Beerbods, a subscription beer delivery club, raised £150k on Crowdcube a couple of years ago. Since that time is has reported two years of losses against two years of projected profits.
Who knows why? Only thing that is certain is that this a yet another example of Crowdcube inflating expectations in order to gain investment and their commission. We wrote about then before here
You have to ask how many times are they going to be allowed to repeat this before something is done about it.
Projections for Beerbods showed profits of well over £100k for 2016 and the real loss reported to YE May 2016 is £41k. Profits were also forecast for 2015 but the reality was a loss of £53k. Beerbods do have a holding company but results here do not seem to reflect trading.
This is such an excellent point. Crowdcube teach the 'entrepreneurs' to inflate the valuations to such high levels, they create impossible boots to fill. EVER.
ReplyDeleteWorse the entrepreneur starts to believe the hype, goes on a spending spree (easy come easy go) and wallows in their short lived glory missing major warning signs and ignoring business norms.
What happens next?
Shit we need money, we are running out.
Hmmm ok, we are worth 20 million, because our last Crowdcube valuation says so, let's sell a few percent at oooh I don't know .... 30 million then?
Cool, good idea you entrepreneur of the year you.
Hey there, do you want to buy a few percent in our award winning company you (single celled) investor?
Cool yeah sure, lets have a look at your books...
No erm, wait, what? we can't hand you our books because our competitors may be watching.
But it's just me and you now and I've signed an NDA.
Shit he's asking for access to real accounts, I've been lying just like we did in the initial raise... what do I do?
Tell him about that thing we won, the award thing.... shit best get back to crowdcube.
POP..... love this blog. thank you!
So they are all playing with their numbers...
ReplyDeleteWhile it may seem absolutely logical to inflate your projections, your growth rate, and pad up your revenue in order to sell the prettiest picture of your company to investors- nothing is ever that simple....
A company founder, that I know and like, raised a lot of money on Crowdcube. He is now sweating as the money runs out. Growth has not come anywhere close to the projections pitched (out by 10-20 times) ..... what's his next move?
The other thing that happens when shit hits the fan(-tasy) numbers and these (possibly once sincere) founders see they are heading for a crash... is that they can, and often do, turn bad as they fight to survive.......