Friday, 10 February 2017

Iolight fails to illuminate Crowdcube's darkness


Iolight raised £240k on Crowdcube in 2015. They are now raising £250k at a value showing an uplift of 30%. 

Of course they are not really raising £250k as we all know - the real target will be nearer £400k. Even in the 2015 they had this new raise projected at £300k. 

The company makes a great product - whether it has a large market is another matter. Sales to YE July 16 of just £8k, dont prove anything. Other than they cant be relied upon to produce projections - the 2015 raise was sold on 15/16 producing over £60k of sales. More worrying as an investor must be their GPM. Projected at 77% it came in at just 68% and is now projected to be just 60% - some variation when you consider that for every one percent drop on a million pound t/o you lose £10k of profit. 

All subsequent years for Iolight have now been tightly reigned in from the 2015 figures - but this doesnt get a mention in the pitch. 

It is just another case of a perfectly good Crowdcube business rigging the projections in order to sell the equity. When 99.9% of these projections produce results all lying in the same direction, the pattern is unmistakable. 

We dont think this is a responsible way to do business. Essentially it's a sales trick. The companies or at least some of them may turn out to be successful - although none have so far in any meaningful way. So why cant we have Crowdcube projections that are attainable? The answer may lie in Crowdcube's own projections which at the last count were, by someway, the worst we have seen - out by a staggering £8m for the last filed year.

Nothing like leading by example.  

5 comments:

  1. What do you mean by "The answer may lie in Crowdcube's own projections which at the last count were, by someway, the worst we have seen - out by a staggering £8m for the last filed year."?

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    1. Precisely that. In the last filed accounts, they showed a loss for the year of £4.4m. The projections they used to sell their equity showed a profit for 2015 of £3.7m - so the discrepancy is minus £8.1m.

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    2. And we are being generous!! The projected profit figure, quoted above, that they used to raise their funding, was for 2014 not 15 -so you can expect the 15 figure to have been double that at least!

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  2. They have recently lowered the valuation. Do you think it is a good business to invest into? Previously they focused more on developing the product - which they managed to achieve. Now, they realized that they must focus more on marketing. The microscope looks fantastic and it seems to have huge potential.

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  3. Please answer , is it a good business?

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