by the end of July. The loans are still outstanding and the news from the forum is not too good - https://forum.fundingcircle.com/discussion/13078/2million-newquay-property-loans-late-what-is-the-penalty/p1

Of course these loans are not Verto Homes', the liability belongs top Towan Heights LLP, of which VH is a partner. Zero information about this situation is available to investors on Crowdcube but that is standard fayre.

Does it matter - well apparently not as VH have 'raised' £1.5m on their £1m target on Crowdcube. Although as we all know, this is pledged money not raised and as in the case of Crowdcube's own cash grab, pledges can melt away faster than ice.

Let's see if the legal action makes any difference. The excuses for not paying have now run the full gambit and come full circle - facts are the money has not been repaid and the units have not been sold or paid for. Tits and up come to mind. 

Classic Crowdcube botch up shows nothing has changed despite Lang's assurances

The Hebridean Food Co complete a successful campaign on Crowdcube using inaccurate financials.

I love the outer Hebrides - this picture showing the majestic Hecla is where I owned a cottage many moons

The Hebridean Food Co is raising money on Crowdcube and has past its target - which is an excellent achievement. They are now overfunding. We have no problem with that.

However if you read the forum, you find a question that asks if the financials to July 2016, which give a turnover figure of £150k, are accurate. So this is now an historic actual figure, although the back end of it was a projection when put together. You would think and indeed hope that this figure along with the other figures to July 2016 would be 100% accurate. Why wouldn't they be?

You would be wrong.

The question was answered very roundly by the company. There was a 20% shortfall in sales for the year. So why, you might ask, is this not shown in the financials? What chance is there that you would find this information in the forum - it should be updated via a simple post by the company and platform. In fact if the question had never been asked would the company and platform have just carried on regardless to raise their funds, take their commission all based on blatantly false figures. Yes, it's what they do.

It's yet more evidence that Crowdcube's claim to have corrected their past DD and financial shortfalls is just more of the same PRing.

Writing on the wall for stalled Crowdcube cash grab

Crowdcube's latest cash grab is stuck and going nowhere. Investors on the forum have finally woken up.

In the run up to this latest Crowdcube pitch on their own site, Lang et al were PRinging that they had pledges of over £40m - it was everywhere.

Now the pitch has only two weeks left to run, it is firmly stuck below £7m - where it has been since it opened. You see the problem with PRing is that if most of it is fabricated, you look a bit on a arse.

The forum is populated with the sorts of questions we have been asking CC for 5 years. What happened to the pledges? How can you claim 'amount invested' when this figure itself is merely pledges? Why do you never mention any of the many failures financed through your platform? What ROI did the two 'exits' actually deliver? Why did you let 88 Delicious access CC investors which then led to fraud and those investors losing all their money and the perpetrator being sentenced. What about the due diligence for Rebus, Crumpet Cashmere et al? How will you ever get into profit? What due diligence levels are acceptable? Why let companies pitch with financials that they never get close to? At what level of failure is CC liable to investors for misleading them or gross negligence? What exactly does the FCA do? How close are CC to the FCA?

Yet more PRing evolved around the idea that CC would facilitate previous shareholders selling their shares in this round - but only if the 'amount invested' (although we know this isnt true anyway) climbed over £12m. Pure fantasy.

One of Crowdcube's smartest moves was to get the Crowd involved in the platform as investors at an early stage. You can see the die hards now on the forum trying to prevent the meltdown and their cash burning. It is clear from their comments that they know little about what is really happening and seem to have little interest in the truth. But we live in a democracy and I am fast becmoing convinced that all regulation is a waste of time and money - like the doppers in Brazil, people will always find a way around. Why not make it more fun and just allow them to take whatever they like - 100m in 6 seconds followed by all 8 runners exploding would be a fantastic spectacle.  

Anyway, well done everyone - most of you have at last woken up. Crowdcube will never get into profit and investors in this round at least, will never see any ROI. They have done a grand job of pulling the wool for 5 years but Luke's luck just ran out. So move over and let the serious platforms take it from here. Thanks boys.