Tuesday, 1 November 2016

Beauhurst Report for third Q 2016 shows sharp fall in equity crowdfunding.

The new report just out from Beauhurst on PE/VC and Crowdfunding investment in the UK shows a dramatic decline in numbers if the Deliveroo £210m deal is removed. Read it here

They make no real attempt to analyse this decline but the figures are very clear. For equity crowdfunding the picture is even clearer.

The quarter saw a 20% decline in investment through ECF platforms, with Seedrs ahead of Crowdcube for the first time. The deal numbers are now down below where they finished at the end of 2013.  

As a guess we would say that this decline is partly due to the tarnished image ECF has been given by its leading proponent - Crowdcube. You cannot expect people to continue to throw money away on the basis that they will get 30% of it back via tax rebates. Not everyone is that stupid. Where are the real deal pitches?

For 5 years now we have been consistently promised 3-5 years exits at multiples that would make you very rich. What has actually been delivered is 3 exits at multiples that will pay for the postage and a large pile of failures - many of which are yet unrealised. It's totally unsustainable.

For a company that is heading rapidly from the breakeven line in the wrong direction, you do have to question how the two founders can justify paying themselves around £250k per year. 

Clearly with the decline in PE and VC investment, all the blame cannot be the platform's. We are seeing a general reluctance to invest which can most probably be put down to uncertainty - caused by Brexit and all that it might or might not imply. You would be surprised if this was not the case, given the utter confusion being expressed by the Government.

Anyone interested in this sector really should read this report - it reflects exactly what we have been saying here for 18 months. 

1 comment:

  1. Very informative (as usual), thanks for sharing