Friday, 29 September 2017

Will Crowdcube make it to Christmas?


We took a look at Crowdcube's billings for June to September. It really doesnt make for happy reading if you are a shareholder.


(We wrote this before Crowdcube published their misleading Q3 figures. Can it be possible that their investment figure of £25.4m includes all the money pledged in failed campaigns? Surely not?)

As we already know, Crowdcube burn in excess of £7.5m (2015/16 accounts) just to keep the office and PR running. That means that they need to be grossing in excess of £200m in completed campaigns, at their stated average commission rate of 4%, to reach BE.

So for the four months we looked at, we found the following - 

June 17 -      £4.25m raised from 7 campaigns

July 17 -      £4.5m rasied from 12 campaigns

August 17 - £4.5m raised from 9 campaigns

Sept -          £1.58m raised from 5 campaigns

Averaged over the 4 months, £3.7m equates to an annual gross of £44m - or half what they achieved in the previous year which included ''£10m'' with Brewdog. At 4% that leads to a revenue of £1.76m. So lets assume they have other revenue streams which we dont know about  - last years accounts showed revenues of £4m. Assuming even the best case, they are not going to be making more than they did last year, leading to another loss of over £5m. At least. And dont forget we havent taken into account their habit of including, in these totals, amounts that are not raised on platform and therefore not entitled to any commission.

Somewhere in that paragraph is a little share holder screaming blue murder. With falling gross completions, increased competition, first mover advantage gone and a whole raft of failures from 2014/15 and 16 queuing up round the block - there is no way out. 

The Crowdcube model doesnt work - you know we know this. So why would anyone want to buy them? 

Looking at the site now, they have an increasing number of half completed pitches, drifting around until their deadline date - with no interest from investors. Why? Well because Crowdcube couldnt pick a winner from a one horse race. Investors have taken 6 years to wake up but now they are on the move. Claims of 34000 'members' includes a vast amount of dead wood. Egos have exploded along with the cost base and have reached levels that were never realistically going to be covered by their revenues. In fact they now resemble so many of their own platform's pitches - poor business models, poorly executed. There are of course exceptions but not enough.

Compare their figures with the recently released ones from Funding Circle and you can see the difference between a well run business and a mess. FC is still making considerable losses but the key figures are heading in the right direction. 

So UKplc could have some good news for Christmas.




2 comments:

  1. I wonder where investors would stand in the event of CC (as a nominee shareholder) going bust?

    ReplyDelete