Monday, 1 August 2016

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. 


2 comments:

  1. The "pledges" they received were expressions of interest prior to the prospectus or details being available. I myself made a "pledge" but then decided not to invest, and i thank this blog for making many of CC's failings visible. The point about PR is well-taken - using the word "pledge" was somewhat misleading. But actually to convert 20% of the interest they received and quickly raise £7M is a decent result for CC, and I expect they will be hailing it as a success.

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  2. This is a bit of a rant. Apologies in advance. We invested in about a dozen companies listed by Crowdcube. Initially we felt this was exciting access and were grateful for it. We made some assumptions. We naturally assumed all historic financials presented to us would be accurate. We understood future projections would likely be a little sensational- it happens. We also assumed the respect coming from company founders and Crowdcube itself to us was genuine. Why wouldn't they appreciate us backing their businesses? Surely it's flattering to see established professionals and business people say yes? Over time it became clear, however, that crowdcube are simply a PR team- nothing more. Worse it has also become apparent that as investors, historic data that we made investment decisions upon is likely to be wrong. This is data that can be accurate to a decimal point- so really there is no excuse. This coupled with a total lack of accountability and regulation means that we have found ourselves in the uncomfortable position of relying only on the good character of the company directors, and a hope that the financials we were given originally were not too far off reality. Even if you forget the money for a second, this is not at all what we wanted out of this. We are at the tail end of succesful careers as professionals and in business too, and were genuinely keen to give back, help new businesses and support the underdog. We feel we have been hoodwinked. Far worse we feel that Crowdcube's general attitude and MO has taken good teams and companies and turned them.

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