Monday, 10 July 2017

Just how bad is the Ethos Global Scandal?


Ethos Global, forced into liquidation by the Courts, and their funding facilitator Crowdcube, are trying to dismiss the closure and shenanigans that led to it, as nonsense. What really lies beneath the surface may be far worse then we thought.


Cambrdige has a bit of record with Crowdcube. There is of course this on going case but not long ago there was the confirmed fraud of the Solar Cloth Company. The SCC was run by a Cambrdige resident who was using various different spelt names to hide his business failures - a simple fact that the Crowdcube DD department missed. Result - the loss of £1m of investors cash plus a whole pile of creditors being out of pocket. Only two companies made any money out this farce. They were Crowdcube with their commission and the insolvency practitioners.

Now we have another Cambridge farce; Ethos Global. The truth is proving hard to come by but a recent source told us, that the scandal is far worse than it appears. The company was apparently already struggling before Crowdcube and was in dire straights. That's not all the source said but the rest needs some verifying. QED - when they approached Crowdcube and were vetted by them , they were already in a lot of trouble. If true, can Crowdcube really be allowed to keep their FCA license? What is the point in having any regulation if it can be so blatantly abused with no sanction. 

As with the Olympics, where they should just let it be a free for all and see who blows up first on the 100m, no regulation is better than regulation poorly enforced.

We think that Ethos Global marks a new low in the many lows of the development of ECF as a credible long term channel for SME funding. If not here, then where will the FCA draw the line?

10 comments:

  1. Your articles are turning into something I would expect to find in the Daily Mail. Can you please avoid publishing clickbait and stick to the facts. This speculation doesn't help anyone. I respect your blog and find it a useful source of information but this feels like a bit of a character assassination now

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  2. Thanks anon. The difference between us and the DM is that we believe the story will be as we predict. We dont usually publish unvetted sources and comments for obvious reasons but in this case we hope to bring forward some people who can verify or deny with authority the story of Ethos G. It is working as I write. Are you one of those or do you not have a clue if our assertions are correct or not. If the latter then maybe you are a DM reader? The speculation has helped a great deal FYI. There appears to be little character to assassinate.

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  3. Off Topic, but, have you reported any good news - ever?

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  4. Have you had any kind of response from CC? Or have CC mentioned anything about it in the press? Seems only a matter of time before they have to come forward with an explanation...or perhaps they won't. They FCA is light years away from cracking down on ECF. They're hands are tied with much bigger issues so I doubt anything will happen from that perspective. Private investors losing £1m is small time, simple as that.

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  5. Good Q. Yes when there is genuine good news not platform PR, we blog it. It hasnt happened much to date. That is rather the purpose of the blog - to counter the endless PR prattle coming from some platforms. Otherwise what would be the point? If you don't like it there really is not any need to read it. HAB is one co we have written about in the good news section very recently which might suggest you don't read the blog at all which in makes you a troll I think. Please do it elsewhere.

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  6. The second Anon is a different Anon to me (Im the first Anon/Troll). Did you see the email that Ethos sent to investors a few days ago?

    Re good news, Clippings is rocketing ahead. Very impressed with them to date

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  7. No havent seen that yet but heard they would be offering shares in the newco. If the scale of the scandal with Ethos is as Im led to believe, no one would want any shares with these guys ever. Time will tell. Glad to hear Clippings is doing well, waiting for their Oct filing but now see they filed in Jan this year. Too realy for me to see any signs but if you are happy then it must be doing well. Seems able to raise cash so that's a good sign. Massive step up in revenues next 2/3 years to get into profit - thats the real test. Wish you luck with them and we will be there to write it if you'd like to keep us informed.

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  8. ps 'offering shares in newco' under intense pressure from CC - as they are held in a CC nominee account.

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  9. Good evening.
    I am the other anon (but not trolling), I sort of was trying to lead towards 2 questions
    - if almost all the news is bad - i.e. crowdfunded companies almost universally appear to fail, why do we collectively carry on throwing money at them?
    - where are the successful companies funded - is it more that the good companies get bank funding and only the shakier ones have to turn to crowdfunding?

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    Replies
    1. Ah - sorry for jumping to the wrong conclusion.

      1. It is not so much that they fail but they fail to deliver on their projections, the ones used to sell the equity on CC. We have records for over 400 CC funded companies and very few - probably in single figures - have managed to reach or exceed their sales pitch numbers. They may fail later or they may turn it around - we just report where they are now. This is almost universally bad news. The few that have exploded tend to be down to total incompetence or total fraud or both. CC never do any real due diligence despite their claims and the evidence is on the blog. The vast majority of CC funded Co's will end up as Zombies from an investors' point of view. They will make a living for those working there but never reach any point where the investment can be realised.

      Angle networks, VC's and banks are funding the ones that dont use ECF. They are far more vigorous and have far more experience than any crowd. You would expect them to get better results. ECF platforms that combine both like Syndicate Room or Growthdeck might just have the answer.

      You have to remember that most SMEs do not go on to be the next FB. They make a living for the staff and the founders. The internet and CC PR has tried to change this fact but at the moment the old truth is prevailing. You cant make a poor idea, poorly planned, work just because CC allowed it to be funded.

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