Thursday, 23 February 2017

2017 - Crowdcube's lack of progress

We are now almost at the end of month 2 for 2017. So just how have Crowdcube done in these months of their seventh year?

Truth is not too well.

To break even CC need to have net revenues of around £8m. At a commission rate of 7% that would mean completing around £100m in terms of raises for the year - even allowing for any extra income they might put together.

January saw them complete on just under £4m of deals and so far this month they have completed on just £2m. Average those up and add a little for the next few days and you are looking a best case of £7m over 2 months or just over £42m annualised for the year. Recently they or rather two of their pitches have been forced to reduce their valuations in an attempts to get over the line. It remains to be seen if this works.

That revenue is under half what they need. And we havent even published our report yet!

Looking at some hard numbers rather than their PR, the picture certainly isn't rosy. Revenues for Q1 (calendar) of 2016 were just over £900k. Looking at Q1 for 2017 the company will need to complete between £12m and £13m at an average commission rate 7% to just keep up. Or in other words March will need to see completed raises totally almost the same as January and February added together just to stay where they are - losing a a lot of cash. 

There are extraneous circumstances for the fall in deals being done. But its not like we couldnt see that coming post the summer of 2016. There is little sign that things will be getting better in the months to come. They might want to consider the damaging cumulative effect continuous fantasy valuations and projections are having on investors faith in their model. But of course they wont.

It will be interesting to see how Luke Lang spins these  - he did a Murali on the December 2016 figures - ridiculously ignoring the fact that they were hugely boosted by the Brewdog £10m bond. Bet they were not paying 7%.

There will always be a position for him in The Donald's new White House when Crowdcube eventually succumbs to the inevitable. 

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