Wednesday, 7 September 2016

September MADNESS has arrived



If it wasnt serious this would be hilarious. Seedrs and Syndicate Room have both issued entirely bogus 'valuations' of their portfolios  - on the same day. 


Both valuations show healthy gains for investors - but the catch is there have been no real gains because neither company has achieved an exit. Investors are locked in until this happens so its a paper exercise in PRING. It is also highly misleading and they should really know better. Its the kind of stupidity that Crowdcube excel at. 

Its all really very disappointing. Seedrs held a secretive press briefing this morning which Syndicate Room clearly got wind of and pushed their announcement to 10.30, leaving Seedrs looking into the middle distance as SR disappeared over the virtual horizon.  

Meanwhile the Syndicate Room PRING stated '' We’ve calculated that SyndicateRoom’s 2014–15 portfolio is valued at 135% of the original investment (as of May 2016, not including (S)EIS tax reliefs)''. 

The first word is the giveaway!

When are the main three UK platforms going to grow up and give as an ECF investment structure that works? Inventing returns, when its just as likely that all these so called increases will be expunged by failures, is just irresponsible.



9 comments:

  1. Just looked at the Seedrs one - it doesn't tell us the valuation of each individual company.

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  2. Goncalo de Vasconcelos, CEO of SyndicateRoom7 September 2016 at 06:12

    Hi Rob,

    As always I'm one for transparency. I'm happy to talk about how the value of our portfolio was calculated, which is straightforward - it has all been calculated based on share value paid by independent parties as part of funding rounds post the company's funding round with SR. For some companies this means an uplift, for very few (in SR's case) it means a downround or complete wind-up. The share price for individual companies is naturally confidential.

    It is a 'paper' return and it's not liquid, so investors can't realise their gains but that is what we have at the moment and it's a fair analysis. It doesn't represent returns, it represents the paper value of the portfolio for 2014 and 2015.

    All the best,
    Goncalo



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  3. Hey Goncalo,

    Why is the share price 'naturally' confidential? If the valuation is 'based on share value paid by independent parties as part of funding rounds post the company's funding round with SR' then this should be public information at companies house if I'm not mistaken.

    Furthermore I believe the vast majority of these investments were done with the benefit of EIS tax relief, so the 'net amount' investors were willing to pay for these shares is probably 30% lower, in a 'fair' analysis you should take that into account and deduct it from the valuation.

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    Replies
    1. Goncalo de Vasconcelos, CEO of SyndicateRoom8 September 2016 at 01:19

      Hi Anonymous,

      The share price is confidential because companies usually want to keep it that way. To SyndicateRoom it would be great if we could publish their most up to date share price. The share price isn't posted on companies house, only how many shares were bought by whom but not how much they paid for it.

      Fair comment on the EIS tax relief. However companies that raised finance post their round with SyndicateRoom raised mainly from institutional investors who don't tend to benefit from EIS. In terms of portfolio value, it is up 35% before taking into consideration any EIS or SEIS benefits. But I take your point on EIS/SEIS tax reliefs.

      Have a great day,
      Goncalo

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    2. Goncalo - that is not correct. Any new shares issued have to declare what was paid for them - alhtough this is often misfiled by companies wither through ignorance or to hide the real price.

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    3. Goncalo de Vasconcelos, CEO of SyndicateRoom8 September 2016 at 01:28

      OH, great then! Independent people can check the facts. That is good to know, thank you Rob

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    4. As Im sure you know Goncalo - it is not that simple. I was just pointing out that your statement was wrong - which for someone who is a leader in this sector was a little shocking!

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  4. Ironically the best example is Crowdcube's latest round, their new shares with EIS relief sold out within minutes (and arguably could have sold a lot more if the allowance was higher), however when it came to the exit of existing shareholders nobody was willing to purchase the shares though technically they were offered at the same price.

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    Replies
    1. Not quit true as the offer to buy back the shares only kicked in if CC had managed to raise a min of £12m and they fell way short of this at £8m, despite claiming to have pledges at over £40m. the whole buy back stunt was just that a typical Luke Lang PR charade.

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