As if to emphasise the story below, we have been contacted by a Crowdcube shareholder in Monzo (previously Mondo), the challenger bank that raised £1m on Crowdcube recently.
The Board at Monzo have issued shareholders with some news - which if you read our last blog is at least a good start. However the news is not all good.
In the Crowdcube pitch Monzo talked about the need to raise further funding, approximately £15m. The Crowd would be involved. The Board have now decided that they will raise a separate £4.5m now via VCs. No Crowd.
When we asked this shareholder if he thought this was in the interests of all those who backed Monzo via Crowdcube, he said -
Personally I don't think it's ideal - they should've given the crowd an opportunity to, given they point out they "couldn't have built Monzo" without the Crowd's help - and the Crowd even helped pick a new name for the bank. I'm sure the appetite is there.
What this now does is dilute the crowd's holding which may well have an effect when Monzo come back for another £15m next year, We will have to wait and see. As someone once said, shitting on your own doorstep is never a good idea.
If I remember correctly Crowdcube investments ranged from £10 to 1k max, so in order not to be diluted you would need to invest between £1 and £100, surely not worth the hassle and admin costs. The max shareholding anyone from the crowd could have is 0.003%, who cares about having 0.0027% instead? Instead the share price (which is what matters when it comes to selling) is up 50% in half a year.
ReplyDelete'Share Price' up 50% - are you having a laugh. No wonder CC are able to rob people blind. For a share to have a price it needs a market. There is no market here so the shares have zero value in reality.
ReplyDeleteIf the shares had zero value then you are implying every unlisted company is worthless... that's just nonsense.
DeleteAnd the new investors don't get the new shares for free, they pay a price for them and I was just simply stating the fact that the new investors are willing to pay 50% more than the crowd last time, I never implied the crowd is able to cash in at this price.
Maybe you forgot, but it was SyndicateRoom and Seedrs who misleadingly referenced to these increased valuations as 'return'.
Ok then - but we are not psychic. You did write 'Instead the share price (which is what matters when it comes to selling) is up 50% in half a year'' which is complete rubbish as there is no share price. The shares are currently worth nothing - you are getting mixed between the intrinsic value of a company and its share price. More thought needed.
DeleteYou have also been highly selective with your memory. Crowdcube have claimed on many occasions that companies raising a second/third or fourth round with increased 'valuations' have added to shareholder value, which as you well know is complete nonsense. A classic example is Front Up which raised 3 times - each time at a higher value and then went bust. Shareholder value zero. Of course CC did not promote the collapse but had promoted the increased valuations to promote themselves and the scam that was Front Up.
DeleteIf they promissed: "The Crowd would be involved." is is a matter of pinciple.
ReplyDeleteThe fact that VCs are willing to pay more for shares is the next best thing to having a secondary market. It at least shows that those who are deeply involved still want more.
ReplyDeleteECF takes time, which Monzo didn't have this time, but they have promised the Crowd another round in the new year, with priority to those already in.
A little naive.
DeleteMondo offered 3.33% of their stock for 1 Million on CC.
DeleteThis gives their Information Memorandum, which is all they had at the time, a valuation of 33.3 Million GBP. haha....33 million for a business plan !
Hats off to them for returning value to their existing investors,,,which is the objective, but they're problem now is that they have to move on from this and create value for their new shareholders. I can tell you that the VC's won't be buying at over 5 Million valuation.
This should never been financed at 33 Million,,,it is comical. Stupid and rich investors are the best in the short term, but a fool and his money are easily parted. In the long term, they don't stay stupid and rich for long, so the foundations of Mondo's investor base aren't strong. But hats off to them,, they have raised a load of cash very cheaply.
Dumb Money.
Harry. They are raising at a £50m valuation. And the new investors are (fwiw) well respected VC(s). They are not raising at a £5m valuation.
DeletePerhaps your vitriol would be better received by the crowd if it were based upon some sound understanding.