Enclothed raised £400k on Crowdcube and then failed in another raise on Seedrs - after we had pointed out some very odd goings on, on here. Now they have been taken over by another Crowdcube funded company, The Chapar. Enclothed shareholders have been told nothing.
UPDATE 23 July 18 - A 100% reliable source tells us the following - Enclothed is in administration and will be liquidated with no money going to shareholders. Substantial secured and unsecured creditors will also lose out - numbers being worked on. The deal with The Chapar is not concluded and is now in doubt. From our perspective, these two girlies were cluelss rich kids, playing at being entrepreneurs. Which is fine with their own cash. But the gate keepers here ie Crowdcube - let them loose on the public and the result was inevitable. Crowdcube yet again to blame. Time for change. CH filings are not working - the only clue to this administration is the change of address.
In what is becoming a routine outcome for Crowdcube investors, they are the last to know what has happened to their investment. We wrote about Enclothed here when they attempted to raise more cash on Seedrs.
This deal may yet be a good one for investors in Enclothed. The company is still active according to CH. There is little evidence of the sale apart from what we hear and this article which has little detail
Recent comments we have published on the blog from anons, show that some people believe the story put about by Crowdcube, that the whole thing is the result of Crowdcube refusing to give me a job in 2012. Its time to find out if that is true.
Im certainly old - well almost 60 which back in 1982 when my career started, seemed ancient. Bitter, well maybe but I put that down to a healthy dose of good British cynicism. It can often be mistaken for bitterness in this world where if you can get away with it, it is ok.
My working background has been and still is in SME start ups. So when Crowdcube launched in 2011, I was there, eager to find out more. If I had had access to capital like this in the 1980s and 90s, it would have been an enormous help.
I joined the then small number of early adopters on CC. I invested in a small company, met other investors and thought to myself that this was a very worthwhile new sector. Then, through carrying out my own DD on the pitches on the platform and talking with other investors, I discovered what we all now know - Crowdcube is a scam. It uses fake information to promote investments - claiming whenever it is caught that it doesnt check. In 2012/13/14 I was rubbed off the platform numerous times for pointing these 'facts' out. They didnt like the truth. Im still banned from their Twitter and FB pages.
My first reaction to this in 2012 was one of - ' Well these guys have had a great idea but their lack of experience is showing - so maybe I can help.' I suggested to them that I run a remote DD service - free of charge - from my home in Scotland. Their response - 'We know what we are doing and do not need any meddling from the likes of you'. This later became ''Rob Murray Brown asked us for job and we turned him down - that's why he writes the blog''.
If you just take a moment to think about it, in 2012, we had two children well settled at private schools in Scotland, we had a lovely house we were slowly renovating and I had access to the best golf courses in the world. Would I really be applying for a job in Exeter - 12 hours away - to work for a bunch of 20 somethings in a brand new and as yet unproven sector?
The blog came about simply because I couldnt be bothered making up new names to join CC just to be rubbed off again. The blog reports the facts - just the facts. The way I write is just the way I think. ECF needs to be purged of the likes of Crowdcube, so it can really flourish to benefit companies, investors and lastly the platforms. Crowdcube's model benefits Crowdcube first, then minor criminals and ignorant so called entrepreneurs. It has had no real benefit for investors or companies if you take the results to date in the round Our records, 90% unpublished, show a massive collection of zombie companies, who only managed to get investors cash by lying about their potential on Crowdcube.
I genuinely care about this. When you run a few decent businesses from start up and have been permanently short of capital, with all your personal assets tied in, you understand the importance ECF could have for growing genuine SMEs in the UK. You can also see the charlatans. In my opinion the two greatest charlatans are Luke Lang and Darren Westlake.
With Crowdcube's PR you would expect the sale of one of their funded companies to American Express in late 2017, to be headline news. Well as Crowdcube shareholders lost money on the deal, of course they have swept it into their large bin of failures.
We brought this story to you last year - here. But more details have now emerged. The buyer was American Express.
Cake got itself into financial difficulty and had no choice but to close or accept the AMEX deal, which valued the company at around £9m. Crowdcube investors had accepted a valuation of £11m when put in £1m in 2015. Large debts meant that most of the sale proceeds went west. Sugru style.
We think that if Crowdcube had an ounce of honesty they would put both of these two companies up as examples of exits that left their investors out of pocket. After all they claim to be open and honest.
And Beauhurst where does this one appear in your infographics - exit? dead? zombie?
And of course we shouldnt forget that this is another UK gov subsidised deal that has left the good bits drift overseas for a snitch of the real value - cf Sugru.
Well it has been coming. A failed second or maybe third attempt to raise more cash on Crowdcube has resulted in Berrywhite being turned into mush. They took £291k off 172 punters on Crowdcube in 2014.
As is now a common, we had warned investors on this one. Here.
The liquidation is in progress (may take a while) but from the initial report the company has left around £54k of trade creditors dead in the water. The S of A gives no value to Crowdcube investors and Crowdcube have made no mention of the liquidation on their Berrywhite page. Both have become standard ways of limiting the damaging PR.
We report the facts. You decide what to do with them. Never Never goin'to give you up!
Wisdom of Crowds raised £400k on Crowdcube at the end of 2015. Now just two years later the fun is over for their event organising outfit, The Crowd.
We cant find anything else that they do, so is that it? The message they have left on their twitter page will not please investors. Talk of how much fun it has been and how well they have done with other people'e money is crass. It's an insult.
As we keep on saying, this is another example of a business that was not investable, was certainly not scalable and looks very much to us like it was a bit of fun for bunch of friends. That's fine but if that's the intention, dont take money off the public for your entertainment. And dont rub salt hard into the wounds by pretending it was anything other than an expensive, loss making, flop.
Shambles rules. Oh ok.
We would love to know where this company sits in the Beauhurst ECF analysis graphics? Growth would be our guess!
More results for companies that have used Crowdcube to obtain funding, yet again illustrate that the methods being used provide very poor results.
When 95% of something continuously indicates that the something is not working, surely it is time for a change? Well apparently not, as Crowdcube continue to operate their flawed model; propped up as it is by fake news PR which is then regurgitated verbatim by independent bodies like Beauhurst and Crowdfund Insider as fact - see earlier posts. Beauhurst have now changed their article replacing 'exit' with 'aquisition' and acknowledged our verification of the facts - shame they are not honest enough to give us a credit. They have also taken down all their 'research' into other ECF exits etc. We are happy to help but hope they dont just reprint Crowdcube PR again.
Here are some more examples for the months of June and July -
Crowdcube - projected £3.7m profit Filed loss - £4.7m
Grub Club - investors lost all their money in an asset fire sale. Called an exit by Crowdcube.
Crowdfunder - projected loss £150k. Filed loss £500k
Birdsong - projected loss £20k. Filed loss £70k
Floodkit - projected profit £589k. Filed loss 50k
Fourex - projected profit £2.3m. Filed loss £1.4m
Good Egg - projected profit £209k. Filed loss £70k
Health Connected - projected profit £3.6m. Filed loss £70k
Cauli Rice - projectd profit £93k. Filed loss £960k
Tempus Energy - projected profit £6.5m. Filed loss £360k
ISO Spaces - projected profit £2.6m. Filed loss £250k
Shopwave - projectd profit £2m. Filed profit £89k
Circuitree - sadly closing down due to illness of founder. We wish him well in his fight.
Teachpitch - projected loss £53k. Filed loss £80k
This is an illustrative, not an exhaustive, list. We have not included Brewdog as they are covered in a separate article on here. The only company we can find that recently filed accounts and is ahead of projections is Hopstuff and those were new projections - their original ones were a joke. Missing targets does not mean its curtains for the company but our records show that a combination of missing targets, late filing and other failings (ie SM inactivity, lack of new stockists, poor reviews, no app etc) suggests a struggling company. Very few of these for which we have figures, get turned around.
The following companies are late filing -
Faction Collective - havent filed since YE 15. French run a different accounts system.
Easy Property and E-Prop (moved date to Sept 18).
We are pretty sure that at some stage this particular merry go round will explode.
So what if an FCA regulated ECF platform promoted a company and as a result the company achieved its funding target. Then sometime later, the company got itself into serious trouble and ceased trading. It turned out the founder had issues and couldnt cope. Or so it was claimed.
What if this founder was in fact not having issues of his own making? He was having issues induced by the things, illegal things, he was doing. What, if any, liability comes back onto the platform for not seeing this in the original pitch?
What if, when the company got into trouble, the platform and the founder told investors that the reason for the company's collapse was in fact nobody's fault - it was just a case of circumstances. And then what if there was irrefutable evidence that this was not the case. Would the platform be liable then for misleading investors?
As things stand today the platforms are not liable for any form of behaviour by the founders who use their sites to raise cash - even though the pitches are supposedly vetted.
Should this founder be banned from being a Company Director? Or do we allow this sort of thing just to happen and put it down to bad luck.
Im not sure but unless we start talking about these things and stop trying to hide them for the bad PR they will bring, then we will never come to a satisfactory answer.
Grubklub, who owned the online Grub Club app, raised £288k on Crowdcube in 2015. Their projections showed profits for YE 2017 of £2m. Accounts show losses £240k. But that is not the main story.
Update 14 July 18. A SH has been kind enough to share correspondence - which in turn shows this company up for what we believed it was - a sham. A sham that has ripped off shareholders and that Crowdcube have taken so little interest in since claiming their commission, that their own website tells people, is fine. Well it is not and will according to the remaining founder close shortly with all investors cash lost. For Vizeat it wasnt so much a takeover as a shovel and sweep job. Well done everyone. Here is the email to SH -
As you know well by now, following my several newsletters on
the subject, we have been endeavouring since early 2017 to find a sustainable
way to continue the Grub Club business, whether by investment, strategic
partnership, merger, or sale to an acquiring purchaser.
Following positive discussions with our biggest global
competitor during the last few weeks of the year, I am now able to advise of
Grub Club's asset sale to VizEat late on Saturday 23 December 2017.
The structure of the deal is such that the Grub Club
business will effectively be absorbed into VizEat meaning, unfortunately, that
there will be no return on Grub Club shares, whether for Founders or Investors
On behalf of the leadership team, I would like to thank you
for your contribution to making Grub Club the 'stand out' dining experience in
London, resulting in:
of thousands of pounds being raised for charities, such as the Hands Up
Foundation for Syria, Food Cycle and The Food Chain, to name but three out of
60,000 dining guests experiencing a completely new way to enjoy good food
whilst meeting like-mindedly sociable fellow guests;
of underused cafe's being able to supplement their normal income through
hosting evening dining events;
new permanent restaurants being established following the chef's experience
with Grub Club;
such restaurant achieving their ambition of being awarded a Michelin star of
The sale to VizEat will allow the Grub Club team to continue
shaping the London Dining Out scene and further expand into other UK cities,
whilst also protecting current Grub Club suppliers and employees.
We will revert to all relevant shareholders latest by 31
March 2018 to advise on the possibility of claiming any EIS / SEIS loss
In the light of the above sale, I will be stepping down from
my role as Grub Club Executive Chairman & CEO on 30 December - thank you
for your support over the last 12 months of what has been a highly eventful
2017 for the business.
As the remaining Founder still active in the business, Sid
will now be your main point of contact for all future business communication.
Executive Chairman & CEO
Extraordinary Dining Experiences in Curious Corners" or 'Creating a bloody a mess' And here is article by Beauhurst on Crowdcube exits - https://about.beauhurst.com/blog/grub-club-acquisition-crowdfunding-exit/ - which has now been corrected due to our data. But you would have to say that it is incredible and worrying that a company like Beauhurst can accpt a Crowdcube PR and just stick it out there as if it were true. We accept that Crowdcube are happy putting out misinformation but we wouldnt expect Beauhurst to do the same on their behalf.
The Crowdcube site shows nothing interesting has happened at Grub Club for 2 years - typically out of date. Yet the website they have puts you through to a similar business owned by a totally seperate company, Vizeat. Grub Club was 'aquired' by Vizeat - well it is now run by them. It is unlikly any money changed hands.
Having dug around a little we failed to find any legal connection between Grubklub and Vizeat. Crowdcube shareholders still appear to own shares in Grubklub, which was at YE technically insolvent, with accumulated losses of over £800k and £27k in the bank.
We have asked Vizeat what happened but have had no reply yet. Vizeat has rebranded to Eatwith and guess what, the old founder of Grub Club, Siddarth VijayaKumar has been made the UK CEO. The other two founders have resigned. Is this good news for Crowdcube investors? Hard to say. Probably not as they do not own shares in Vizeat which now owns the Grub Club app.
In an interesting piece here Vizeat calls it an acquisition whilst Siddarth calls it a joining of forces. It cannot be both.
If any SHs in Grubklub have any interesting insights then please get in touch. It looks like another Crowdcube company that couldnt deliver and that has been picked off by a larger rival for pennies or nout - ring any bells? Success in Vizeat does not currently appear to mean success for SHs in Grubklub.
Brewdog's 2017 results show a drop in profits, after tax, for the world beating brewer, of £2.2m on last year's £3.2 result. Does it matter for a company that became a paper Unicorn recently?
As always this post comes with caveats. We know that Brewdog is a phenomenally successful UK company. We only asks these questions about its recent progress so as to analyse the use of ECF on this scale.
Expansion is the probable cause and if they can keep the money flowing in as fast as it is flowing out, then no, it probably doesnt matter at this stage. Administrative expenses rose by £15m, from £20m to £35m. Meantime GP only rose by £12m with a fall of 1% on the GPM. Their favourite headline figure, EBITDA, has been given some treatment so that it appears to be increasing from £6m to £8m. However this would seem to be some accounting ruse as the non 'adjusted' figure is down by almost 40%. Of course that message is somehow lost in the mayhem of a Brewdog accounts presentation. The bottom line net profit number has not been adjusted. Other income from non controlling interests is set at just over £4m.
The finance costs more than doubled to £1.2m
Brewdog have been struggling a little to raise their punk equity both in the UK (still below the first target of £20m and so nowhere close to the real target of £60m) and the USA. In the US they appear to have taken down the running meter - well we couldnt find it anymore. Their map of US investors is still bleak.
During the year, the company bought back shares to value of £705k at a price of £13.18 per share. In December 2017 the company sold B shares for £23.75 each. Not quite sure how that works?
The company claims to have seen sales growth in the UK of 78% over the year. But the accounts show UK sales going from £58m to 89m. Not sure how that works either.
Sales in the US were tiny at under £4m out of a total £111m. As the brewery has been in action there since July 17, this seems like a slow start.
As ever the plans are gargantuan. New breweries in Australia and the Asia are the headlines. All in keeping with Hatman's love of Locke's advice -
IF WE DISBELIEVE EVERYTHING, BECAUSE WE CANNOT CERTAINLY KNOW ALL THINGS, WE SHALL DO MUCH WHAT AS WISELY AS HE, WHO WOULD NOT USE HIS LEGS, BUT SIT STILL AND PERISH, BECAUSE HE HAD NO WINGS TO FLY.
With rising costs that will be difficult to cut, the ECF cash is looking more and more crucial, if his wings are not to be scorched.
So it appears you can tell Crowdcube investors whatever you like - they hand over cash anyway. Zzish raised £1.3m last year. Now they have burned this as their model didnt work. With a doubled valuation they are back and have already cracked their obviously fake target of £300k.
It is not until you read the forum on ZZish that you get the real picture. The launch in the US didnt work - the service/product wasnt right for its target market. You have to ask if they bothered to ask schools in the US what it was they wanted, before offering them a product that wasnt a fit. £1.5m of loss later, they have an idea of what the required product is. That is someway to run a business. Is it possible to charge the enemy firing blanks - realise your mistake halfway through, regroup, reload with live ammunition and charge again with success?? We shall see.
In the pitch you would be forgiven for believing that all had gone to plan. So why do they do that? Why lie to investors? Just be honest and say ok we got it wrong but now we have got it right and we can go places. Which they can if what they say is correct. Mind you, the trust has just been shattered so maybe people will not believe them now. For sure they need far more than £300k.
One good point is that they have at least had the nous and honesty to file their accounts to YE May18. This is indeed very rare on Crowdcube - maybe a first.
As the Q shows, if they were going to do that, then there wasnt much point in trying to cover up the failure of 2017.
Despite their best efforts to make you believe the contrary, Daisy Green are not anywhere close to their 2015 Crowdcube Bond projections. Of course they dont tell you that now.
It is the same old same old and it always gets the same reaction. Daisy Green have already burst through their fake funding target of £500k and had exceeded £1m before it went public. That looks like a huge success at a valuation of £18m.
But if you look a little closer, cracks appear. The company projected years 2015, 2016, 2017 and 2018 would all be profitable - they were not (2018 is still unknown). So the 2015 figures given in the Crowdcube pitch were historic and showed a profit of around £40k. The company actually made a loss when these accounts were filed. This fudge is now so common on Crowdcube I suppose it is the norm - but it shouldnt be.
Losses for year ending April 2017 were ~£500k. The company sold its bond to Crowdcube investors with a 2017 profit of £300k. Hey so what! Well the point here isnt the gap but its the complete lack of recognition that it exists.
One other trick they try and lay out in this new pitch is the mirage that they paid off this Crowdcube Bond early, out of profits. They didnt. Of course they dont claim they did but the way it's worded, as some sort of huge success - paying it off 2 years early - makes it appear like it is. In fact they had to borrow (at a better rate) to pay it off - thereby stitching up Crowdcube investors who expected another 2 years of interest.
As always on Crowdcube, things are not what they seem. The company may go on to some success but I just hate the way this information has yet again been manipulated in order to obtain more money. Where is the integrity?
Looking over their figures they have been manipulated to make a best case and they totally ignore key numbers that would give investors a true picture of the situation. But then investors really should be looking for these numbers anyway.
For me this has a similar ring to it as Sugru did. Asked why they are now selling equity when they repaid the bond early, the answer from Daisy is less than convincing. What if, as in the Sugru case, the bank loan Daisy has is under pressure (£500k loss last year is not what was planned). You have seen it once, well this might be a repeat. Worth asking before you throw your cash at it.
When Oppo Brothers are not asking their investors to post fake reviews on Asda, they make ice cream. I always thought this sort of nonsense went on but have never caught anyone red handed. Oppo Brothers raised £400k on Seedrs in 2016.
Here is the text of the Oppo Brothers latest shareholder communique. Since this was issued, many 5 star reviews have appeared on their product reviews at Asda. Dont think we need to say more -
Asda shoppers that Oppo is awesome.
low on reviews in Asda and could do with a few more - every review will help
accelerate sales! We need to have an average of over 4.5* to unlock more
takes 30 seconds to add a quick star rating, you don't need to shop there, and
one or two brief words and will help grow your investment.
say you're an Oppo investor 😉 )
click any of the flavours here, then click the reviews tab and you
will get hero status:
Following comments below its obvious not everyone agrees on this. My point is that if you allow this by just saying its ok, then where do you draw the line. Oppo are asking indirectly for 5 star reviews (they say they need 4.5 plus ie 5). So for example you might not like their apple and gosseberry as much as their melon but because you are a SH you give it 5 anyway. That is a fake review. If the product was worth 5 stars then customers would give it 5 stars - that is the whole purpose of reviews. It may well be a 5 star product but you shouldnt be making it one.
Oppo Brothers are one ECF company heading in the right direction - they really do not need to be attempting to manipulate things like this.
Halal took £200k off Crowdcube investors in 2016 - 30% over its target. The pitch financials were complete nonsense with no balance in the balance sheet and figures randomly picked because they looked nice. How does that pass the Crowdcube Due Diligence test?
Now SHs have received a final plea for cash, which if it wasnt so sad for all involved, would be hilarious. Not once in 5 pages of incoherent ramblings, do they mention the delivery of the numbers they projected. Instead SHs are told that the CEO was invited to No.10 recently - maybe to be our new FS.
Year to December 17 was projected to be one in profit. They made a large loss. So to claim that they have been on target and cannot quite understand why they cant raise another £250k is puzzling. It is just pathetic that this sort of total drivel gets funded.
The outcome is that yet another very poor business idea, run by even poorer management, that has taken advantage of people's belief that Crowdcube do some basic due diligence, will go bust. A large part of this letter is about how to claim back your loss relief. Some SHs update.
This company, unnamed for now, raised on Crowdcube 18 months ago at a valuation close to £5m. Now, having run out of cash, it's looking privately for more at a valuation of £1.8m. Sales have been harder to complete and VCs harder to persuade. Who knew that?
12 July 18 - We are now informed that this new attempt to raise cash on Crowdcube has been a flop - £3750 was raised from 9 idiots. Case closed. Company closed? We can now reveal the company is PepperHQ, which had raised over £500k on Crowdcube.
It's a right bloody mess. Any advantage the company had has been blown. What's more, shortly after funding on Crowdcube, the company disapplied SHs pre emptions rights. That was far too easy for them.
New money was sought and a new realistic value was set by this new money - a value of £1.8m against another round at the end of 2017 that was inexplicably sold at £10m. You wouldnt think so to hear the company explain away the drop - apparently in the market their business is worth £10m it is just not worth that to investors. That is a first for us.
The company is offering a rights issue to existing CC SHs - but you would have to be pretty foolish to take it up. The management have not been open with its investors and despite the fact that the business may have some legs - they have managed a very good job of screwing it up. If they dont raise this cash they are toast. No wonder the valuation has dropped.
According to the now customary fantasy Crowdcube projections, the company was due to make a profit of £1.5m for YE Dec18.
Where are Crowdcube in all of this? Hiding as usual, hoping the bad smell will pass. Well it will of course but Im afraid the bad smells are queuing up outside your door boys and you cannot wish them all away. Why not come out and admit, the real source of the odour is inside and is emerging from your hopeless business model. That is what is generating these noxious gases. And so long as you deny this, the problem will persist.
According to Crowdcube's own records, Zapaygo raised £450k from 231 investors on the platform at the end of 2017. This figure is not reflected in filings at CH. The main feature of this campaign was a signed and sealed deal with the NEC Group - to use the Zapaygo app across their venues.
In Zapaygo's confirmation statement dated 5 March 2018, the company only has 38 shareholders - none of them are Corwdcube.
We spoke to one of the NEC venues today, they dont use Zapaygo as they have their own internal system Qbuster. They said that they had no idea when or if Zapaygo would be installed. We received a reply today from the NEC PR department confirming a 10 year 'commercial agreement' with Zapaygo but no mention was made of exclusivity or any time frame.
We asked Zapaygo for answers a while ago but they have not replied. That is not to say there isnt a contract (see above) but it might have been helpful if the pitch had pointed out the start date or if it had to undergo trials? Maybe the lack of funding has caused the problem - although this would be odd, as the pitch never mentioned it being subject to raising £500k.
This PR from the NEC Group is currently being used by Zapaygo on another funding platform - angelinvestmentnetwork.co.uk to raise another £1m. This platform is not FCA regulated but unlike nearly every other ECF platform, it does make a profit. The pitch tells investors that Zapaygo has a ten year exclusive contract with the NEC Group. In this pitch Zapaygo claim to have raised £500k at the start of 2018. No filings at CH suggests this has happened, although Crowdcube claim an investment of £450k. Investments have been made but not at this level according to CH filings. If Crowdcube investors had put in £450k and it been completed, then they would appear in the March 2018 filing.
And Crowdcube what on earth are doing? If you manage to get onto their CC page, it appears from the forum that investors have been left in the dark since February and one Q was from 3 weeks ago. It is farcical for an FCA platform to be involved in this - really.
There is this helpful piece from the ever unreliable Crowdfundinsider - they do love to get it wrong -
And this page on Crowdcube confirming the success - obtained with a simple Google search. No doubt following this post, this will disappear so here is a screen shot -
The upshot of all this is that the core deal that made this company investible has been delayed or cancelled and obviously, so have its revenues.
We have not seen the 'contract' but it must have been worded in such a way as to allow for wriggle room. Either that or the app failed to pass initial NEC testing. Either way it looks as though investors were not told the entire truth when the Crowdcube pitch declared the NEC deal was signed, sealed and delivered.
We had an email exchange in December 2017 with Zapaygo's CEO. He was annoyed we had flagged up some things in the Crowdcube pitch. Well as ever, it looks as though we were right again. Certainly Zapaygo is not at the NEC and is not due there anytime soon according to the person in the finance department. That is 7 months after Zapaygo and Crowdcube claimed in a pitch seeking investment for equity, that it was a done deal. How misleading is that, readers from the FCA?
Of course it is entirely possible that the mess has been caused by Crowdcube's inefficiency. What's the betting on that scenario? Either way is makes ECF look like a poorly run kindagarten - again.
The new Crowdcube Emoov campaign has topped its £1m target on day one. £500k of that was from one source. The valuation puts this newco, made up of 3 oldcos, at £104m.
Wow! and I thought the World Cup was unpredictable.
The hope seems to be that a £9m spent on advertising will rocket turnover in the next 12 months (for FY19) by 550%. Hmmm. Will it really be that immediate? Turnover has been stagnant recently - hence the merger? Even Purple Bricks, who spent £10m on advertsing in 2017, only saw UK growth at around £150% and that was from a more advanced starting point.
The IPO is, according to the company, expected to value the company at around £130m and then they hope that the post float euphoria will lift this value by another 300%, as it did with Purple Bricks.
Purple Bricks spent ~£10m on advertising last year and £8m the year before. Can Emoov match that year on year? The winner will be the player with the largest market share and Emoov have it all to do. Purple Bricks have already crossed half of the Rubicon and are producing operating profits. Emoov and its two siblings were all loss making before the merger and two of them had negative balance sheets. PB raised £50m in the City post IPO in 2017.
If on line estate agents are the future, another whole topic of open debate, then PB have a considerable first mover advantage.
You will have to excuse me for being a tad reluctant to believe much of this will happen as they plan. I do hate to ruin a party but these numbers, going on the past experience of the 3 companies that have amalgamated to create this newco, seem very generous. The main thrust of the pitch seems to be we can do what PB did or better. Well there is little evidence to back this up and Emoov are starting from 30 yards behind the line.
On Crowdcube's forum, we are told there is a very telling Q&A. The Q is, how have things gone so far for FY2019. The response skirts around the issue with lots of jargon and paff but does not attempt to answer it. Game Set and Match for me.
There is also the vexed question of EIS. If new SHs buy into this round and the company's planned IPO takes place Q1 2019, these new EIS reliefs will only be valid if the shares are held for 3 years from purchase. Nowhere in the pitch is this explained. In fact in a direct Q on the issue, Emoov prefer to indicate some tax loophole that they think gets around this. It is very simple - 3 years from purchase. HMRC do not consider an IPO an exit. So if the IPO happens and the shares then flop a year later, SHs will have to decide if loss of EIS is better than the holding a falling stock. To retain the relief they are locked in for 36 months. That's not quite the picture being painted on Crowdcube.
Maybe that is misleading - probably not though! It would certainly worry me that the CEO of Emoov doesnt know the EIS regulations.
Of course the Q1 2019 IPO is perfectly timed to coincide with the crash of all crashes; that is Brexit DDay. Maybe that was the plan?
Just Park has had £6.2m invested via Crowdcube over two rounds. The company's original projections were a joke, as were their second round ones. They lost over £1m in the 9 months to Mar18, meaning their losses are rocketing again.
They have enough cash to last till March 19, at this rate.
Whilst the accounts appear stable, a figure in the creditors account (current) listed as 'other' for £1.4m would worry me.
Good news is reviews have improved.
How much more money people are going to throw at this company will be interesting to see. Clearly the total invested so far of £6.9m is not enough. Just shows how naive they and Crowdcube were when they set out on this journey.
As we said consistently, a major flaw in the model is that the company has little control over the end service offered to their clients - the parking spaces are controlled by their owners not Just Park. Unhappy clients do not tend to make for a successful business.
Builderstorm raised £140k on Crowdcube. They are now at BE, well ahead of schedule according to the CEO and are looking forward to good results for YE Sep18.
We really dont like to get it wrong but we did here. Builderstorm runs its accounts in a negative balance but has control over the funds required to cover the deficit. The business is due to turnover £1.1m this year and with a high GPM, they tell us it will BE before September.
For our system to work, people who abuse it need to be made to pay. Ethos Global took £709k from 388 Crowdcube investors in 2016. Then they went into liquidation, having opened up a London studio with these funds, which they transferred to their newco. Leaving investors and creditors out of pocket.
Under what system would that be legal?
So why has it taken a whole year to get nowhere?
We have contacted the liquidators many times on behalf of shareholders who asked us to help but they never respond. FYI Adam Harris of Mazars is a complete waste of space.
It cannot be that complicated - it was not a large turnover business. There are no offshore accounts - there are barely any accounts. The trail from their Cambridge studio, to the new London one, is very clear and obvious.
Doisy and Dam should now be in profit - £136k for year ending Sep17. But the Sep17 accounts just filed show yet more losses totalling £230,000 for the year. This year they are supposed to be making profits of £500k.
If and when we come across a Crowdcube funded company that actually gets close to its projections, we will let you know. It seems to be a pipe dream at the moment.
So if ALL Crowdcube funded companies fail to get close to the figures used to sell their equity, when is the FCA going to step in and say - ''Yes, this is all clearly misleading'? Because, clearly it is. We are talking about an almost 100% record for misleading projections. The normal distribution one might expect, would be for 40% missing, another 50% being there or there abouts and say 10% showing better results. Not figures showing 95% missing by a country mile and 5% max being there or there abouts. And this 5% is shrinking.
We hear ECF evangelists say that this fact is not important - you expect all start ups to miss all of their projections. We think this is nonsense. They say this simply because to say anything else would cause harm to the worst offender, Crowdcube. They prefer to trumpet the now defunct option that an upward valuation in a follow up funding round indicates a ROI for investors. Come on.
Credit where credit is due. Whilst the £100k profit reported in the accounts for YE Sept17 is not quite the £1m they projected on their Crowdcube pitch, it is nonetheless a profit rather than the usual loss.
So is it possible to take a company that makes £100k profit and scale it so that Crowdcube investors, who bought in at almost £1.4m back in 2015, see a decent return for their efforts. Maybe?
At least these guys are now heading in the right direction. Clearly a shop in Shanghai has been a smart move. It maybe sometime before we are raising a glass to their success but here's hoping.
As we reported before, Berrywhite just refuses to lie down. In liquidation, the directors have now invented the Berrywhite Group and have arranged a share swop from one to the other.
All the usual excuses are trotted out for the failure of Berryone. How many businesses were put to the sword by the 17.4 million in 2016 is yet to be revealed but it is excuse number one for the moment. Andrew Jennings, the founder, is funding the newco with a £7k loan to buy the assets of Berryone off the liquidator. £7k ?????
We have been saying this for 7 years - taking a nice little business and scaling it is not always a good idea. Equity Crowdfunding demands scale. QED ECF is not always a good idea.
Hummus Bros was a small business, running for 7 years before it started to use equity crowdfunding. It took £600k off Seedrs investors to grow large. Now it has collapsed - blaming all sorts of reasons but the one that did it in.
For example, in the letter to SHs, the company blames the fall in the pound after the Brexit vote. However the second Seedrs round was in 2017, so after that vote and collapse. Did they mention this then - NO.
To put it simply for you, this was a business that might have made the owners a living and paid its staff and dues. It was not a business to scale and in the old days a bank manager, whose job was on the line if he got it wrong, would have said so. They wouldnt have scaled as they wouldnt have been funded. They would have continued for many years happily running their 2 or 3 outlets. Since the funding started coming in in 2015, the only consistent rise for the business has been the magnitude of its losses.
ECF platforms are not in the habit of turning away businesses with a little sex appeal and the restaurant trade has always been considered that - despite the failure of so many.
So who is really to blame. Its a mix between the actions and reactions induced by ECF - need to scale and need to exit. The lack of business sense of most of the investors on these platforms. The lack of the management team to do scaling and in the end the false idea that this was ever achievable.
At some stage more people will wake up to these facts and ECF will alter direction for the better. It's not happening yet though. So you can expect this example to be repeated many times more.
When someone states its time to move on and that they are only now looking to the future, you can be pretty sure the thing they have left behind is not quite as they described. So it is with Vibe Tickets and Luke Massie's phoenix operation.
The administration of Massie's original ticket re sale company, TheVibe Ltd, is now underway.
It reveals two important points. The sole reason TheVibe was placed into administration by Massie was the debt owed to HMRC and the company's inability to pay it. A debt of £57,000 had accrued since December 2017 - so the report states. We revealed this in our last post. It shows very poor management. And kicks many of Luke's published excuses into the long grass.
The second and possibly more revealing point, is to do with the pre pack. Massie has always claimed he didnt plan any of this. According to the administrators, Massie made an immediate offer to them to purchase the assets of the company for £30k. Now the company had been advertised as being for sale but Massie's offer was the only one. This £30k was pushed up to £40k on negotiation. Then out of the blue the largest investor in Thevibe, put in an offer for £150k. Does that strike you as odd? £30k to £150k is not a normal auction jump. Then to add to this oddity, Massie immediately (2 days) put in another offer for £160k. This was from a guy who has claimed continuously that he had no money - which is why he couldnt invest in Thevibe. Out of the blue he shook the money tree and £160k fell into his pocket. So having tried to buy it for £30k, he ended up spending £160k.
£160k would have been enough to clear the old company's immediate debts and problems with HMRC but Massie has always claimed he tried to raise this but failed. Hmmmm. There is TRYING and there is trying.
Massie has also always claimed that he would be able to pay of creditors with the sale proceeds. Well that will not happen. Estimates are currently that trade creditors will see 78p - imagine what they would have seen if Massie had got away with his £30k offer - zero. Thank goodness someone had the sense to offer a sum that would clear most of the debts - and it wasnt Massie. Muck like his assertion that all Crowdcube shareholders have been satisfied, its another hollow one.
The Tea Brew Pub took £180k off Crowdcube members back in 2015. The promise was to have 10 units open in four years and then franchise. The pot is looking pretty empty.
Holland, the founder, cant even manage to get a simple set of small company accounts together for the filing which was due in March of this year. That is really totally unacceptable and unprofessional. It is indicative of sort of trash Crowdcube promote - daily.
Failing to open any units bar its first, is not great news for investors after 3 years but it's not the end of the world if there are good reasons. Failing to carry out your duties as a founding director of the company is simply unforgivable when you have taken people's money.
It now looks as though Luke Massie's new Vibe is being valued at well under £5m. On Crowdcube 2 years ago it was valued at £6m but investors who put in £600,000 in 2016 are going to get lucky, as Luke gifts them free shares in the new Vibe. HMRC who were owed £57,000 by the now defunct old Vibe and are the main reason it was put into administration by Massie, are waiting to hear if they will get anything.
Vela Technologies plc, a previous investor, has announced a £200k investment in the new Vibe Group Holdings in exchange for a 4% holding - valuing VHGL at around £5m. VGHL owns 97% of the new Vibe Tickets and various other Massie businesses. The other 3% is earmarked for the old Crowdcube investors under a pledge made by Massie to this blog.
The £200k is part of a £700k round to launch the newco Vibe Tickets after Massie bought the old Co which he put into administration. We have now news on where the other £500k is coming from but the Vela investment is unconditional. Vela itself is not riding high on AIM and the mess with Vibe has certainly got some interesting comments from investors.
The numbers are difficult to be sure of, but it looks as though that 3% of Vibe Tickets will be worth considerably less than the £600,000 investors put in 2 years ago. 3% of £5m is only £150,000. Massie has chosen to give them 3% of Vibe Tickets not 3% of VHGL. As VGHL is worth £5m and most of that comes from its 97% holding in Vibe Tickets, we can assume that the latter is worth less than £5m. So claims that all his Crowdcube investors, who bought 10% of the old co for £600k in 2016, will get like for like shares in the newco do not stack up. But that is no surprise.
In a series of deals which he definitely did not arrange in advance, he has done rather well when his loyal investors have not. Pure luck. On the flip side, he is under no legal obligation to gift 3% of the new Vibe's shares, so one could see this as an act of the benevolent dictator or entrepreneur.
In all of this, it has always struck me as odd that Massie claims the whole problem was caused by Matt Ewing, the boss of Elite Telecom, who had invested £600k prior to the CC round, having too much control due to a SH Agreement which the young Massie had failed to understand. He goes and on and on about how this tied his hands and he couldnt operate the company - which is poppycock. All it did was prevent him from raising new cash without consultation. We know the real reason he put it into administration now that the first report has been filed - very poor management. But where in all of Massie's arguments are Vela Technologies - who were also a substantial investor in Vibe, putting on £400k, under the same SH Agreement. Vela is run by an ex stockbroker - so if he cant read and understand a simple SH Agreement, what hope have Crowdcube investors? Or indeed Luke Massie.
Meanwhile Vibe Tickets as a business seems to be viable so long as Luke remembers this time to pay the company's dues to PAYE and NI. His judgements are still highly questionable and his reasons given for the collapse of the old Vibe do not stand up to scrutiny.
Energie raised £600k on Crowdcube in 2016 at a valuation of £15m. According to the pitch, one aim was to IPO in 2018 with an EBITDA of £2.9m
Their ultimate stated goal is to have over 1m club members and nearly 600 fitness clubs by 2023. The accounts show the membership numbers rose by 8% in the financial year from 104k to 113k. So a way to go.
These accounts are not a lot of use - the company made a small loss on what appears to be a zero net revenue but its hard to tell.
Anyway we will keep both eyes and ears open for the impending IPO announcement. Values mentioned in the Crowdcube pitch state that the management are looking for an annualised run rate EBITDA in 2018 of £4.6 million which would give the company a £46m valuation based on a multiple of 10. I dont think annualised used here is a fitness term.
Well blow me down with a feather - that was an easy 3X ROI, eh.
Videogram Worldwide took £55,000 of Crowdcube investors in 2014. Later that year it took another £50k of investors on a platform called Crowd for Angels. Now it has filed for dissolution.
Oddly the Crowdcube round has been taken down but its still mentioned on the C for A site.
Accounts for YE August 17 show zero cash but a small profit, although we suspect this is mistake as the share cap account has reduced by a similar amount. They have refiled accounts before. We wrote about their joke accounts and their ridiculous pitch here many years ago.
Really no idea what happened here. The only fact seems to be that this was never a business worth investing my socks in, let alone £1.
It's probably a good idea to strike whilst the iron is still hot - a good idea for whom though? Jordan Daykin is back on Crowdcube with a newco - whilst his Gripit Fixings fall off the wall.
Daykin certainly knows how to milk a run. His newco, VPS, which he bought for £5m is now overfunding on Crowdcube. There wasnt much made of Gripit in the pitch. Gripit has raised £4.1m in two rounds on the platform. Lastest accounts for YE Dec17 show losses of £1.8m for the company - a nine times increase on the latest projections. The figures suggest something odd - read on.
Should shareholders worry that he has now turned his energy and attention to being CEO of VPS - a totally unrelated business, in a totally different industry? Well time will tell. Gripit is due to deliver a profit of over £3m this year. Clearly it must be on track or he wouldnt go wondering off.
Debs Meaden is a SH in Gripit - via that wonderful comedy series Dragons Den. What does she think? No comment.
The accounts were moved, so this loss of £1.8m is for 17 months. Interestingly the first 5 months of this were included in the Crowdcube pitch as 'historic' data. However if you add the losses for 'previous 12 months' and the year Jan to Dec 2017, you get a projected loss of only £1m in total. Now it is impossible to know if the discrepancy (£800,000) occurred before the CC raise dated 03/17 or in the period after that to 12/17.
In the light of recent events with the platform and the fact that accounting dates were moved in June 2017, you might be highly suspicious that old tricks are being played here.
It is certainly more grist to the mill when considering Crowdcube's FCA licence.
This is the Crowdcube model in action. Rateragent made several claims and produced some very interesting numbers in their 2015 Crowdcube pitch. It managed to raise £134k from 133 people who really should be ashamed of themselves.
The company then filed one set of accounts for 2015 and has filed nout since - being closed by compulsory strike off in December 2017. Con? Well you judge. Revenues went from £170k to £2.6m in 2 years - well of course they didnt but that is what Crowdcube agreed to print so they could claim their commission. We will never know if there were any revenues - losses for 2015 were more than double the Crowdcube figure. Our ridiculous accounting system means that we cant learn much from their filings.
We called this back in 2015 - here. 133 of you didnt listen. Crowdcube made around £6k, everyone else lost the lot.
Its worth noting before you read the final paragraph that the company's strapline is -
Rateragent - Where transparency is Key.
In a final baffling twist, Rater Agent Reviews Ltd, with the same logo, is now operating here. This company was incorporated in August 2017. Joshua Paul Rayner is the sole director and shareholder and was until a few months ago a director of One Moment Ltd - the parent of the original Rateragent and the company Crowdcube investors put their money into. Ring any bells?
Saying everything is brilliant when in fact you know its all over, is not a sensible or rational act. But is happens too often.
On the back of some alarmingly bad results for Crowdcube itself, Crowdcube announce that have they just had a record year. Well here is some more good news to add to that -
Powervault - still in test phase and reported £1.5m loss for year when they had a loss of under half that in their projections. Time will tell.
Health-Connected - Further losses of £71,000 filed against profits of £3.6m
Cauli Rice - as already reported way off even the altered projections. Excuses excuses.
Freetrade - Still in trials. Supposedly with revenues of £3.7m for YE Sept18.
ISO Spaces - live on Crowdcube and going nowhere. Filed loss of £250k against Crowdcube projection of £2.6m profit. Is it any wonder people dont believe them?
Witt -as reported, way off targets. In all, we have files on 37 companies due to report in May and June. Not one of those that have filed, have come even close to the projections used to sell the equity on Crowdcube. Not one. We have a waiting room of overdue accounts and our experience suggests most of these will go to the wall. We are not making this stuff up - it is real hardcore fact - no spin, no PRing.
When something is so obvious, how can people still be stupid enough to swallow up more of the same. Equity Crowdfunding might work, but Crowdcube's model doesnt. It is centred on Crowdcube making commission, not on creating viable businesses. 7 years on and that is an indisputable fact.
Crowdcube have filed their accounts for YE September 2017. The news is not good. Revenues fell by 5% over the 12 months and the company filed yet more large losses - £4.626m. So where do they go from here?
The company managed to raise another £1m in May 2017 but this was at the same valuation as the previous public raise in September 2016. You can hear the massive wheels grinding to a halt as the bearings explode.
The only good news we could find is that the loss for the year was lower than the previous year but when your turnover is falling - what does it matter? Falling revenues are the result of falling funded completions - a 5% fall at this so called 'growth stage' is a disaster. We didnt expect to see that sort of collapse.
In a good piece in the Sunday Times, Luke Lang of Crowdcube is reported to have said that the year was record breaking one for the company with £90m invested via the platform. So £90m produced £3.8m revenue. That's an average commission of just over 4%. But we know their standard rate for SMEs is 7.5%. So smaller companies are paying for the larger ones? We had heard a rumour that Revolut used Crowdcube for free - maybe we can see that might be true from these numbers.
At that rate the company needs to be completing well over £180m in funding just to cover its costs of £7.5m. That simply is not going to happen using their model. This all comes at a time when recent disasters like Sugru and Thevibe are putting Luke et al into the limelight for all the wrong reasons. More disasters are in the wings - see next post.
Someone asked if the ECF sector was seeing a fall in activity. Well we are not sure but Syndicate Room reported a doubling in their deal flow, which suggests if you have a decent model and are honest, you can still make good things happen.
This is what Crowdcube said about its progress in a recent shareholder update -
This has led to an exceptional year where we’ve significantly increased the volume and speed of launching pitches, which has positively impacted other key metrics.
Is it just me or is that statement totally at odds with their filed accounts? The referral to the exceptional year must mean exceptionally poor? Increased volumes must mean that they have for some reason been forced to reduce their commission rate?
In this report they also state that the 2017 revenues will be £4m - the largest revenues since they started. This is clearly either misleading or wrong. We dont know what the figure could be if this refers to the calendar year 2017, but we do know the accounting year to September 2017 saw revenues of £3.776m. In a update to your own SHs, you would think the date reference would be the accounting year. Why would a finance company use the calendar year unless to mislead?
It doesnt even bear thinking about the original Crowdcube pitch projections for itself - the numbers are so crazy out of kilter we cant bring ourselves to print them here.
The fall in losses is a direct result of a reduction in costs of £850,000 - that must mean Darren and Luke have forgone their bonuses.
Upbeat references to increased deal flow - ie more pitches than ever before, ignores the essential point we keep on making. Pushing out lousy businesses with fantasy plans and numbers, will not lead to success. Increasing numbers of failures, with many having more than interesting stories attached to them, are a direct result of pushing through over valued, poorly managed companies for the sack of their own revenue. Now even that is falling. Why - well to the state the bleeding obvious, investors are wising up.
There is talk of a new funding round in 2018 - there is just enough cash to carry the company through to September without one. Given these results it will be interesting to see where they go for money. The profit and loss account is at minus £17m and counting. Meanwhile all indicators are heading south. It's not a ship I would want to be on.
Of course non of this will get into the ECF fake news press and probably wont make a dent in the national newspapers. If you are an investor, we'd like to hear your take on the way these numbers stack up and the way Crowdcube have managed their release. Get in touch via email as we need to be able to verify you are a SH. All off the record and anon. firstname.lastname@example.org Thanks.
Farmdrop raised another £10m recently. They appeared on Crowdcube at the start of their journey and raised £750k. Now the valuation is five times higher. What's not to like?
Well for one thing they dont seem to be able to make up their mind what they are. Since the Crowdcube round, where they were hub based and pick up orientated, they now deliver. Using electric vans for the last few yards. A completely different business really - more of a dig it up and move it than a pivot. It has certainly delayed their progress.
In the Crowdcube pitch they stated that in 2017 they would have revenues of £70m. So as we all know, these are projections and cant be taken as fact. But you would hope they would be on the same planet as the real figures - wouldnt you? Otherwise, what is the point?
In their latest PR - https://techcrunch.com/2018/06/14/farmdrop-picks-up-10m-series-b/ - they state that they are on target for £10m annualised revenue for 2018. This is a claim made with some considerable pride - one we should be applauding. Well guys when you compare that with your sales pitch for selling £750k of equity in your business, it looks well past its sell by date.
Best we can say is; long way to go. I personally never believed that the UK shopper gives enough of a to take part in the Farmdrop revolution and if they did they would be already be out there supporting farmers markets. People's main anxiety these days is having it now, with as little effort as possible and as cheaply as possible. A very small percentage of us care enough to bother with this. The delivery is incredibly expensive to manage - much like the Deliveroo model - and profits will be elusive. It really doesnt have a USP and barriers to entry for existing food suppliers/delivery co's are low - if the model was ever going to be a success.
Then of course you have to consider the dark clouds of Brexit - which were not even on the horizon when 351 piled money into this via Crowdcube. Small farmers - the core of Farmdrop's supply chain - will be hardest hit and will likely go to wall in numbers in the first 5 years of the chaos we have brought down on ourselves.
Might well be wrong but the numbers suggest not for now.