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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 outcomes.....so 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, https://jivrbike.com/ , 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.

Saturday, 6 May 2017

Alquity UK join the Crowdcube pile up

Alquity raised over £500k on Crowdcube at the end of 2015. Promised profits on growing turnover have turned into massive losses on disappearing revenues. Luckily, they do have a solid, high cost base to fall back on. 

Havent we heard all of this before?

Alquity are supposed to invest in Africa and other emerging markets. The director's report tells us that these markets have been very challenging. This may have come as a surprise to Alquity but we are not sure it would to anyone else.

Despite achieving a decline in revenues from the previous year of over 25%, and increased losses to almost £1m, the company is optimistic about the future. Two of the 5 directors have left.

Crowdcube's projections showed profits for this past year of £300k. As has become the norm, this figure was pure fantasy. Of course putting losses of £1m in to the projections, may have dampened enthusiasm for this investment. The company was valued at around £13m. Who knows?

Projected profits of £1.4m for YE June 2017 are looking unlikely. The Crowdcube claim that they will become a £1bn fund by 2019 is looking optimistic. We wish investors in this one all the best. 

Friday, 5 May 2017

Crowdcube's Vulpine crashes out

Vulpine raised over £1m on Crowdcube at the end of 2015. They have now decided to call it a day. A recent attempt to raise more cash on Crowdcube flopped and you have to ask why they didnt take a reality check and lower their ludicrous valuation. Too late now.

It's what happens when you get on the Crowdcube merry go round; high valuations lead to higher ones, as the platform doesnt do down rounds. The public are not that stupid. 

We have written about these guys before - http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+vulpine on here. Nothing wrong with the product but zero business sense. We called this in 2015.

Left to their own devices and growing slowly they may well have made a good living for the founders. Get scaling up wrong and there is trouble. They got it horribly wrong. 

So in little more than 12 months, they have blown £1m and their business, apart.

In their £1m raise, they had only asked for £500k - so they have managed to deliver nothing with twice the money. The usual Crowdcube projections showed £500k profits on £4m plus turnover for this year. 

In other news Crowdcube claim to have had a record first quarter for 2017 - you may have tripped up over the countless press releases out there. I suppose that interpretation depends on what date you use - the completed campaign dates or the when the money gets to the businesses' accounts. Either way what they should be doing is leaving aside their incessant self grooming and telling us why they think a company like Vulpine has been such a disaster. Then we might get somewhere.

Wednesday, 3 May 2017

Crowdfunder borrows from Crowdcube

Crowdfunder, a UK based version of Kickstarter, largely for creatives, has raised almost £2m on Crowdcube in two tranches. Now Crowdcube are loaning them money.

In what is a bizarre development, Crowdcube have signed a loan agreement with Crowdfunder - amount unknown. Darren Westlake, one of the founders of Crowdcube is a director of Crowdfunder.

This loan was not in the financials when they raised £1.3m just over 12 months ago. So it wasnt planned. Accounts are due out in June. Accumulated losses filed so far amount to £610k. 

Crowdcube, despite what their PR says, are not generating net cash. At their average commission rate of 5%, they need to be raising around £160m each year just to pay their current costs of £8m pa. They are currently nowhere near to this with a disastrous April. If they break £100m we would be surprised. 

So what's the deal?

We have no idea. Crowdfunders' world is so separate to Crowdcube's we can see no synergy. Crowdfunders platform is currently plagued with SNP MPs trying to raise election funds. Hardly what Crowdcube investors are likely to be keen on and not exactly creative. Crowdfunders was due to have ample cash at this stage according to the Crowdcube projections and that was on raising only £1m 14 months ago. Seemingly, that projection was wrong. 

Any clues let us know.

The search for the truth goes on and we didnt find it here.

Seedrs facilitated Hokkei in raising around £250k in 2015.
Seedrs facilitated Hokkei in raising around £319k in 2015. 

Take your pick. 

If you havent read the post on Hokkei below - this one wont make any sense. It may not make any sense anyway. 

Having written the post below we were contacted by the Seedrs PR department. Every equity crowdfunding platform seems to need a PR department.

They asked us to correct an error in the post, which said that the platform had not raised £319k but had, despite its claims, only raised £250k. We posed the Q, where did the extra money come from? Seedrs explained -

'' Consistent with Seedrs longstanding policy, we allow investors to hold shares directly rather than through the nominee if the company consents. In these cases the nominee managed amount will not represent the full amount invested in the business through the platform.''

We asked them a very simple question. Did you get paid commission on the difference between £319k and £250k. We got a very simple one word answer  - NO. No explanation, just NO.

As it turns out, one investor put in the difference but not via the platform. According to Seedrs PR, this individual used the site to assess the investment opportunity and then invested off platform with Seedrs agreement. We have no reason to think this isnt true. But the statement above is clear - 'invested in the business through the platform'. This did not happen. That is a fact. So the amount invested through the platform was as a we stated - around £250k.

This matters because the equity crowdfunding platforms, or the two retail facing ones, use these figures on completed raises to boost their image. If it could be shown that these figures included sums raised off the platform - as was the case with Crowdcube and £800k of the £1m raise for Waterbabies the Musical - then the FCA might want to take a look. Only a peek mind.

So just how long is a piece of string. Well the answer seems to be just as long as you would like it to be. If anyone else wants to know how long it is, we can tell them but you will just have to take our word for  - it's our piece of string and we make up the rules. 

All in all not very helpful and not what we were expecting. Our chat with Seedrs PR ended with them accusing me of being overly combative. Moi? Must be some misunderstanding. It's what happens when the truth becomes a little blurred.

Tuesday, 2 May 2017

Hokkei liquidation shows fundamental flaws in system


Hokkei funded via Seedrs in the late Summer of 2015. By December 2015, the company had ceased trading and was in the hands of the administrators.

We wrote about them here. The final liquidation is now in place. However the amount raised by Seedrs  - claimed on their website as £319,580 appears in the Liquidators report as only £258,128. That's one hell of a commission Seedrs are taking out or they have been exaggerating their success numbers.

As usual the report can find nothing odd with a small one unit takeaway operation (already operating) burning up over £250k in cash in less than 6 months and ending up with overall debts of over £400k; a large chunk of this owed to trade creditors

Surely someone is taking the pea? 

In a final nose thumbing gesture, the ex director of Hokkei told the press at the start 2016 that he might well get the business back up and running again. That is precisely why the Insolvency Service takes away people's rights to be a company director. If we are going to make it easier for people to raise money then we do need to tighten up on the ability of the authorities to come down on those who abuse the system.

He is now back in  business - only cooking hoepfully!

It would also be good to know what happened to the missing £60k of investment from Seedrs?

Just had this from a SH - a note sent round to Hokkei investors from Seedrs. Clearly shows that their figure of £319k is fictional. Who can you trust??