Crowdrating moves to subscription only model - will it survive?

Crowdrating takes a stab at giving punters information about companies that are raising money via Equity Crowdfunding platforms.

When it launched a couple of years back, it was accused of trying to get companies to gain better ratings for cash. Thankfully this practice has ceased; we think. We wrote them before here and the comments are worth a read.

Now what they have is a very basic analysis by what are a team of young interns with little real business experience. When I say basic I mean BASIC. They award medals for various categories - with Gold Silver or Bronze. Illustrations are included. Your 6 year old would feel at home.

Funnily enough they gave Appetise, which has failed to raise money on Crowdcube, two Golds and a Silver - so that is an illustration of the penetration the site has. 

As with all things to do with Equity CF, they have come up their own stats, showing how well their Gold companies have done versus their Bronze ones. You might ask so what if no one is reading it. All they are proud of is the fact that only 2 of the 25 Golds (out of a rated total of 384) are showing distress. The other 23 are still trading. Its so vague as to be pointless. When we last wrote about them it was 24/25; so the odds are worsening. 

The only real interest here is that of the 384 reviewed companies only 25 get a decent rating. That does fly in the face of what Crowdcube tells everyone about their companies. 

We offer a much better service for free - currently. We have a 100% record of being right or your money back.    

So now if you want Crowdrating's information and to look at decorative medals, you will have to pay £5 per month for a basic package or £10 for what they call their premium service.  

Wheatfromchaff Ltd - the controlling company - shows increasing losses and a BS in the red so maybe it is time to either get the cash flowing or move on. There is room for a similar service but it has to be more detailed and more accurate and not presented in such a mickey mouse way. 

We're on it. 

Silkfred finally publishes accounts with losses of £2.5m

Maybe this is why the IPO has been delayed?

We wrote about them here when the news broke that they going to IPO for £100m in 2017. Really on these results? The Telegraph carried this story -

https://www.telegraph.co.uk/business/2016/12/10/silkfred-fashions-100m-stock-market-listing/

According to information we have seen, the company was nowhere close to a £11m turnover for 2016, as the Telegraph states. Journalists - isnt it time they checked what they were told instead of just parroting it as fact?

This is probably just a minor glitch to be fair. The company has had no problems raising more cash  - it has just done so to the tune of £1m. Its in a rapid growth stage which just isnt translating yet into revenue. Time will tell but we had this company down as one likely to give you all a return. Just maybe not quite a £100m IPO!

Time to take away the takeaway - Wrap it Up file more losses

Wrap it Up took £760k off 560 Crowdcube investors in 2015. Now two years on how have they performed against their Crowdcube offer?

Well you guessed it.Yet another hopeless failure. 

The Crowdcube version had profits for the year just filed (Dec 17) of £670k. The company actually made losses of £230k and since funding, has never made a bean despite claiming to be profit making on the pitch.

The pitch emphasises the new central kitchen which can service up to 100 outlets. Hell that is fantastic if you are using it but with only 17 outlets on their website some might say this a total waste of capex.

We shall have to wait and see what the outcome is - the company is complicated see here and there are new non related Wrap it Ups popping up  - so the brand is hardly valuable. Units that do exist and are run by this Wrap it Up, get very average reviews - not what investors might want in a growth company. 

The whole picture is very confusing. It does beggar belief that 560 investors could give away £760k for this at a dreamy £6.5m and not invest in a current pitch by Appetise, which offers value for money and a real chance of success. You have to wonder at the sophistication of this crowd. 

Whatever happened to SilkFred's £100m IPO?

As alternative facts go, 2016 news in various papers, including The Telegraph, of SilkFred's £100m stock listing in 2017 is right up there.

In what reads like a company PRing, the news was splashed out in December 2016 just in time to pick up their Christmas sales.

More recently and we assume more realistically, the company have raised £7.5m on valuations of £20m and £25m. Considering what Crowdcube investors paid - even with dilution - they have seen the paper value increase. Just why the listing was postponed or cancelled isnt clear but there re many current factors in our economy that might make you think twice right now.

We had this one down as a real success - please dont let us down. Accounts are late.

Whatever happened to SilkFred's £100m IPO?

As alternative facts go, 2016 news in various papers, including The Telegraph, of SilkFred's £100m stock listing in 2017 is right up there.

In what reads like a company PRing, the news was splashed out in December 2016 just in time to pick up their Christmas sales.

More recently and we assume more realistically, the company have raised £7.5m on valuations of £20m and £25m. Considering what Crowdcube investors paid - even with dilution - they have seen the paper value increase. Just why the listing was postponed or cancelled isnt clear but there re many current factors in our economy that might make you think twice right now.

We had this one down as a real success - please dont let us down. Accounts are late.

Myshowcase's final crash

Our recent report of the give away of Crowdcube funded MyShowcase to Miroma Group has now been confirmed. A communication from Crowdcube, who are the nominee account holders in this mess, states either agree to this or the business will close. And you have 4 days to take legal advice and decide. 

Investors in MyShowcase via Crowdcube will get 12.5% of the new Myshowcase, whereas they bought 13.7% via Crowdcube for £1m. These new shares have no rights. Miroma will get all the MyShowcase shares for nothing. Miroma have recently signed an agreement with Reach4Entertainmant in the US which may help the business.  

As usual, the poor investors that believed in Crowdcube, have been royally hung out to dry whilst Nancy and her cronies have been rescued from a sunken ship; at their expense. Whilst the communication goes on to say that this is unlikely to effect investors EIS reliefs - as the deal is at 'arms length', we feel these are rather short arms. Given the fact that the founding CEO of Miroma was a major investor in MyShowcase. In fact if you were really cynical you might think this was all a set up.

We know the FCA are hopeless but are they really that stupid?

What are Taylor St Baristas really up to. Maybe Harris and Hoole can give us a clue?

The power of fake news on the internet never ceases to amaze. Taylor St Baristas took £1.8m off Crowdcube investors in 2015 by way of a bond - for the sole purpose of rolling out new stores. 

Now they have told the Sunday Times, who wrote a piece on ecf bonds using our data, that they no longer wish to open units - they are coffee whole sellers. Well that is not what they sold punters when they issued the bond. It's completely the opposite.

One feature of the TSB's bond document was their repeated referall to the success of Harris and Hoole. Harris and Hoole was set up by the Tolleys in 2012 using Tesco funding. Its chain has now grown to over 50 but its profits are harder to find. In fact since 2012, it has made annual losses of £5.2m ,£12.8m, £25.5m and in 2016 17.7m. The Trolleys left in 2016 to concentrate on TSB and Tesco eventually got rid of the loss making headache to Cafe Nero in the same year. Including 2016, £61m has been thrown at this company and it has lost the lot. They have single handedly re written the definition of the word 'success'.

So is this the model that they based TSB on? Hope not. Of course in the TSB bond document none of these losses were mentioned - H&H was a massive success that meant the Tolleys knew that they were doing. Eh? The difficult bit is making a profit - any old fool can lose millions each year.

I do feel for the mugs who took the 'in store' bond offer in 2015, expecting a unit near them soon, so they could use their 12% annual freebie and indulge in what is, by many accounts, the best coffee around. With only 10 units open (just one more than in 2015) and very substantial losses, this 12% maybe annihilated by the added petrol costs in getting there. If it is so bloody good what went wrong?

Looks like the investors may have been trollied.

Brexit funder Peter Hargreaves buys 33% of Crowdcube funded Powered Now.

In a move that massively dilutes Crowdcube shareholders, Peter Hargreaves has invested £2m into the SME invoicing and on line form company, Powered Now. 

Powered now had raised £1.1m on Crowdcube in two tranches in 2014 and 2015. In order to achieve this Hargreaves' investment, the company altered existing shareholders pre-emption rights by special resolution. That's why the dilution took place. 

Whilst Hargreaves may be castigated for his £3.2m funding of the Leave campaign in order to help him avoid the new EU tax avoidance directives, his involvement in any start up must be a massive plus. Powered Now certainly needed that boost.

The company recently filed accounts for YE Jun17 showing a £500k loss against a projected £1m profit in the 2014 projections. Having completely missed those 14 projections, the 2015 version had a loss for the same year of £347k; so much closer to the mark.

The company gets rave reviews for its service and products and now it has a very serious backer, we'd expect it to make good progress. It is just a shame that pre emeption rights which were clearly sold to investors have been tampered with. Mind you the company did really need the cash.   

Crowdcube's Tempus Energy do not disappoint with further large losses versus projected £6.5m net profit.

Maybe one day Tempus will supply some good news - but not yet. A £500k loss for YE June 17 has replaced their projected Crowdcube £6.5m profit. 

We wrote about them here

Tempus have excelled in missing their targets and they are certainly up for Crowdcube's worst performing success, ever.

Now they have a new team of directors (all the others resigned) and some cash. Large intangibles are holding up the mantle.

Good luck with this one. Not quite as Crowdcube described it back in 2015, when they took £650k off investors. 

Yet another Crowdcube Bond issuer fails.Taylor St Baristas files a £800k loss.

Hi - Hot from the Swamp today we have the Taylor St Baristas accounts. TSB used Crowdcube to raise £1.8m on a 4 year 8% bond. Target profits for YE Mar17 were just over £1m; generated by 20 coffee shops. The £800k loss has been generated by just 10.

Yet again we see the sort of ludicrous projections that Crowdcube promote on their platform coming to a sticky end. TSB now operates just one more unit than it did before it took the money off investors. Where did the £1.8m go? Who knows but.its gone.

So what? Investors are still getting their interest payments. Well yes for now they are. But with a BS at March 17 of minus £1.2m and no new funding since, it all looks a little stretched. The money is due back in 2019.

Investors can do nothing even if TSB collapse, as the bond was issued by a 100% subsidiary - Coffee Bond plc. Coffee Bond plc would eventually go bust but has no claim over the assets of TSB - as in the Square Pie fiasco. This no sense arrangement comes courtesy of the Crowdcube Primary 7 Bond Origami Group. Bless.

You would love their Bond Invitation Document  - this one was certainly Licensed to Thrill.

It all fits with our news breaking story of the Sqaure Pie failure, which was picked up by The Times today and the poor performance of both The Eden Project and River Cottage, whose bonds are due for repayment soon. Dont you just love the way Crowdcube sidestep the important issues and continue to produce a constant stream of PR sludge.

Swamp out.

Insolvency Service get it wrong again over Solar Cloth Co

The UK Insolvency Service has looked at the dealings of the Director of The Solar Cloth Company and decided that they do not warrant any action. 

No that is not a joke. 

You may remember the SCC. It helped itself to loads of investors cash using false information about the founder and his previous antics. The story was well written up in The Times. It was a caste iron case of fraud - all helped out by the Crowdcube platform.

Now in letting this individual go, without any reprimand the Insolvency Service quotes Section 6 of the Company Directors Disqualification Act 1986 where in order to be disqualified, said director has to have acted in a way that makes him unfit to be a company director. Text below -

Dear Sir/Madam, 

The Solar Cloth Company Limited Company Directors Disqualification Act 1986 I refer to previous correspondence in this matter and advise that as a result of the investigation undertaken, the Secretary of State does not propose to take disqualification proceedings against the directors of the above company. Such disqualification proceedings when brought are done so pursuant to Section 6 of the Company Directors Disqualification Act 1986. 

Whilst this may not be currently relevant to you it might be helpful for the future if I advise you of the wording of that section. 

It says: (1) The court shall make a disqualification order against a person in any case where, on an application under this section, it is satisfied — (a) that he is or has been a director of a company which has at any time become insolvent (whether while he was a director or subsequently), and (b) that his conduct as a director of that company (either taken alone or taken together with his conduct as a director of any other company or companies) makes him unfit to be concerned in the management of a company”. 

Accordingly if, in the future, the Secretary of State should learn of any unfit conduct relating to this company it could be included in any disqualification proceedings brought in respect of this or any future company failure. 

Yours faithfully Naomi Fulford 

Well if this guy has not acted in such a way then we are not going to see any companies' directors disqualified ever again. Also, it seems unlikely the company will be able to oblige the Secretary of State in the final comment as it no longer exists! What a ridiculous outcome.

So just beware the presence yet again of one Perry Carroll or whichever name he chooses from his list. He'll be the one flying some amazing money spinning business and asking for your cash.

We wrote about him and SCC here

Clearly something needs to done about the 1986 Act - yet another piece of useless legislation that pre dates the mass use of the internet. Just WAKE UP will you please.

Amidst the doom and gloom we have a good news story from Thailand.

SOM SAA is a Thai restaurant that raised £700k on Crowdcube at the end of 2015. Now at the beginning of 2018 it is going strong, receiving rave reviews and delivering what it promised.

How investors will see a return is a mute point but at least these guys stated in their pitch that they had no intention to roll this out until after the founding restaurant was well established. They have not been forced to return for more capital like nearly all the other trading Crowdcube successes - so investors have not been diluted. How refreshing it that?

YE April 17 accounts show profits of £128k which whilst slightly below the projections, are real profits.

ทำได้ดี

Bra Entrepreneur using Coin to divert the gaze of the FCA?

In the latest crazy twist in Fintech, Bra millionaire and Baroness, is launching a new Start Up fund based on crypto currency. 

Michelle Mone and her business partner Barrowman, are about to launch an ICO - Equi. Their new coins will be part of their new fund for start ups. Why they have chosen to raise the money by issuing a new coin is a mystery to me apart from the rather too obvious media attention.

This deal is being set up in such a way that it circumnavigates the eye of the FCA. Its a very fine line they are drawing and I just wonder if this is the sort of monkey business that a Peer of the Realm should be involved in? They get around the FCA regulation because the coins are non transferable so are not considered within the FCA's remit. In fact this is probably the only reason they are even talking about using coin.

If it comes off, which seems unlikely and the FCA quite rightly bring it within their remit, one hopes that a Peer of the Realm will not find another smoosh to hide it under. After all, despite her success, it should be a one size fits all when it comes to financial regulations.

Working in Tandem to help their Seedrs investors by reducing their value by 96%?

Tandem, the online bank, is now offering its Seedrs shareholders, the right to purchase new shares at £0.60. When Tandem first raised money on Seedrs, the shares were worth over £13.

This is all part of a 'deal' cobbled together by the ever smiling, bearded founder of Tandem, Ricky Knox. Ricky is apologetic about the dilution. He is also apologetic about the share price. 

This all comes about because Ricky had lost Tandem's banking licence; which for a bank, is serious. In order to get it back, Ricky bought Harrods Bank and as part of that deal was required to raise £25m. £10m of this came from existing shareholders convertible loan notes. The other £15m was underwritten by a Middle Eastern fund. 

Ricky is careful to point out that despite the fact the company had already trodden all over investors by removing their pre-emption rights, he is now offering them a chance to limit their dilution by buying shares at the new £0.60 price. He goes on to explain that this is in no way an attempt by the company to get further investment from them. 

As one sanguine investor put it - a £500 investment in the original Seedrs campaign is now worth £20, so to get your money back the company would have to be worth £1.5bn. He also points out the crucial con - undrum that to not invest is going to mean you wont ever see your money back.

They should write a song for you Ricky - like the Ricky Baker number.  

Who ate all the Pies?? Crowdcube bond raiser Square Pie goes into administration

This is a first for the failing Crowdcube platform - their first bond issuer to go bust taking with it £665k of investors cash.

We warned you all about this happening when they were raising the money - when will you listen?

http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+square+pie

There are no details at CH but this article confirms the collapse - https://www.birminghammail.co.uk/whats-on/food-drink-news/square-pie-grand-central-closed-14260512

So days after we published a warning about the health of the other major bond raisers, what we thought and what Crowdcube told everyone wasnt possible, has happened. 

What a total shambles. This comes at a time when the PR mania coming out of the Crowdcube office has been geared up. That's embarrassing. Square Pie ran 6 units, 5 of them were loss making. Was that in the bond offer documents?

We will bring you more on this once the documents are filed at CH. Looks like the simply ran out of cash and had had cash issues for a while. Long enough maybe to make the Crowdcube bond a scam? KPMG are in charge of the mess - is that a good thing? 

Just how safe are Crowdcube Bond Holders?

Bonds sold on the Crowdcube platform were supposed to be a safer way to earn income than investing in equity. But recent results from 4 of the platform's bond campaigns beg the question - REALLY?

These bonds or mini bonds, are usually for 4 years and offer an annual return of between 7% and 11%. They have been offered by what the platform has described as more established and therefore lower risk companies. 

Well that may be so but results from both River Cottage and The Eden Project show they are way off the course the set with the bond sale documents. Two more recent examples, Daisy Green Foods and Grind and Co are even worse.

Daisy Green Foods had projected profits of £350k but brought in losses of £480,000. A difference of £830k.

Grind and Co had projected profits of £353k and reported losses of £1.4m. They have new growth plans so we will have to wait and see.

Both of these two had missed targets in previous years resulting in a cumulative gap far too wide to be put down to bad luck.

It looks like both will need to raise new cash to continue in 2018. To repay their bond in 2019, they will need a considerable change in fortune and to raise more cash yet again. Grind and Co had raised another £2.4m at the back end of 2017.

What is more alarming generally, is the wilful misrepresentation of projections by all 4 of these companies. To be so far out in terms of their plans suggests either crass management or some dodgy dealing. Take your pick - neither inspire much faith in their abilities to run a successful company.

Mr Sherick has finally been liquidised.

Mr Shreicks Shakes took £280k off Crowdcube investors in 2015. It is now in the hands of Il Liquidatore.

In a slightly odd twist, this Crowdcube failure had sent an email to its shareholders at the end of 2017, telling them that the end was nigh but that he, Andrew Sherick, hoped to resurrect the business once it had closed. The reasons for closure were numerous but none of them were down to him.

In this email he wrote - 

However, what I would ask is that it is important at this difficult time that I also ask that you keep this information entirely confidential.  Your support in this would be appreciated.  I put at risk our plan to carry our shareholders forward if I am not offering similar to our creditors this I cannot do. (His underlining and colour selection)

Had he achieved the above and knowingly left his creditors short, he would have being breaking the law. Luckily for him, he didnt.

The company goes down taking with it unpaid debts of over £600k, accrued in just 2 years. One key supplier, Tomlinson Dairies, were well thanked for their efforts by being left with a debt of over £200k. There appears to be no money in the company. Which is odd as the founder had claimed the IP and brand was a roaring success. In the SoA he puts its value at zero.

We really do need to either start educating people in some basic business sense or stop idiots like this from being able to set up companies. You dont allow people to drive a car without a license, so why do we allow anyone over the age of 16 to be a company director and start companies at the drop of a hat. 

As usual Crowdcube have been conspicuous by their absence in all of this. 

We wrote about this before but took the post down when the founder contacted us to give him a chance to sort things out. 

Easy Property follow merger with CPEA, with a capital raise and change in pricing strategy. Will it make any difference?

Easy Property helped themselves to £1.35m on Crowdcube in 2014. Having lost over £17m in the last two years, we find them refinancing and announcing a new (to them) pricing strategy. The big Q is, will this put them top of the pile? 

People we speak to say probably not - it will just extend their inevitable death. As you would expect the Crowdcube projections (does anyone read them?) showed the company making north of £10m in profits by the end of 2017. In reality they made a loss of £10m in the year to September 16. 

The new pricing strategy is more about PR than anything substantial or groundbreaking. They now take a 'marketing' fee of £295 up front and only claim the sales fee of £595 if the property sells. In the words of their CEO they didnt like charging if properties did not sell. Do they really think calling a £295 fee by another name will fool the public?

I suppose they had to do something with the losses mounting. 

The major player and the one everyone wants to beat is Purple Bricks. They reported losses for the YE Apr17 of £4.5m, under half the previous year and increased revenues by 151%. So Eprop have a long way to go and will need very deep pockets to overhaul the sector leader. The recent round at about £30m is a mere spit in the bucket. 

Whatever happens, Crowdcube investors have no control and must hope that the roller coaster is built on solid foundations. These latest developments suggest they are firefighting which is never a good sign. The for sale sign may well go up, for the company, next time.

Something remarkable has happened - a company associated with Crowdcube has made a large profit

White Label Crowdfunding has reported profits of £352k YE April 17. That's an increase on all previous years of £352k.

White Label are associated with Crowdcube because they 'bought' a Crowdcube failure, UP Investments. We wrote about this odd deal here. It has now gone through. 

What is odd is that prior to doing this deal, WL were doing nothing and UP were making heavy losses. So just how you can combine these two and create a £350k profit is a puzzle. 

But the profit is sitting there in black and white and is backed up by a healthy trade debtors entry of over £300k. 

Shareholders who gave their money to UP may be wondering what has happened to their value now that they own shares in WL (this was part of the deal). This again is odd as SH's in UP were advised by the founder that UP shares had no value when the sale went through. Clearly a company able to generate net profits of £350k from a standing start has some very considerable value. 

Lucky investors!

But wait......... UP are late (only just) filing their accounts. With no shareholders apart from the profit making WL, why is it still open? Well you may remember that it was making heavy losses - which is why it failed (sorry sold). So what happened to those losses. We will just have to wait and see but our guess is no one is in a hurry to file anything at UP.