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.

PS
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.

5 comments:

  1. The only dead certainty with Crowdcube is that you'll lose your investment. CC should be Charitycube

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  2. I find it odd that crowd funded companies can issue micro accounts etc. Should they not be compelled to convert to plcs after raising funds, with an obligation to issue accounts far more detailed than private companies. Or at least mirror plc reporting requirements.

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    1. Agree entirely. we have been calling for any company using this channel to have to produce full accounts (audited?) for 2 years before they fund and for 3 years afterwards. Surprisingly the platforms dont want this - would mess up the ease with which their clients can fleece investors and therefore cut their commission. FCA have given up.

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  3. As an entrepreneur (who has not raised any money on crowd-funding sites), the challenge has multiple elements.
    Many investors seem to only want SEIS which means that company will be very young and may not have previous accounts and even if they did, they might not mean anything! Having full audited accounts is expensive so it would be better to come up with a better model.
    Investors want big figures and big growth figures quickly - it is this that supports the notion of an exit in three years time. The result is the companies go for growth quickly. As every experienced business knows - managing growth is complex and confusing. It is cash intensive and not necessarily the best approach for a business.

    The crowd funding market feels like the Lloyds Insurance Market of the 80s before its collapse. Too many people investing across a portfolio and paying too little attention to what they are investing in and committing time and energy to understanding the actual business and the team running it!

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    1. This is in the end all being driven by the greed and ignorance of platforms like Crowdcube. When one of the founders has false claims of his own business success on his own Gloria B, do you wonder why he allows everyone else to do the same? It will end up like Lloyds unless people do something about it. If it goes west we all stand to lose what is potentially a great way to fund real entrepreneurial and sensible businesses.

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