Thursday, 30 November 2017

Seedrs joins the failure party


Seedrs funded Ridelink runs out of cash and calls it a day - just 5 months after taking over £1m off investors.


Well if you cant beat them, then join them. As Crowdcube failures continue to pile up, Seedrs clearly had no intention of being left behind.

If you choose to believe anything you read or hear on an ECF platform, this company looked like a good bet. Geared up with £4m of investment and going places according to their CEO, Ridelink was 88%owned by Rocket Internet - an incubator based in Europe. The company had a trading record and tens of thousands of signed up customers. Mind you it had a turnover of just £90k for YE16, which must have raised some queries? In the campaign video, one poor guy actually set up a home based car rental business using Ridelink. He had bought 3 cars so will now be wondering how to pay for them. What could possibly go wrong?

Well we dont know yet - we asked Seedrs but they have not replied. In some correspondence from Ridelink they just say they have run out of money and are recommending people use Drivy instead. That sure is a novel closing gambit. In a face saving move, the email goes on to say that Ridelink is joining up with Drivy, which they say is great news for everyone.

Drivy acquired Buzzcar back in 2015 and is heavily backed by big money.

Hold on a moment - were there not investors in Ridelink involved here? Maybe Drivy are also sharing their company with them? And dont forget, the rewards promised by Ridelink to Seedrs investors. Good luck claiming those now.

We are not convinced that all the information made available to investors was accurate. There seems to be little sign of the £4m for example. Time will tell.

Finally we found this alarming but not uncommon note in the accounts for YE 16 - its second year. The directors paid themselves over £300k in the year with the largest single payment being £140k. This is astonishing for a start up making large losses and only in business because of other people's money. It should also be noted that neither 'founder' was a shareholder which would immediately ring loud alarm bells for us.  

5 comments:

  1. Wait, the founders didn't hold a stake? So the people who "had the idea and worked on it", didn't want to partake in its success / failure?

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    1. No it was great for them... they didn't risk any money and if it was successful then they would have paid themselves a lovely salary and possibly options at a future date... win win... the complete opposite for the poor old shareholders who get stuffed!

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  2. I remember I was paying attention to this campaign because I had previously invested in HiyaCar and did not invest in ridelink because of the discussion about Hiya Car vs Ridelink where I read they invested millions in general marketing and facebook acquisition, and with very high salaries to go with it. Plus I never really liked to see the company being headquartered in Luxembourg, some things just doesnt sound right. Like some other company which was owned by another company incorporated in Delaware. Lol.
    When I see startup directors paying themselves stock market salaries and going for crowdfunding to be honest it just sounds like a 'take it while we can' scheme.

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  3. The last round of funding wasn't completed until early August. So I presume they didn't get the money until around then. To burn through 1 million in cash in 3 months is pretty disgusting. A very positive update was sent in October although it did mention obliquely
    they only had enough cash to last them Until December.

    They employed 21 staff!!! Ridiculous. At least I only wasted 50 quid.

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  4. Let's see if HiyaCar can do a lot better. Also invested in people/getting the proposition right (hopefully not with fat cat salaries - but they seem to have their heads screwed on), burning cash and now need to nail the next phase - successful ramp up of hires "hiyas".

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