Wednesday, 17 January 2018

Crowdcube embarrass us all with their latest update.


Crowdcube's new headline figure of £130m is the amount of money that people might have invested on their platform. Not what they actually invested.


Crowdcube's latest PRing fest takes the use of fake news down into the swamp. £130m invested in companies using the Crowdcube platform are the headlines. It is simply not true.

Well that all depends what you mean by the word 'invested'. We would have said that was pretty obvious but Crowdcube have reinvented its meaning. When they use it, it means 'pledged' for a short time. In our book the two are a long way apart unless you wish to purposefully mislead. Something that would clearly not be acceptable on a FCA regulated platform. 

The real amount invested or in other words, the real amount that pitching companies took away with them to use in their businesses was (according to a not headline figure from Crowdcube) only £90m. This £90m was only up by 10% on 2016, whereas the headline figure of £130m was up by 19%. You can see why they do it. 

So what is this £130m? Well it's the same as say Carillion issuing a statement (a bit late now) stating that their total revenues were XXXXm, for us only to find out that this figure represents the total amount of business they pitched for. Only 75% was in fact real income generating business. Crowdcube have added up all of the money pledged on all of their pitches - successful or not. To look at it another way, we know we are right as Crowdcube's revenues from their successful pitches were only £4m and that did not come via £130m invested. On what is now a commission of 7%, this 4.4% for the last year seems an extremely poor return.

It is highly misleading and idiots in the press like Crowdfund Insider just lap it up. Sadly it proves that despite all the claims and the new CEO, Crowdcube are still embellishing the facts and using whatever it takes to make money and mislead.

The only good news for Crowdcube investors here is that the figures for 2017 were marginally better than 2016 and that the company will only have lost another £4m - unless they have let the costs slip. After all their PRing, it has not been the year they promised 12 months ago. But they are still open for business unlike so many of the companies that have funded via them. 

19 comments:

  1. Yes, of course. Well you can change the meaning of any word, just as long as you detail teh proposed changes in our Terms and Conditions ! This is how CC explained their pledged / raised discrepancy to me.
    Crowdcube might be a interesting social experiment into how to stimulate and manipulate the madness inherent in crowd behaviour, but hopefully sooner rather than later, someone somewhere will realise that most of this 90 M goes down the swanney. UK plc doesn't mind that much because at least it goes into the UK economy in some way mean or form so its unlikely to be the govt or FCA. But really it is crazy leaving the supervision of 90 M GBP to both crowds and their manipulators. Its a little bit like a left wing policy to stimulate the economy; short term gdp gains, but ultimately a zero sum gain.

    ReplyDelete
  2. In other news, if your 90m figure is correct and Seedrs are telling the truth

    "£125M was invested into campaigns and 168 deals funded across 8 countries and 17 different sectors"

    ...does that mean that Seedrs is now bigger than CC
    ?

    ReplyDelete
  3. Any idea if Seedrs 2017 growth over 2016 is 'real'?

    ReplyDelete
    Replies
    1. How does Seedrs make money? I know there's a carry but do they charge 7.5% on the initial investment as well? The numbers don't add up. Last years turnover was just over £1m but they raised over £100m on the platform...£100m x 7.5% etc....where's the money?

      Delete
    2. Like CC, Seedrs take a commission on successful pitches as their main source of revenue. Unfortunately like CC they also lie about the amount that has been 'invested' via the platform. For some reason the FCA thinks it is ok for both the leading retail UK platforms to perform the same disservice. The headline invested amount is in fact the total pledged in all pitches - successful or not. So like a plumber stating his turnover as being the total for all the jobs he quoted on - not the ones he did. You will find somewhere the real invested figure and it will not be £100m! They then take commission on that - they get nothing whatsoever for the so called invested figure for pitches that do not complete. That is one of ECFs big selling points - no fee unless you raise. Ironic that it is now being used to bump up their image.

      Delete
    3. Anon where have you got the figure from that Seedrs made 1M last year, and 100M invested? I have figures (from Seedrs website) of 85M invested in 2016 and 125M invested in 2017. I have no figures for what their commissions received were. How much of the 125M was for campaigns that never met their target i dont know but at least it shows significant growth.

      Delete
    4. 1M barely enough to pay Jeff & Jeff!

      Delete
    5. The £125m Seedrs figure is for all pledged money. So to use the plumber analogy again yes it does show growth in the number of quotes given but it doesnt indicate that these quotes have been successful and maybe that's because the plumber is no good.

      Delete
  4. Crowdcube has a new CEO?

    ReplyDelete
    Replies
    1. Maybe I misunderstood what you wrote? 'Sadly it proves that despite all the claims and the new CEO, Crowdcube are still embellishing the facts'

      Delete
    2. No I think they took on a new CEO in the last 2 years? He was supposed to take them on to the grownups table but has clearly got lost in the bullshit.

      Delete
    3. They've never had a new CEO. It is, and always was, Darren Westlake.

      Delete
    4. Im future watching! 2018 will bring change.

      Delete
  5. I was going from memory...even if they hit £85m (and I do believe they stated that figure was invested in successful campaigns not in total which was higher) 7.5% x £85m is a lot more than £1m. Where did I get that number from ? Again from memory the financials included in the most recent raise showed last years turnover at £1m. There's an enormous gap between what's been raised and what they turn over. It should be a relatively simple calculation should it not?

    ReplyDelete
    Replies
    1. I figure that if a company wanting £1M funding had already themselves found £600K worth of investment (which as I'm sure you know is often the case) then Seedrs wouldn't be able to charge any commission on the £600K, only on the £400K. This surely accounts for a large part of the discrepancy. I also suspect that companies can negotiate a lower commission fee, especially on larger raises. And finally Rob's point about how pledges into failed campaigns are included in the headline totals. If they were only able to charge an average of 4% commission on only 25M of the ~100M then we would be at the £1M commission mark. It does start to look like these business models might not be sustainable, and I expect Seedrs costs are much more expensive than Crowdcube's, since they seem to be more professional and thorough. Anyone know how much cash Seedrs are burning per year?

      Delete
    2. Seedrs YE Dec 16 costs were £5.4m.

      Delete
  6. Seedrs only show real revenue in their accounts - ie post commission. 2016 was around £1m. so that is a long way behind Crowdcube's real revenue of £4m (YE Sept16). If we assume a 7% comms then the Seedrs revenues relates to invested figure of £15m only. So maybe they really had a fantastic 2017??

    ReplyDelete
    Replies
    1. Seedrs PRing for 2017 is very very about the amount invested in successful pitches. They state that £300m has been invested in to pitches on the platfrom but this is clearly a lie - it means that £300m has been pledged into all pitches since they started - most of which was never invested. Otherwise they talk about their secondary market. So assume not great and more heavy losses.

      Delete