Friday, 19 January 2018

Having your Cake but not able to eat it? Crowdcube land another dud.



Cake has now agreed sales terms with a US organisation, returning shareholders $1.40 per share. This price, which is not yet guaranteed as it is subject to the buyers future approval, represents a substantial loss for Crowdcube shareholders.


Cake took £1m off Crowdcube investors in 2015. Now the founders, Charlotte and Michelle, have agreed a deal where they get a substantial return but investors are losers. But at least they can laugh about it.

This is a deal that gave shareholders no choice - they were not even asked; just told to sign away their shares. So much for the rights of A, B, C or any minor shareholder when founders decide it's time to cash in. And of course the poor old shareholders have to take another big hit as their EIS relief is now invalid and will have to be repaid. Thanks girls.

The US purchaser is unnamed. But the price agreed is around £9.7m or $13.2m. Back in the summer of 17 Crowdcube and the founders backed a valuation of £11.5m. The £9.7m has also to cover some outstanding debts. We had something to say about that then - here 

I know people who used Cake and loved it.

The founders are smiling as the investors, who allowed them to make their profits, sit with large losses. Oh well, caveat emptor or you could take our advice in future. Worth remembering these two as we think they will be back for more!


4 comments:

  1. "Investors" need to demand an appropriate valuation. I would never expect that from CC marketing machine. When will people learn?

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  2. What about the 2015 raise, Rob? Looks like they should get some return at this value...?

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  3. My mistake, the raise was not last year but in 2015 - value then £11,500.

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  4. Wasn’t “cake” the name of the “made up drug” that appeared in Channel 4’s spoof documentary, Brasseye? They convinced a host of celebrities to campaign against Cake, and it was even discussed in the House of Commons.

    You couldn’t make it up...

    ReplyDelete