A view from the top

Recent conversations we have had with the top players in Equity Crowdfunding, show convergence. Crowdcube must change or go?

Everyone says it privately. So we thought we'd share their views with you, the Crowd. No names just some real facts. It matters because as the largest and betst known UK ECF platform, what happens to Crowdcube will have serious consequences for the sector as a whole.

The descriptions vary from 'a shambles' to things far far worse. But they all agree - the Crowdcube ECF model doesnt work and if something isnt done about it, ECF will suffer, possibly even die. 

They all have the same positive outlook for ECF generally. But the Crowdcube pile em high, sell em cheap model, with little follow up and no platform engagement after funding, is simply not sustainable. The trail of carnage is building.

They all agree that we need far more company and platform engagement, more pre and aftercare, more skin in the game. The simple truth is you cannot dangle start ups in front of an audience of cash rich, semi ignorant, semi arrogant, tax rebate junkies like some hypnotic rib rave and expect them to make sensible business decisions. They do, incredibly, believe the PR and figures they are fed.

The answer has to be for the platform's to take a stake in the businesses, backed by their expert panel who have some input into the businesses' futures and have properly reviewed their plans. So now the interests of the platform and the investors and the companies are all aligned. All of this can be controlled by access to EIS and SEIS reliefs. Crowdcube essentially set up investors with promises of massive tax reliefs and PR about Zuckerman in 3. They then take the cash, peel off their commission and let the companies do whatever they like with the rest. 

The nature of the beast is such that no one can emphatically prove this one way or t'other; right now. We have evidence that strongly suggests it is the case; other platforms and sector commentators, agree. But until Crowdcube's businesses have nearly all collapsed, many leaving in their wake, liquidised SME creditors, corruption and fraud or just plain stupidity, we can have no definitive answer. By then, it's too bloody late.

September is a hot month for Crowdcube - over 100 of its 'successes' are due to file accounts; many for the first time, so the accounts will show how they are really doing. Our bet is that over the July - September period for 2017, filed accounts will show that very very few of the 130 companies that will have filed, will have come even close to the projections used to value their companies and sell their equity. That is not a good trend but it is consistent with all the evidence we have from 2011 onwards. Nothing has changed.

To date the figure that represents the gap between the projected P&L and the delivered P&L for the last year of filed accounts, stands at over £150m. That's in just one year - add say 2 or 3 years misses together and its goes off the scale. Of the 214 companies that have filed accounts for the relevant period since CC funding, 193 have missed their projections(including a number of companies that have gone bust). 41 of these have missed by more than £1m for the last 12 month period since funding - one of these is Crowdcube. Only 9 have genuinely met them. That's a miss rate of around 95%. These projections are verified by Crowdcube 'experts'; Crowdcube is sanction by the FCA. Is it any wonder that experts have such a bad name now.

We asked Crowdcube to discuss this but never received a reply. If you are reading this, then please help us all out by letting a discussion take place. That would certainly be democratic and open - it might change some opinions. We'd be happy to provide our evidence for you to look at and comment on??