Saturday, 24 June 2017

Tribe loses over half its Crowdcube investment

As Lady Bracknell might have said, to lose one investor may be regarded as misfortune, but to lose half of them looks like carelessness. Or maybe something a little stronger she shrilled into her Darjeeling. 

Tribe opened their 2017 Crowdcube pitch in spectacular fashion and very soon passed their £1m target - on Day1. They then overfunded to £1.7m. Impressive stuff and it earned them a lot of great PR as well as cash.

Now it appears on the Crowdcube 'funded companies' page as a total raise of only £680k. So we presume that after the whistle had gone, the post match dressing room banter didnt go too well. Or was it just a fix from the start? How can you tell? 

Put simply, you cant. We have seen various comments on ECF generally and how it is open to this kind of abuse. A company opens a campaign and arranges for investors to put in money telling them that they can cancel this commitment in the week after the campaign is complete. No laws broken. As we say we dont know if this happens or not but it seems to be possible. We have no idea what happened in this case apart from a massive departure of money that was declared by CC as invested. The obvious advantage of this fix for those of you who dont get it, is that the momentum built in the first week of a campaign sets the scene for its success or failure - you can then go into overfunding. As in this case.

Is it just us or does the amount of investment that has gone AWOL (£1m) seem similar to the inward investment committed on Day1?? Must just be a coincidence.

Confusingly, the Crowdcube Tribe page states they raised £1.7m but that only 68% of the £1m target was reached. Who said CC were hopeless? Oh it was us.

Maybe CC would like to comment on this example - to lose £1.1m of pledged money is more than careless, its downright odd. It also means the pitch funded despite being only 68% of its way to its target. The Crowdcube pitch due diligence verified and FCA regulated projections clearly show that the company will be very heavily cashlite with only £680k. IE unless they have found a new source of cash, they are bust. 

Something very odd about this Tribe.

Friday, 23 June 2017

JAM Vehicles raising £2m for electric JIVR

JAM have featured here before. They dont do accounts - why bother? They just raise cash and spend it. Well the first part is what they claim.


It seems we may have been a bit fast to judge JIVR. We asked the company to explain all the things below and he said - 

Sales are going very well - no figures.
Accounts are very complicated due to various subsidies which he wouldnt name. They are late but so what.
The monies raised in 2016 was a mix of equity and notes - notes dont appear at CH until or if they are converted into equity or accounted for as debt in the annual accounts - which are te ones that are 5 months late. 

Who knows but the accounts when filed may give us a better clue. We think trying to raise £2m without them will be hard. 

The Jivr bike needs cash. Anyone reading this blog will know that. But wouldn't you think that a company trying to raise £2m in the private sector, would file accounts. Their accounts were due January 2017. Their filing record reads like the South Eastern Trains records - late late late.

In a new pitch deck dated 2017, the company claims to have raised over £1m last year, in two tranches. But this money isnt filed at CH. Could that be the reason for the accounts being sidelined?

JAM raised £160k on Crowdcube in 2014 and have struggled ever since. The directors' revolving office door has been spinning to The Swing. 

The new PD is littered with glossy pictures and quotes taken completely out of context. Substance almost zero. It's a neat enough design idea and has been generally well received but this looks very much like a case of the inventor turned CEO making a mess of things. 

Maybe go back to the Waltz lessons before you get into the Electric Jive. 

Tuesday, 20 June 2017

Another Crowdcube business abandons ship.

AngelBerry Frozen Yogurt raised £200k on Crowdcube in 2014. Now their website is closed and has been for sometime. Accounts were filed late but now they are, they show a company way past the edge. Insolvent is the technical term and this is the second filing showing this. 

The company was due to be making profits of £1.7m in 2016; instead they made a £10k loss. Predcitable? Oh yes, this is Crowdcube, whose own accounts show a £5m plus loss against a predicted £1m plus profit. 

Two tweets since Sept 2016. Only 695 followers. 

Meanwhile no doubt, the successful entrepreneurs portrayed in their Crowdcube pitch have moved onto other ventures. Ryan Pasco, one of the founders, has set up 2 businesses since Angel Berry funded on CC - neither looking good. He is sometimes British and sometimes Australian in the CH filings. His mate James Taylor hasnt been so active - maybe he was actually trying to make Angelberry work?

The business was supposed to be sold this year for over £14m - their figures in the Crowdcube pitch.

Right from the start in 2014, all projections have been way off target.  

As we keep saying - this is just the tip of the iceberg when it comes to companies that have not closed officially but have died.

We wrote about them before here   - it was a death foretold. 

Monday, 19 June 2017

Crowdcube success Onelane turns out to be a dead end

Onelane raised £280k on Crowdcube for its service of delivering children to their destinations. Little over a year later they are closing down as they were unable to raise the £1m they declared they needed this year.

So when a pitch on Crowdcube or any platform says it needs to raise £1m next year or the year after, it is worth asking them how they will do this. Or you end up where investors in Oneland are now - a dead end.

In the letter sent around to all shareholders, Camron, the founder, makes a good job of explaining what went wrong. But when you peel away all the pith, it all comes down to crass mismanagement and huge imaginations. If the idea had any legs they would have found investment, they didnt even try the usual Crowdcube trick of upping the valuation and having another CC round. According to Camron they were on target but no one would listen.

For a guy who claims to have an MBA and some connection to Harvard, oh and was instrumental in the role out of Just Eat in the UK, he sure wasnt much good at getting down and dirty when things got a little choppy.

We asked him what he had paid himself and why the investors hadnt been more pliable. No answer. One clue might have been the fact that of the 12 questions on the original Crowdcube pitch , he only bothered to answer 6 and he avoided giving any detail to one that was specifically asked about how he intended to go about raising this £1m.

He claims excellent traction but the current 176 Twitter followers and 600 odd FB likes seems to throw this into doubt?

In his last email he says -

It particuarly pains me that you entrusted us with your investment and I failed to provide you with a return. It is important to point out that you backed a service that worked really well, had tons of innovations in the pipeline, and was on its way to improve the routine for thousands of parents. With further funding, there is no doubt that we would have been a great success

Apart from the obvious lack of attention to detail, this is complete nonsense and is most likely the main reason the business failed. 

That pretty well says all you need to know. But they still invested. None of this will change until investors vote with their feet.

Following posting this piece, we had an email from Camron - rather irate(vaguely threatening legal action through CC), with the usual spelling mistakes etc and no answers to any of our Q's except the one on salaries. He states that he paid himself nothing in year 1 and was paying himself below market rate in the final year ie now. Well call me old fashioned but in my day start ups didnt pay founders salaries until they were in profit - living expenses yes. We live in an instant world today where Crowdcube thrive and poor entrepreneurs take people's cash and pay themselves off the back of running their company into the ground. Great idea.

Wednesday, 14 June 2017

E-Car Club running on empty?

E-Car Club sold out to Europcar in 2015. Accounts for 2016 show revenues are down and losses are up. Of course nothing for Crowdcube investors to worry about as they are already cashed up. Still thought it was an interesting outcome for CC's first ever exit.

Fieldcandy, tent makers, collapses into administration and is sold in a prepacked deal leaving investors penniless

This is an odd tale. Fieldcandy (co# 08326947) raised £417k (£370 net), twice its target, on Crowdcube in 2015. The same company went into administration in February this year. The administrator's report states that at the time of the Crowdcube raise the company was already in considerable difficulty - recognised by the company's directors.

So pretty well as you would expect so far a Crowdcube funded company. But wait.....

The Fieldcandy website is still active and is apparently run and owned by Terra Nova Equipment Ltd - via that old sidestep, the pre packed deal. Terra is in turn owned by Hubaco. Terra purchased the company for £25k  - Crowdcube had it valued at £2.2m. Hubaco are clients of the appointed Insolvency Practitioner Smith Cooper.

Things get really really odd if you look at the real accounts and the verified accounts in the administrators report and compare these with the pitch documents verified by FCA regulated Crowdcube.

YE Dec 2015 - so the year that the pitch completed (August) and the year after the company knew it was in trouble.

Real accounts show revenues of £352k and the Crowdcube figures show £700k.
Real accounts show losses for year of £(186k), Crowdcube show a profit of £3k

Remember these Crowdcube figures were verified by the CC DD Dept and August was already 2/3 of the way through Feildcandy's year.

If we now turn to YE Dec 2016, things are even worse.

Real accounts (management to October 16)  revenues £293k and losses £(25k) on large cost cuts
Crowdcube version to Dec 16                        revenues £1.3m and profits of £139k

The intangible assets worth over £400k on the books have been sold for £1250. There is no hope, according to the report, of any non secured creditors getting anything back.

In total the company will leave debts of £1.14m.

Of course Luke Lang will trot out the usual crap about how this couldnt happen now and anyway its not our fault and you will always get failures and look how much people made on Camden (not much actually) and we are on target to become a very successful company and we should know.

The problem here is clear. The administration has verified that the company knew in 2014 that its sales targets would not be met and its costs were spiralling. As a last resort they went to Crowdcube to fleece investors, who were given a very different story by the platform. The administrator states that the two directors knew at the time they raised the Crowdcube money, that expenses were too high and that this would not be enough money to continue the company. This information was very clearly concealed from Crowdcube investors.

The company had some large and prominent investors but there is simply no mention anywhere in the Crowdcube pitch of the situation we now know to be the truth - the company strategy was already flawed. Talk about taking Crowdcube investors for suckers.

Can one get any closer to a con? How many more scandals before the FCA does something...anything?

Tuesday, 13 June 2017

Beara Beara are back on Crowdcube.

Beara Beara raised £200k on Crowdcube in 2014. Since then they gone on to miss all of their targets - so standard fayre.  So lets start looking at this new raise with a blank page. 

Actually lets not do that - that's what they want. The original raise barely gets a mention in this new one and the old targets are not there for comparison. We can help you out with that  - see below.

We wrote about them before as their historic accounts in the pitch did not match the ones at CH. Here

CC pitch 1 revenues for 2016 were predicted to be £1,005,000. Actual revenues were £740k.
CC pitch 1 profits for 2016 were predicted to be £348k. Actual profits were £31k.

Promises that 2017 revenues are doing well and heading for £1.2m are only slightly dampened by the fact that the previous projections had them at over £2m with profits of over £1m.

Wouldnt it have been more honest just to give us these figures? Why hide them?

Also they had another £300k raise to go in 2016 which hasnt materialised - why?

They have chosen for whatever reason to file micro accounts - 2015 was a full BS filing. 

The current valuation has more than doubled to £3.4m and of course you will have forgotten that in raise one, they had to drop the value considerably to get over the line.

Nothing wrong with the product per se. 

You would have thought that on the back such very poor results recently, Crowdcube would have addressed these crucial issues - openness and honesty. Well it appears not.  

More Alternative facts for Equity Crowdfunding

Borrow My Doggy was reported as having raised £1.5m at the end of 2015. Many of the usual publications picked up the story and issued it as fact. It wasnt.

Reports range from City AM, The Sun, Yahoo Finance and numerous online ECf publications and this release which suggests very strongly that the money was 'raised' -

We were contacted by a shareholder in BMD recently to see if we could find out what happened. The £1.5m was reported as raised by IW Capital through one of their live events - 'Crowdfinders - Make your Business Rock!' - ahem. So successful was this raise that BMD cancelled a scheduled Crowdcube raise. This shareholder told us that several investors were puzzled by the outcome. The news reports were very clear - yes the full £1.5m had been raised at the event.

The Crowdfinders website carries the Yahoo piece and the City AM piece links but they have been disabled. The City AM headline as shown on the Crowdfinders site states -  

''BorrowMyDoggy fetched £1.5 million at Crowdfinders Live. City A.M.''. We would read fetched as raised?

So we spoke to IW's main honcho Luke Davis - a man closely associated with our favourite lady, Ms Horlick. He started by saying that he couldnt understand what all the fuss was about and was this a story being put about by a well known pundit; whom he had just expelled from IW. The story has no connection to the gentleman 'named'. Luke went on to explain that at the event, money is only pledged and that as far as he knew, they had eventually tied up around £1.25m but certainly not £1.5m as reported; although he couldnt be sure of the exact amount. In the reporting, IW is never quoted as saying they had raised £1.5m or any sum. The reports seem to get this figure from an unknown source and they never bothered to check it.

One of the shareholders has said that they believe the amount raised was only just over £1m.

Does it really matter? Well it matters that reports in credible publications can be so far from reality and it matters that companies have made claims that are not true. But then this is equity crowdfunding and the pond is teeming with sharks.

Crowdcube finally admit that their Due Diligence is pitiful.

So at last we have it in writing. Crowdcube have admitted that one of their now failed companies was poorly scrutinised by the platform and they missed a crucial piece of information off the campaign. A piece that would most likely have made investors think at least twice before jumping in. They, as usual, have now last all their money.

According to Crowdcube, they have now corrected the error in their systems and this couldnt happen again. Which is an interesting comment - because it has. A whole year after this company raised its first CC round, the Solar Cloth Company raised £1m. We now know that the information supplied on the platform about the SCC was missing crucial elements - like the CEO's bankruptcy and failed businesses. It is a similar story here - no lies just massive, glaring chasms in the information supplied. The result of a totally amateurish approach. This is the information asymmetry we have been banging on about for years. 

So we have made some progress - Luke Lang never normally admits to anything and to be fair he didnt admit to this - his PRinger did. But it comes to the same thing.

But Crowdcube are still living in the Land of Nod if they think their DD is fit for purpose. We have the evidence that proves otherwise. 

Monday, 12 June 2017

Crowdcube's financials begin to show the stretch marks

Just in case we didnt already know, Crowdcube's latest accounts show just how stretchable their version of the truth really is.

I dont suppose it was mere coincidence that Crowdcube chose to release their latest accounts at the same time as the GE results and 3 weeks early.

According to a piece which appeared in Business Insider just after the successful 2016 £6.5m CC cannibal raid, Crowdcube's stated aim was to break even by the end of 2018. So that would be towards the end of the next financial year. 

Anyone who has read our other piece on Crowdcube's latest accounts will find this very hard to believe. It would mean that for 2017 and 2018, the company would have to hold costs and margins and grow at a rate of 150% pa (based on £4m revenues for 2016). That is a growth rate they have never got close to and considering the last two quarters of YE 2016 had stagnant growth, it seems unlikely. Certainly completion rates since October 2016 have not shown any signs of this kind elevation. Returns for investors have dried up altogether from the small puddle that appeared for a while. Disasters are now monthly. The secondary market has been pinched by Seedrs and IPO's, which appeared in this article to be their Holy Grail, are non existent. 

There is a certain ring to this that reminds me of Theresa May. Ask a question, dont like the answer and so carry on regardless. Totally pointless.

Friday, 9 June 2017

Crowdcube 2016 results are as we predicted - abysmal.

Crowdcube, the UK's largest ECF platform, has announced more heavy losses on falling margins and increasing costs. Pretty much as we expected. You might say, as predictable as The Donald.

The big time backers of Crowdcube must be worried. A 48% rise in revenues has resulted in a considerable fall in GPM and large increases in costs. Net result - an increase in losses for the year to £5.4m. At this rate the company has roughly another 18 to 24 months before closure.

The fall in GPM, caused by their rather panicked urge to make larger deals for PR reasons, from 57% to 52% must be a cause for concern. And the increase in revenues of £1.3m has been more than wiped out by this and their increased costs. It all looks out of control.

The really bad news is that even with these increased losses, they are not heading in the right direction - large deals are clearly impacting margins and the smaller ones are stalling - other platforms do these better. They have now lost their first mover advantage. The accounts are for YE September 2016, the same 2016 that Luke Lang predicted would be such a great one for the company - endlessly. Now the spin doctor is way out of his depth. 

As with all things, the end game will take a while to play out, but end it must. Maybe a white knight will step up and take over - god knows they need radically new management and some sensible strategy to turn this loss making business around. Accrued losses now sit at £12.7m as at September 2016 and will right now be way higher as we predict even greater losses for 2017. 

In the 2016 raise, that they performed on their own platform, they had some interestingly colourful graphs showing their success. One of these showed quarterly (stated calendar) revenue increases. So for Q4 15 and Q1 16 they showed 78% and 125% respectively. As we now know, the overall annual increase in revenues was 48% for YE September 2016. You do the math. Q2 and Q3 16 must have taken a vacation in Acapulco.

In the same MI, Crowdcube stated that their revenues to March 2016 or the first 5 months of its financial year, were £2.07m - this is the section where they try to explain their £65m ticket price......unsuccessfully. According to Crowdcube, the March to September period is more productive than the October to February one on a month by month basis - or that's the line that was sold  Yearly revenues for YE September 16 were under £4m. Bummer.

Management were careful not to include simple revenue projections - too easily scoffed at later on. But just to give you an idea of how clueless these guys are, in their 2012 pitch on CC, they predicted 2014 net profits of £3.7m on revenues of just £4.4m. Where are we in reality? Revenues of £3.95m with loses of £5.4m. That is staggeringly inept even for CC. Do you think people would have invested if the real figures had been known? It may help to explain why Darren and Luke have never run a successful business. 

On these current figures, they need revenues of over £16m or at a 5% average commission rate (their stated rate is only 4%) annual completions of £320m just to reach BE. This year saw revenues of under £4m. At the current rate of increase pa, we are looking at a minimum 4 to 5 years to break even. So that's roughly another £25m of losses. That's without any increase in costs and a continued 40% increase in business every year. Unlikely? You bet. Their dream of a secondary market is just that and is already being trialled (rather weakly) by their arch rivals Seedrs.

Who will go first - the orange guy or the spinners? 

Tuesday, 6 June 2017

Is Ernest mad?

Ernest is on Crowdcube. He's a fintech app. Either we are mad or he is.

Ernest doesnt really exist yet. He doesnt have any customers and hasnt been sold to anyone. Ernest is apparently worth £4m in his underwear.

That's not the crazy bit.

This year Ernest will bring in under £10k of revenue - projected.

Next year Ernest will bring in over £1m of revenue from around 15,000 newly acquired customers. The CPA this equates to, is approx £10, based on their answer to a CPA query. Now that's the mad bit. (We have ignored revenues from the white label plans given the time frame). 

The idea might work but the budgets certainly will not. They will run out of money well before they obtain 15k new customers and will need a lot more to get there. So dilution or extra investment is a given.

You do have to worry a little about the management that put together and stands by this budget.

We love you we really do possums!

Oh Powervault - you returned, again. So lovely to see you. A fourth time? Yes that's four times on Crowdcube and still you cannot get anywhere close to your projections. Oh well, we love you little critters with your energy packs anyway.

For all you possums out there, trying your hardest to lose your money, this one is a dead cert. Luckily Crowdcube have decided not to mention all the other 3 rounds with increased valuations against failed KPI's. On the pitch forum the outstanding Q is so far  - 'how many times have you raised on CC?'

We can tell you that this is PV's 4th time. That's probably a record. Those naughty little generators are so thirsty. 

We can tell you that they have missed their projections from the 2016 CC campaign by a very handsome margin - in this KPI they are consistant. And that they expect to sell this company after 2020 making all you possums a pretty penny. We dont know when they expect to make a profit but then it deosnt matter as their predictions are nothing if not totally unreliable. 

So invest invest invest. You know you want to.

Friday, 2 June 2017

Fake news is all the rage in Equity Crowdfunding

Just when you thought it was safe to go  - BAMM - more crap hits you in the face

We wrote about this here  and now we have the finale to prove the point we made before.

Satago was one of this high flying jam tomorrow internet nonsenses we are seeing so frequently. It burnt through its money raised on Seedrs and promptly arranged a pre pack deal to sell itself out of administration. The cash realised was enough to pay off some of the creditors debts but investors lost it all. 

This was reported by none other Beauhurst as a successful investment!

They wrote - 

What happened to the startups of yesteryear?

This week has been rewarding for investors in high-growth companies: Xafinity Consulting raised £190m in its IPO on the LSE; Ramsdens raised £15.6m with an IPO on AIM; and SatagoCustomadeRoot6, and SecretSales were all acquired.
What they say is not untrue - it was acquired but investors might baulk at the idea that got any reward. 

This is what Jeff Lynn CEO of Seedrs said about Satago in June 2016 just after they had secured further institutional funding - it makes for great reading when you consider Seedrs claim that any of their businesses that go on to raise more money at a higher value have produced real ROI for theie investors. This proves that to be total BS Jeff -

Satago was one of the first businesses to raise funds on Seedrs, shortly after we launched in 2012 so we’re thrilled to see their on-going success. The £4.6 million institutional investment they have just raised is wonderful validation for a great company, and shareholders who invested in Satago a few years ago on Seedrs are enjoying a huge increase in share value as a consequence.”
As administrations go this one does look legit - creditors did benefit or at least they got some money back. But isnt it time that with the rise of ECF we started to consider ECF investors as creditors? As ever the only people really making anything are the insolvency practitioners.

Note - we had previously stated here that Satago raised £1m on Seedrs. This was incorrect and has been altered. Thanks to Steve Renwick for pointing this out. 

Wednesday, 31 May 2017

Skaken em up boss

Shaken's main man, mixologist and cunning escapologist, Mark Jennings has made our day. He says we are well known. 

Well that's how the Crowdcube PRing dept would have spun what he actually said.

Just so you know, Shaken took £200k off Seedrs investors and closed 6 months later. Oh and they had already helped themselves to £150k on the same platform. The company has now closed through a voluntary dissolution. Shareholders were not consulted or given any information. Seedrs have been utterly useless with helping to resolve the situation.

In a series of Q&As on the platform, they have tried to find out why this all went so wrong. They even quoted this blog. That's where Mark's comment comes in. He stated that he doesnt respond to trolls and then goes on to say that I'm a known troll - the 'well' bit we inserted of course.

Mark really should get a conscience. Investors are entitled to know how he went through £200k in 6 months and achieved nothing. His final comment is telling - he says that he has complied with all the legal requirements for closing the company and that he wont be producing any accounts or anything else that might be helpful. His recent twitter feed shows him spending plenty of money at the local Garden Centre and on expensive hotels. Nice.

Well we hope that investors will remember his name for future reference. He is already selling himself as some ECF guru. He doesnt deserve your support. At least we offer a place for righteously angry backers to air their views. Troll or no troll.

Zzish........... we'd like to know

The Zzish Crowdcube pitch has to be a first. Target of £1.150m but declared investment already raised off the platform of £1.24m. So why bother?

We have heard but cannot confirm, that the statement on the Crowdcube pitch that the £1.24m was invested on the same terms as the crowd invested (the pitch closed at £1.318m) is not exactly correct. 

The very fact that Syndicate Room raised over £600k for the company a while back but gets no mention in the funding section, as with the Idleman pitch, says more about Crowdcube than anything else.  They put themselves first before information for their investors. Childish but true. 

So if there are any investors who took up their pre emption rights and know that the deal was different to the one offered by Crowdcube to the crowd - we'd love to hear from you. We really would. 

Monday, 29 May 2017

Vulpine purchased out of administration by Mango Bicycles

Vulpine has been purchased out of administration by Cotswold based Mango Bicycles. Mango, who had traded profitably since 2013, made a large loss of £280k in 2015/16 and were showing a negative balance sheet for YE March 2016.

Details of the transaction have not yet been made available. The administration is not even filed at CH as of today. It seems unlikely that the deal will leave any room for Crowdcube investors to see any money back. Hussey seems more concerned for the brand than the people who allowed him to play with it. We can only hope that for once the administrators do a thorough job and make some effort to protect the interests of the shareholders.

Friday, 26 May 2017

You just cant keep a good man down!

Mal MacCallion used to run Rater Agent, which raised £150k on Crowdcube at the end of 2015. He was the main man in the Rater agent pitch. Then he left and worked for Callwell. Now he has rebirthed Growtion (nee Tramal).

Rater Agent are late with their accounts and Confirmation statement. We expect there are the usual reasons for this tardiness - projections showed a healthy profit.

We wrote about this before here and here

We expect Growtion to appear on an equity crowdfunding site near you very soon. They have a good list of customer reviews for a company that has only been trading for 12 months, including two from Callwell. They help you grow, apparently.

On the Growtion website, they have some case studies, along with a glowing account of Mal's business acumen and successes. It is hard not to laugh out loud.

One of the case studies is ......... Rater Agent. According to Mal, Rater Agent is profit making - obviously thanks very largely to his business skills.  The last set of accounts field at CH for YE April 2015 shows net assets of £1 balanced by Shareholder Funds of £1 - in fact £1 is the only figure on the balance sheet. Another case study is Zoopla. By dint of working at Zoopla at some stage (apparently), years before Growtion was incorporated, Growtion has helped Zoopla to its success. The final case study involves Callwell. Callwell is a tiny company making small losses. When we say tiny, it is really teensy.

So if you are willing to believe any of the above means that Mal has a clue about business, you really need to see someone. Why was he allowed to pitch on Crowdcube? I think we all know the answer to that.

Lucy's Dressings defies the Righteous message

Lucy's Dressings is back on Crowdcube - a year after its first raise. According to everything we know from the Righteous salad dressing company, this should be a no no.

Old timers on Crowdcube will remember Righteous - a company set up by the same people who now run Cauli Rice. The founders of Righteous sent an email to investors a year or so ago, explaining that they had been delisted by most of their glittering band of supermarkets. Why? Well the founders explained, salad dressings are not really selling and no one now expects them to in any great quantity. Good to know, if a little late for the investors who had believed the hype behind Righteous' previous CC pitches. Their PR was excellent.

Now Lucy has some salad dressings with glittering stockists. Hang on, havent we been here before? 

How many times can people make the same mistakes? Countless it appears. Good luck. 

Idleman Crowdcube pitch very casual with the facts

Reading the new Idleman Crowdcube pitch you would think this company was on track. Put simply it hasnt been on track since its first Crowdcube money grab in 2015 and its now very definitely in the sidings.

As usual with Crowdcube, nothing in the pitch is a lie. It's just not all quite true or very important bits have been left out.

Example - in 2016, so only a year ago, Idleman raised £1.2m on Syndicate Room. In the section on this new Crowdcube pitch, dedicated to listing all previous funding, this fact has been totally left out. Neither the amount or the raise are mentioned. Why?

Well we think probably because the valuation in April 2016 is now the valuation in May 2017 - despite the massive progress the platform tells us Idleman has made in those 12 months. Of course as the raise on SR isnt mentioned, neither is this valuation; which means in essence that this round is a down round. 

Example - in the SR documents the projections showed revenue figures that Idleman have since missed by miles. They have of course also missed their 2015 Crowdcube projections by even greater margins. Neither fact gets a mention on the current CC pitch.

Example - In the SR 2016 pitch they show the Trust Pilot aggregate at 8 out 10 - a reasonable result. However if you go onto their page now on TP, you find they have dropped to 7.5. This is very clearly heading in the wrong direction. This gets no mention. One star reviews are not uncommon. 

There are more but to be honest we simply cant be bothered to go through them. This company has never delivered on a single target that we have seen. Any company that quotes revenue figures including vat really needs to back to kindergarten business school. Our guess is it never will get close to its ambitions. Invest if you must but at least do it with your eyes wide open. 

Thursday, 25 May 2017

Ethos spins a complicated web.

Ethos Global raised over £700k on Crowdcube just last year. Accounts are now 8 months overdue and other companies now appear to be running the Ethos Yoga studio in London. Where are shareholders in this complicated web?

Shareholders invested in Ethos Global Ltd on Crowdcube  - a company run by Dr Theodoros Koutroukides and Jennifer Lynn Hersch. Company number 07874390. Remember those names.

We have written about this company before - here

Ethos was described by Crowdcube as - 

Looking to disrupt a £50b+ global industry, ETHOS is a chain of boutique yoga & fitness hybrid studios combining health, science and technology. Growing the cash-generating Cambridge headquarters........

For a company with one studio, you might think the use of the word 'chain' to be typical Crowdcube BS. Shortly after this investment was completed, the 'cash generating Cambridge HQ' closed down; annihilating the one link chain. The property, St Andrews House First Floor, appeared on the market for re let and is still there with Bidwells.

Shortly after this, a new Ethos studio opened in London. This studio is still running but is not run or owned by Ethos Global according to their website's T&Cs. This studio is run by Ethos London England Ltd co number 10601085. Not to be confused with Ethos London Ltd which is an entirely separate company. The Directors of Ethos London England are one Theodoros Koutroukides and Jennifer Hersch. By dropping the 'Dr' and the 'Lynn' they appear at Companies House to be different people to the ones running Ethos Global - but they are not. Hersch has now resigned from Ethos Global. Since February 2017 when this company was set up, it has changed its name to Soma London England Ltd. It is in turn 100% owned by Soma Holdings, company number 10598796, which is 100% owned by Koutroukides. 

Meanwhile accounts due at the end of September 2016 for the Crowdcube funded company, are missing. So what exactly do shareholders in this Ethos now own? Who knows. Crowdcube projections had them making £1.6m by the end of 2016 and £4.6m by the end of this year. Who wouldnt want a piece of that; if it was true?? It seems unlikely as Ethos Global dont seem to do anything anymore. Maybe that's their version of Mantric Yoga.

The company was issued a compulsory closure notice a few months ago but has since had this rescinded as it has raised what appears to be £280k in a new share issue. Or so the filing shows. As it appears to have nothing to do with the London Ethos Yoga studio, why would anyone invest in it? Again who knows.

All in all, a very strange set of events and far. The accounts would help but when we asked (repeatedly) about them we got nowhere. We were told that the company was just fine - doing well. Certainly the London studio, which appears to be 100% owned by Koutroukides is doing well. We just wonder what money helped to set up this studio? Could it have been the £700k plus raised for Ethos Global on Crowdcube? If this is all perfectly normal, why change the company name, twice, set up a totally new company structure and close down your cash generator and why appear in CH filings with different names to the original company directors' names. One being different might be normal but both of you?? Seems unlikely. 

Saturday, 20 May 2017

Crowdcube promotional wheeze unmasked

Crowdcube pitchers are informed by the platform that if they reach 50% of their stated target, this releases new Crowdcube PRExtra, which will promote the pitch. 

We didnt know this and we have been involved with the platform since its inception. It's not really a problem unless investors dont know about it - and we are pretty sure they dont. Well now they do. 

We came across this when one of the pitches, currently live on the platform, sent emails to existing investors asking them to push the company over the 50% line, in order to activate the powerful Crowdcube PRExtra machine. For this they promised to up the rewards to investors.

This doesnt really sound like a very sensible way to operate a business or a funding model that uses tax payers EIS monies. Surely the underlying viability of the business to deliver on its projections should be the driver for the crowd to invest? Not some smoke screen PR blitz hatched behind closed doors and known only to the company and the platform. 

The pitch has someway to go to get to 50% and has almost run its course. We think there are fundamental business reasons for this. It will be interesting to see if PR wins over business sense.

As a recent anecdote, the now catastrophically collapsed GF Foods, manipulated its second raise on Crowdcube in order to squeak over the line, only to take all investors down with it, just over a year later. 

Friday, 19 May 2017

Another sticky mess - Superjam in fruitless search for profit

Superjam  - no not some confused 70's tribute band - leaves investors cold with results many miles off target.

Superjam is the brainchild of one very famous young man, Fraser Doherty OBE or 'Jam Boy' . Unfortunately for Crowdcube investors, Fraser's charity work has not translated into a money making business. Well not yet anyway. 

Superjam raised £318k at the start of 2015 for his existing Jam business. He makes Jam. You get the idea. 

He doesnt sell that much Jam though - hence the small profit of £3,000 compared with the Crowdcube projected figure of almost £700,000. We thought he might have paid out massive dividends, but his corporate tax account suggests he just didnt make much. YE September 2017 has a profit tag of £1.3m. His claim that it's stocked in Waitrose seems to have passed its sellby date - the link on the company website doesnt work. The Waitrose site helpfully tells you that this product is unavailable. It's been like this for a while - at least 6 months. The link to the Ocado site doesn't work either and a search there for SJ, brings up Bonne Maman - which is not such a bright idea!

A little giveaway is the TM printed next to every Superjam logo. Surely he knows this is totally meaningless?

He is also heavily involved with Beer52, an Angels Den miscreant and failed Crowdcube pitcher. This is another online business building stability on sand with heavy use of the now infamous discount code to collect 'customers'. We wrote about them here. You can still get a 75% discount 3 years later. Losses are mounting.

All in all, exactly what you would expect. 

Thursday, 18 May 2017

This is what happens when you let Crowdcube amateurs loose on Business Finance

GF Foods York raised money twice on Crowdcube. Now the Liquidation has revealed that 'unexplained discrepencies' in the company records were being reviewed.  The company owes £1.4m to various creditors. This could all have been avoided. It's a very bloody mess.

We called this disaster out a long time ago - the pitch details in both raises were highly suspicious and the company had already collapsed once. Crowdcube just ploughed on as usual, ignoring the obvious facts and allowing the founders to take investors money not just once but twice. You can find our posts here.

It seems beyond the bounds of possibility that Crowdcube will wheel out Luke Lang yet again to try to PRing his way out of yet another blood bath. But we guarantee they will. 

When will investors wake up??

We have copies of the Crowdcube Q &As from their second raise at the end of 2015. When asked if the company was trading in line with its projections for that year of £1.4m revenues and a NP of £200k, this was the founders response -

At present we are matching sales to forecast - we have higher rates of sales from Sept - Dec in forecast due to seasonal listings and at present current orders for these products are matching the forecasts by customers.
We have new product listings with two major retails scheduled for February, so unless these range reviews are postponed by the retailers, which is highly unlikely we believe we will be on target to meet the forecast


This raise only crossed the line because the company increased its equity offer by 40% at the last moment. Perhaps a warning to heed for the future? Whichever way you look at this, the comment above was nothing but a lie. The company never managed to file the accounts for this period. Crowdcube vetted projections for YE December 2016 had Revenues at £4.7m and NP at £1.5m.

Reading the 55 page Administrators report is chilling. They found the information they were presented with was wholly inaccurate and were forced to remove all the IT systems and place new locks on the company's buildings. It was such a mess that even now they have no exact idea what is owed to whom. Crowdcube investors can kiss goodbye to their £345k of investment for sure. 

Wednesday, 17 May 2017

Crowdcube at it again...Oh and again!

If you keep getting away with the same old crap, it becomes the accepted norm. But we dont think it should. It is boring but we keep banging on about it.

Crowdcube's latest campaign is for Vita Mojo - it has crossed its £1.5m line within a few days. Truth is the line was actually £500k. Impressive but not quite Carling.

So why are they allowed to dress these things up? In this pitch you have to search for the £1m input, off platform, from The Elior Group, as it appears at the bottom of the Exit section. Why? 

You are told they invested at the same price, but you are not told what the terms were in full.

Just as we thought phew, that's enough of the Crowdcube cock ups, the DD dept have excelled themselves again - see image above. In the excellent video for this company's campaign, passed as fit and proper by CC, there is a glaring altfact. Ewan Stickley, who appears in the video alongside this image's description, as a big hitting endorsement, was never the Operations Director at Pret a Manger as the video claims - he was the Operations manager for London. There is a big difference you know. He has never been a Director of anything apart from his own small business training company. We are sure Mr Stickley doesnt even know his name is being misused - his Linkedin page is accurate. Why do Crowdcube have to do this shit time and time again? 

Monday, 15 May 2017

Crowdcube's Lost Tribe of Customers

Tribe launched this weekend on Crowdcube and have already cracked their £1m raise. Backed by some heavy hitters willing to go on video to endorse the company, it looks like a a breeze.

As you would expect we have checked out a few of the claims. Nothing wrong with this company but we cant agree with their figures.

No doubt these guys have run a very, very long way. No doubt they are selling their nutrition bars. But do they really have 25,000 current active members as they claim - 'buying' being the now tense -  

  • Over 25k customers buying TRIBE nutrition online

A point that seems to have been missed off the Crowdcube pitch is that Tribe are offering a 5 bar pack (worth RRP £6.95) for just £1 on Thrivo - the Groupon of the nutritional world. This is backed by a whole raft of reviewers offering discount codes. As we have seen so many times before on Crowdcube, most of these guys are not loyal customers....they are bargain hunters. They buy once, consume and are never seen again. There is no mention on the pitch about repeat purchasers which is a bit of giveaway - excuse the pun. 

Companies like Earlybird, Flavourly and now Tribe, use them to bolster their following just around the time they are looking for funding. Funny that. If I opened a pub and offered everyone beer for 50p a pint then I would be thrilled with the response - massive queues, massive customer numbers. But a month later when I put the price up to the normal level, would I expect to see that level of repeat business continue. Of course not. It takes time for the head to settle - then you can get a true picture of where you are. 

On the back of the Vulpine fiasco, do we really need another over hyped load of tosh. Figures for revenues are entirely fictional - the company has a 16 month trading record with the first 12 months exacting a reasonable but tiny £263,000 in revenues. How does that translate into £6m in 24 months time? Of course it's the exponential increase in members, illustrated by the 25k given figure above. What if most of these do not repeat purchase?

Tribe's current revenue run rate according to their pitch is at half the expected revenue for the year - so they have will need those customers and not just shadows. Of course the healthy rewards on offer make this a good bet for the small time purchaser keen on the product - so maybe this is how this should be viewed. It isnt the first health food/subscription model business to raise on Crowdcube but lets hope it doesnt go the way of the others.

A final word - check out the big hitters to see what they have really achieved outside off Corporate Office No 1 - you might be surprised. 

Sunday, 14 May 2017

We were wrong - Vulpine just got a lot worse

An article in today's Sunday Times makes the Crowdcube Vulpine fiasco look a lot more serious than just poor management.

This article (google it as we cant find a link) by Oliver Shah, suggests that people in Vulpine knew things were not working before the company came to Crowdcube and raised £1m in just a week.

Investors in the previous seed round, according to the article, who had put in £1.1m, had by the Summer of 2015, become totally disillusioned with the company and the way the founder Nick Hussey and his wife were effortlessly sprinting through the money. Two of them, Philip Jenks and Simon Hulme, both experienced angel investors, resigned from the company's board. According the ST article an unnamed source stated that when Vulpine went to Crowdcube is was because they had totally run out of alternative funding avenues.

So this is where we depart from the ST piece. If what they have written is true, then it seems very clear to us that Crowdcube have failed to carry out any reasonable level of due diligence on this business, prior to promoting them as a highly successful start up on their platform and getting their investors to hand over £1m. Why did the resignations get no mention in the pitch? They are listed at CH but you have to go someway back to find them. They would be quite easily missed. Which was clearly the aim. Why were the projections allowed to be so impressive when it was already clear the business model did not work? 

Crowdcube, as ever the clowns, have trotted out their usual pathetic, amateurish apology. Surely they are not going to get away with this yet again, not after the similar debacle with The Solar Cloth Company? You really cannot be serious!! 

Friday, 12 May 2017

Is the JivR Bike an elaborate con?

Jam Vehicles who own the JivR Bike raised £160k on Crowdcube in 2013. The folding ebike is a great piece of design but also comes with a great big price tag and is not yet in production.

On their website, , you can pay a small sum of Euro 99.00 to book your bike and then pay the rest of the Euro 2,499 when its ready. No time frame is given but we are told the deposit is refundable.

This all looks fine.

But then you should also know that the company, JAM Vehicles, is 5 months late with its accounts. Previous accounts showed the money had run out. A month or two is ok but five is more than careless? Maybe they are in the middle of a buyout?

For sure the money on deposit wont be returned if the accounts problem is genuine - so if you want a JivR Bike I'd be inclined to wait and see what happens.

Thursday, 11 May 2017

Vulpine illustrates the worst of all things.

Vulpine raised £1m on Crowdcube in late 2015 and has now closed. It never delivered on its promises and figures we have now seen help to show why. Its not illegal but it is certainly immoral. 

It turns out that the director of Vulpine was helping himself to a salary of over £90k pa at the same time as running a start up business, using shareholders money, rapidly into the ground.

We dont very often get to see these figures - people like this dont want this sort of thing out in the open. Vulpine tried to raise even more cash on Crowdcube this year, but luckily for all involved, failed miserably. Crowdcube were clearly totally oblivious to these goings on or they wouldnt have allowed the pitch to get off the ground. Or more likely didnt give a damn. 

In the last 4 months (Dec 16 to March 17) before the director pulled the plug and there is only one director listed at CH, he paid himself £37k. This with the certain knowledge that the cash had run out. Just to clear up one fact that has appeared in the comments on other Vulpine posts here, this sole Director and Founder took back full control of the company in June 2016 - reportedly to turn it around. So yes it is he who is helping himself with both hands.

It illustrates yet again why we need ECF platforms to be run by professionals who have some skin in the game and why we need a more open and certainly more honest approach to assessing businesses using this form of financing. Before it is all too late.

Who can you trust?

Crowdcube claim to have raised over £27m in Q1 of 2017. Beauhurst have just produced what they call a report that analyses all ECF funding in non listed Companies for Q1 2017. In it Crowdcube had only £23m. £4m is large gap even for Crowdcube.

We know the Beauhurst report is wrong as it doesnt include several established platforms and does include the bizzare one hit wonder, AllBright. This sexist platform (girls only) has achieved just one raise in the period   - an astonishing £50k. Whatever happened to bra burning?

Growthdeck, not included at all, must have done better than this?

You have to wonder with Beauhurst if they ever consider taking money for inclusions?

How Crowdcube come to £27m is a mystery. No doubt some clever number play at hand. Crowdcube are nothing it not clever with their numbers. 

You definitely cannot trust the man in the picture either. 

Wednesday, 10 May 2017

Just like buses

Secondary Markets are all the rage. Following our last post on Secondary Markets, we understand that a current Crowdcube pitch , Derby Brewing, has come to an agreement with Asset Match for the sale of its shares.

This may seem a little premature.

Derby Brewing is currently a long way from completing on Crowdcube, with just 7 days left. It has already played the discount card by lowering its valuation. The company has no share capital to speak of at the moment, with most of the money in the company there by way of directors loans and mortgages. Its a typical successful, family run business. 

So one assumes this deal with AM, is on the basis that CC shareholders will have a way of realising their investment. No timeline is offered but realistically it has to be 2 years plus. So why announce it now?

The deal isnt on the Crowdcube site, again one assumes Crowdcube would wish the brewery to deal with its own secondary market rather than AM. Unless of course they havent really got one - which we all know to be the case.

In a world a little like a washing machine stuck in the spin cycle, AM are also equity crowdfunders, having used Crowdcube back in in 2013 to raise over £250k. Let's hope they are colourfast. 

It's all a little perculiar. But then so are buses all turning up at the same time. 

Tuesday, 9 May 2017

Equity Crowdfunding Secondary markets.

Both Seedrs and Crowdcube claim to have set up workable secondary markets. We have an opinion, for once!

A workable secondary market is the holy grail for equity crowdfunding. Being able to release investors from their too often worthless paper share certs and give them a return for their risk, would make the whole game work.

However the key word here is workable. Vanity projects set up by the two retail facing ECF platforms, Seedrs and Crowdcube, wont be. 

Seedrs - 

Their model is to set the share price and have a week long 'sale' once a month. A similar idea to that operated by Asset Match, who sold shares for Brewdog last year. Only existing Seedrs investors can partake. 

Lynn says the reason for them setting the price is to prevent wild swings  - either up or down. Apparently EY, who we can all remember as the accountants involved with Bernie Made-OffWith- MaMoney, have stated that Seedrs use a verifiable system to value these shares. It's the same system that tries to make us believe that Seedrs investors are in fact seeing considerable ROI; despite the facts. What EY know about starts ups should be written on their charge sheet.

In a normal market, buyers set the price via demand. So investors know that even if the company doesnt turn out as predicted, they may be able to sell their shares and recoup some of their money even at a loss. This is not the Seedrs vision.

Time will tell, but Lynn's insistence that there will be no down rounds suggests he has his head in the clouds. Valuations are, I think we can all agree, too high on both platforms, so putting them higher for the secondary market is not going to work. Without buyers, Seedrs have no market.

Crowdcube have taken a different route. They claim to have created a secondary market in their PR. But on checking, they havent.

Two Crowdcube companies recently offered shareholders a way to sell their shares - Celixir and Mettr Technologies. Both were exceptional cases in that they had received large inward investments from overseas and these new investors didnt want to manage a whole raft of mini SH's at the AGM. Celixir (Cell Therapy) had claimed on its Crowdcube pitch  - 

Cell Therapy is scheduled to complete a public listing on Jan 14th 2015 on the Euromarket GXG exchange at an initial valuation of £100M (~£50 per share). This Crowdcube funding is the final private placement prior to listing with a pre-IPO discount of over 25% at a £64M valuation (£37.00 per share). 

Needless to say, this never took place. 

Its certainly true that shareholders in both companies have seen very good returns. But to understand if this is a trend, as Darren Westlake claims in a PR piece here, or a couple of exceptions, you need to know all the facts. It's similar to claiming that the recent Brewdog deal, where shareholders could sell around £500 worth of shares only, actually gave a ROI of 2800%; as the Brewdog Capman claimed. Of course it didnt - to get a return you need to be able to sell your holding not a tiny percentage of it. Brewdog shareholders cannot sell their remaining shares as there is no market. Darren does claim precisely this but who is surprised anymore?

Real secondary markets need to trade at fair prices set by buyers and based on known facts. Neither Crowdcube nor Seedrs seem able to produce either. Buyers will not be fooled and there are no perks this time around, so why would they bother? There will be the occasional exception to prove the rule.

There is of course the whole issue with S/EIS and the 3 year rule. Selling your shares before 3 years is up will mean payments to HMRC and the loss of the CGT avoidance - although the latter may just be wishful thinking. It could be a bit of minefield especially with the Crowdcube single investor model.

Someone somewhere needs to come up with a better model. We are working on it. 

Crowdcube's new ploy - just so you are aware

3 of Crowdcube's latest pitches have a similar trait. They all have fake targets. 

So they all declare they are raising £X but then a small note tells you that Y of X has already been raised off platform. This makes the platform look better, increases the progress on the 'funded' bar which stimulates interest and allows Crowdcube to claim larger raises in their Annual Total Jamboree PRing sessions. So sort of win win win and then sadly lose, for all those investors who failed to read the small print. 

Crowdcube have been to known to do this without telling people - so maybe we should be thankful for small mercies. You may remember a certain promise of a £250k investment made on the Seedrs platform which has as yet never materialised. So who knows if these amounts do ever get invested?

Current target embellishments care of  - Hope and The Chapar. In the Chapar pitch it is clear that investors have not understood Crowdcube's 'note' about this off platform investment of £250k. A Q on the forum actually asks if this amount is included in the current CC running total. Of course it is and of course the answer to the other Q is NO, CC will receive no commission on this amount. And finally the Q is correct in his comment that this amount should not be on the platform at all  - it's a clear attempt to try to con investors by creating a false momentum. Investors on the platform have absolutely no guarantee that this £250k will be forthcoming - they have to take the company's word for it. Why have the FCA allowed Crowdcube to operate a system so obviously open to abuse? The A to the Q hedges around these delicate issues. Guilty as charged.

It would surely be more honest to just state the real total ie the raise amount less the off platform investment?

The latest one to try this has been Teachpitch, which is back for more cash after only 12 months since its first Crowdcube triumph of £300k. Target (apparent) £400k but £261k of this has already been raised separately off Crowdcube from two existing investors - we are not told who. 

The company revenue for YE October 2016 was projected at £207k but it has managed just £7k. No new raise was ever mentioned a year ago. Of course this lack of progress has led to a doubling of the company valuation. 

Apparently 'Due to the optimal use of our existing resources and team & our commercial strategy to work with licensing customers in the east who have multiple schools in their portoflio, our actual YE Oct16 EBITDA loss is £50,000 lower than forecast.' .........We think this means that running out of cash has meant a lowering on activity and therefore costs - but who knows. 

Hope these guys are not going to do any actual teaching.

Sunday, 7 May 2017

There is no Hope

When it comes to fibs, Crowdcube's Hope pitch wins prizes.

Hope are looking to raise £500k and the pitch has just run out of normal time - well short of the line.  

But dont despair, Hope founders declare on the platform, they have some exciting news. Because the campaign has seen such great momentum, they are extending it for another 14 days. 

The only issue we have this statement, issued by Hope in the updates section of their pitch, is that it simply is not true. As the pitch very clearly states, the company is not really raising £500k on Crowdcube - £350k of this total was already in the bag before the pitch went live and was raised off platform. 

So in their allotted period, the company have only managed to raise just over £100k. Which quite frankly for a business backed by the ex CEO of M&S is pathetic. Recent activity has been next to nil.

What we can be certain of is that the extended campaign has nothing to do with momentum and everything to do with desperation. And why are we still finding Crowdcube hoodwinking their investors? It's such an amateur way to treat them.  You should really complain a little louder guys.

More Horlicks?

Nicola Horlick's Glentham Capital has come in for more than its far share of bad press. Recent reports state that the £250k she had promised the invest via Seedrs has now been paid in - meaning Seedrs do not have to follow through on their threat of legal action. Whoever thought they would? Companies House shows no new investment.

Glentham is now based in the US. There they have been trying to raise $125m since December 2016 via a platform called Castle Placement. The IP includes claims that Glentham has an exceptional team with a proven track record of building similar asset based platforms. Gone are the days when Glentham was focused on the film sector - it now intends to makes $1m-$10m loans to US lower middle market businesses.

One of the well established team is clearly Holick but what isnt made clear is that another member of the team is also a Horlick - well its Nicola's husband Martin Baker. Nothing like keeping it in the family. People might wish to critically review the term success when it comes to track records.

We will let you know if the paperwork for the £250k ever appears.