Thursday, 29 December 2016

Hop Stuff completes its Crowdcube raise of £500k - glass half empty or half full?

Hop Stuff will be the one to watch in 2017. Prudence has left the room.

Despite being only loss making since it raised funds on Crowdcube in 2013 and having an estimated turnover of just £1m for YE April 2017, Hop Stuff have smashed their £500k target with more than 3 weeks to go. Well actually this pitch was extended but lets not quibble about facts - this is CC after all.

Congratulations to Hop Stuff for what is either a great business or possibly one of Crowdcube's best examples of just why their system stinks. Only time will tell.

The pitch was full of interesting figures - ones stretched to their limit - see here  . After we wrote about them, many were removed or altered. Some are still elastic.

We think that this will either be a remarkable success or a catastrophic failure. Their plans leave little room for anything else. On their projections, they borrow another £500k by April 2017 - or that is the plan. They then pay over £100k pa in interest which wipes out the next year's profits. Burn rate for 2017/18 is almost £2m - much of this in the fixed cost column. 2017-2018 revenues triple, partly on the back of a Swedish deal which the founder has himself admitted has not been concluded - but only when asked. 

All of this on top of the fact that as far as we can see there is no experience in the team at the £3m t/o level. Sure the beer is popular but that's just one relatively simple step. 

There is no room for error here - the 2018 profit will evaporate if the GPM increase of 2% doesnt materialise and we all know how difficult GPMs are to project accurately at an early stage. If they over trade and require more cash  - this round's valuation is likely to prevent any new equity funding. They are already highly geared, so missing revenue projections is not an option.

400 trusting souls have jumped in. Here is a toast to you all. Brave or foolhardy - we will know by the time 2018 is over. We hope that the new year brings Hop Stuff much success - god knows Crowdcube could do with some really good news.

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