Enistic raised £340k on Crowdcube in 2104. Now they are struggling with mounting losses, huge founder pay packets and resigning directors.So how does a new company making losses justify a salary of £150k to its founding CEO. Well is cant but there is nothing Crowdcube investors can do about it.
We wrote about Enistic here when they suddenly withdrew their second attempt to take Crowdcube investors for a ride. Thet were not well received the second time.
Now information we have shows why. The CEO, Darryl Mattocks, has been taking £150k pa out of the company by his own admission. YE March 2017, the company reported losses of over £100k - ie his salary. He hasnt broken any laws, its just plain stupid. Investors did not put their money into the company to pay for his lifestyle.
A recent resignation by one of the non exec directors has led to the revelation that things are not well at the company and there have been some interesting goings on. We wont go into these here, suffice to say that they are not in the interest of Crowdcube's shareholders and it also involves a service contract which appears to be against the interests of Enistic.
So we comeback to the title of this post. How can Crowdcube investors assert any from of meaningful influence on rogue directors, once they are shareholders? Simple answer is they cannot. The first Crowdcube pitch raised almost 3 times the amount sort. So investors were enthusiastic. The March 17 accounts show little cash remains and assets total £119k, even after the company raised more finance last year. Someone has benefited but it is surely not the investors.