Thursday, 4 January 2018

We did warn you!

So here we are at the start of another year - this one is labelled 2018. What have we learned about equity crowdfunding? 

I suppose the easiest way to put this is to show you a Q&A I had with a reader in the summer of 2015 - so two and half years ago. Things have improved marginally since in that we have seen 2 exits but both for tiny uplifts and there are now at least 4 companies that have funded on Crowdcube that may make it. Whether at the valuation they were sold at and the dilution since, this gives investors a real ROI is another matter  - 

  • Rob, do you see any winners out of the crowdcube platform to the benefit of investors?

    Some of the management teams I am seeing look shocking, but there are one or two I was going to back until I found you :)!!!
  • Not really. If you look at it logically why would there be? Maybe one out of the first 1000 CC pitches to fund will make money for investors - maybe. So that's in another 2 years time or so that it pitches and another 5 years before it sells for £££££. If like me you joined and invested in 2011, that means you have waited till well after 2020 for a single result. That is a very patient position to hold for more than 10 years, checking pitches every month etc. As of today not one of the 250 CC funded pitches has returned anything, 10 or so have gone have gone bust and many of the ones we have research on from 2011 to 2014 are nowhere near the projections used to sell the equity. Its not a sensible way to build sustainable businesses and without subsidy (SEIS and EIS) it would have died an early death. Really its just a play thing for bored overpaid city dwellers!!

    1. Hello Rob,

      I would just like to say thank you very much for this blog that you run. I came into your blog by sheer chance due to a link to your page posted on the seedrs discussion about Ride
      link; leading me down quite an illuminating path to discover how much of a zero sum game crowdfunding is for the investors. It almost feels like a cash giveaway to these companies really.

      I am incredibly grateful for you taking to time out of your day for all these years to try to help people see the light. I no longer use crowdcube and have begun to sell my lots of shares on seedrs to recoup my money back. I am grateful to have come across your information early, as I only started to join crowdfunding investing middle last year. It really seems the start ups worth while are already taken by VCs and the rest just pitch a dream.

      A lot of trouble has been saved due to your efforts.

      Once again, thank you.

    2. I must say, Cell Therapy from Crowdcube actually did deliver a return of about 4x on my investment. Most investors stayed invested, about 5 (regretfully myself included) sold to a major Japanese investor.