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Saturday, 31 March 2018

Alquity UK make £70k profit

Good news for Alquity Crowdcube investors - it has for now stopped making losses. Mind you, its a long way from its forecast £1.4m profit.

The thing about on Crowdfunding and especially Crowdcube, is that all good news, however tiny, must be celebrated joyously or we might commit suicide.

Alquity UK is a financial investment company, so you might expect them to be able to project a couple of years forward with some accuracy. Well they cant. £70k versus £1.4m is laughable.

Here's hoping that £70k becomes £4.8m and them £9.3m (their Crowdcube sales pitch) over the next two years. Unlikely but you have to be optimistic in this game - well that or just plain dumb. 

Friday, 30 March 2018

Chupamobile have just £10k left on their balance sheet, 3 years after taking £740k off Crowdcube investors

So what is Chupamobile and its 'seasoned entrepreneur' (Crowdcube's description) Stefano Argiolas, doing?

Looking at the latest accounts  - late again - not very much. YE Dec 2016 showed this company making profits of £1.3m in its Crowdcube sales pitch. It's hard to be certain, given the lean information supplied in their latest accounts, but our guess is they made a loss of £95,000.

That was over a year ago. There is no record of them raising money since. In fact their filings at CH are almost exclusively to do with moving filing dates or postponing compulsory strike offs.

£740k is a good sum of money - so where has it gone? Fixed Assets are negligible. We wrote about this company before - here .

Their website is all in $ so maybe they have ended up over there. Any shareholders with some more information , please get in touch. ROI would seem some distance away. It could be even further away if you read their reviews - I dont think I have ever seen so many people calling a business a scam  - see here

Back in 2014 when they raised the £740k on Crowdcube, they told investors that they expected to be bought out in the next '2 to 3 years'. So that would be last year. Well who the hell believes anything these companies say anyway - Crowdcube investors just throw money away because they love doing it. Just so long as they diversify their throwing - some over here and some over there. Give them a bit too. Good job guys - excellent result for GBplc.

Oh and dont forget taxpayers, via EIS, these investors will get 30% of their thrown away money back from your Government. Excellent use of public funds.

Thursday, 29 March 2018

Hiyacar moves venues from Seedrs to Crowdcube for more money

Hiyacar have used Seedrs twice to raise cash and have now decided to move over to Crowdcube - maybe the Seedrs wet nurse had run dry?

The new Crowdcube pitch is currently in private mode. Valuation will please Seedrs investors as at £7.2m, it's twice the 2016 Seedrs round of £3.6m. Not sure what the evidence is for this doubling but who cares. It was valued at £1m in the 2015 Seedrs round, so these investors are really doing well  - if they can find a buyer! 

We bring you this news as Crowdcube often forget to tell you these important details. And as we all know, knowledge is power. 

Be careful out there - the recent events with Freeagent (maybe not done and dusted yet; watch this space) and Ridelink, are illustrations of just some of the dangers. Ask yourselves, is this progressive capital they need or a bung to stop up a large hole in cash flows? 

Thanks to Iceman for this one. You're simply The Best. 

Wednesday, 28 March 2018

Red Squirrel Group make further losses after Crowdcube funding

Red Squirrel took £641k off Crowdcube investors in 2016 at a valuation of £5.25m. This last year it was supposed to be profit. Losses for the two operating companies in the Group amounted to £270k.

We wrote about these guys before - here . They had projected profits of £260k, so this miss is pretty good for a Crowdcube company.

The company appeared on a highly dubious alternative ECf platform The Right Crowd but it would appear that this round failed. 

They have rebranded and grown their bar outfit - Mad Squirell, which now has 5 outlets compared with 3 in 2016. So we will just have to wait and see if this is a good idea or not. 

The Early Bird, Oliver Pugh reappears as a cuckoo.

You remember Oliver. He and Earlybird Snacks raised £420k off Crowdcube investors and then went into liquidation. Now he is using the EB mailing list to sell his latest idea.

You can find Oliver's version of events here  where he clearly states that he is emailing all his old EB customer list. To make things look more established he has converted his Twitter and FB accounts from EB to the new business EB Flight Club. Interestingly, the Liquidators note in a recent update on EB's closure, that no one bought the customer list - although Oliver and an associate expressed an interest in it. So you have to ask how he is now using what is still an asset belonging to his previous collapsed company? Do the liquidators know about this? It has not been closed yet.

Maybe there is some moral obligation on Oliver's part to return at least some of the money he took off investors and the creditors? Maybe not.

Moving onto Oliver's latest project - he has taken an idea which is described here in the Telegraph -


Oliver, being the showman he is, doesnt mention this of course - its his idea brought about by his post business collapse round the world travel trip -  a trip made when he was skint. In fact a short Google search using 'mistake fares' reveals a whole host of places doing the same thing.

If followers are interested then you can currently get a deal - 3 months subscription for £36. Caveat Emptor my friends. Thanks go to The Goose for the heads up.

Tuesday, 27 March 2018

So what's the deal with Seedrs shareholders in recently sold Freeagent?

Freeagent just sold to RBS for £53m. Back in 2015 Freeagent used Seedrs to raise £1.2m.

In what was at the time the first crowdfunded company to IPO, Freeagent went public in 2016, just a year after crowdfunding. The launch price for shares was 84p valuing the company at several million pounds less than Seedrs attempts. Figures are hard to verify at this stage but this IPO was a down round for Seedrs investors. The price since then has been as high as £1.42 but recently was on a gradual decline into the sub 70p bracket. Seedrs investors initially paid £10 for shares but this was reduced to £1 in a 10:1 split in 2016.

The CH filings for Freeagent are a disaster -  couldnt make a lot of sense of them. The long and short of it appears to be better to wait for an IPO with guaranteed liquidity than invest on Seedrs. The other very obvious conclusion is that this company was overvalued by a very large amount if you take the industry norm of a 10X ROI. On this basis shares should have sold to investors on Seedrs at around £5m not over £30m. I wonder why? 

Saturday, 24 March 2018

Good news for Ideas Britain Shareholders? Bad news for Crowdcube.

We have removed our previous post on Ideas Britain as legal representation from the company lawyer, Jonathan Coad of Keystone Law, accused it of being riddled with factual errors. What is the legal definition of 'riddled'? 

We wonder, if we had had the post littered with errors, would that have been ok?

So anyway we apologise for the assumptions we made which we thought were based on facts. This time we will just give you the facts and you can make up your own minds. 

Ideas Britain raised £270k on Crowdcube.

It projected in its Crowdcube campaign, profits for YE Dec 16 of £1.167m

Filed accounts at CH show losses for YE Dec 16 of £155,000

The difference between these two is over £1.3m.

Crowdcube projections show profits for YE Dec2017 of over £3m.

We have no figures for YE Dec 17. 

IB was set up with £400k of equity funding from Manchester City Council and The North West Fund. The shares owned by these two were recently transferred - they no longer own any shares in IB. We have asked both bodies to give us details of these share transfers to check they sit within the rules set out by the company in its articles. 

We dont know what was paid for these shares and who took them.

Adam Shaw's holding increased at the same time that these shares were transferred.

Other members of the Team also transferred shares at the same time.

The letter from Jonathen Coad of Keystone Law states - 

After the Crowdcube fund raising the Company informed Crowdcube that it would not send out ‘newsletters’ to shareholders but was happy to communicate directly with any shareholder who had an enquiry.  Whilst the Company in any event had no legal obligation to send newsletters, this decision was taken to protect its IP Formats and not to breach the various non-disclosure agreements it enters into.  

This blog only became involved with BI because a shareholder asked us for help trying to find out what had happened to his investment.

Crowdcube is licensed by the FCA. One of the key areas of concern which Crowdcube are well aware of, is the lack of communication between funded companies and their new shareholders. For Crowdcube to be tacitly agreeing with a company that they do not need to issue updates, would seem to be contrary to spirit and possibly the letter of their FCA license. It is certainly a fact that will be of great interest to Crowdcube's thousands of investors.

Adam Shaw states on his Linkedin page that he was the Founder and CEO of HTC Healthcare plc. 

HTC was liquidated on 28 March 2013. 

HTC's last filed accounts for YE March 2006 had losses for the year of £1.142m

HTC as at March 2006 had a deficit of 3.077m

No accounts post March 2006 were filed

The Pine Unit Trust applied for HTC to be closed on  6 November 2008.

Adam Shaw resigned from HTC on 29 October 2008 or 8 days before the Pine Unit Trust appl.

In the letter to us from Jonathan Coad of Keystone Law, states as fact - 

'Adam Shaw was not a Director of HTC Healthcare plc when it was liquidated. Contrary to the implication in the Blog Post he cannot be held responsible for the liquidation of that company.'

HTC was founded by Adam Shaw in May 1999. He was until 29 October 2008 the self proclaimed CEO (see linkedin). The Pine Unit Trust petitioned for HTC to be wound up a few days later.

Adam Shaw signed off the last accounts filed at CH

There is no record of the state of HTCs finances on winding up at CH.

HTC's demise was not mentioned in the Crowdcube pitch.

Pass the sieve.

The End.

Friday, 23 March 2018

Seedrs' Vrumi struggles to make sense

We always thought Vrumi was one of those business ideas that was only there because of the internet - it didnt have a real, grounded need. And so it has proved.

Vrumi raised just shy of £1m on Seedrs in 2015. In 2016 and 2017 combined, it managed revenue of £226k. In turn over that period it lost £1m. So in the space of 24 months it had soaked up £2m and produced £226k in revenues.

So either the money was going into areas of no real benefit to the company or the people in charge of those areas were doing a poor job. It's not a good ratio when you consider that now they are thinking of closing down and that money appears to have had zero chance of creating a business.

When will entrepreneurs who think they know the internet, understand that promoting online business like this, takes very deep pockets. The company never had so much as a side pocket.

In the end, few people wanted this service - the numbers prove that. Or if they did, Vrumi have a done an exceptional job of putting them off.

Shareholders would love to know what percentage of the £2m went on actual promotions.

A final point here. This company and Seedrs kept shareholders well informed - unlike Crowdcube. However if the information passed to shareholders is to have any benefit it does need to be more robust. It is no good saying things are fine and then closing down a year later.

Thursday, 22 March 2018

Crowdcube's One Rebel posts more large losses

The one thing you can say about One Rebel is that they are consistent. Late sure,  but they never fail to deliver losses for their Crowdcube investors. 

As always with the type of accounts UK companies are allowed to get away with, its hard to see whats wrong here. Losses of around £650k are added to their accrued losses. From comments, they dont bother to communicate much with the Crowd who have funded them to the tune of £4.5m in two Crowdcube campaigns in 2014 and 2015. 

However it is not all bad news - the company now has 4 studios. That's progress. When they last appeared on Crowdcube at the end of 2015, they had two. 

Of course it would be foolish to think that this progress in any way reflects the promises made in that campaign. Profits of well over £1m were destined for 2016 in 2014 and even the later raise had profits of over £200k for the period. The recent injection was a down round for Crowdcube punters - so a double whammy for dilution.

Im told these guys really know what they are doing. So if the person who told me that knows what he is doing, all should be fine. The numbers for 2017 will already be known by the management - we have to wait until September or more likely well into 2019 given their track record. A very Happy Exit was forecast for 2020. Here's to happy exits.

Wednesday, 21 March 2018

Thor Drinks Collapses after raising cash on Crowdcube

Thor Drinks has put itself into liquidation having raised £45k on Crowdcube three years ago.

This one is pretty much the usual sorry Crowdcube story. The 'left hung out to dry' trade creditors owed £130k, might not see it that simply. The more sorry businesses Crowdcube funds, the more contagion they enable with unpaid creditors. That is an excellent plan Thor. Kill me with a tray. 

The company never got close to any of its annual projections and with mounting losses it has closed. That is what happens if you have product no one wants to buy. 

This is what Crowdcube said about their exit strategy - 

The exit strategy is based on a 5 to 7 year plan. While a trade sale is one option, the most likely would be sale to a private equity to a firm that specialises in FMCG.
Examples of such sales include Bottle Green, which initially received £5 million investment from Piper Equity in 2007, and then more recently on to SHS for £30m
With a forecast EBITDA of £1.5m in year 5, we estimate a 9x return for investors.
Ah well another time maybe. Take him away. 

Tuesday, 20 March 2018

Farmdrop post new £3.9m losses

Just because something is odd doesnt make it wrong. But I do think its fair to assume that Farmdrop's current business plan is not what Crowdcube investors bought into. They have little choice but to look on and hope.

To be fair, the company has completely changed its business model and has the backing of some very deep pockets. Which it looks as though it will need. Investors are just along for the ride, like it or not. Farmdrop have not done what Camden Town Brewery did - which was opt for a different plan whilst at the same time giving investors a way out. 

On the current GPM of just 9.9%, they would need to see revenues of 20 times the 2016/17 £2.1m just to reach BE. Of course its not that simple and there should be economies of scale but you wonder with their plans to open hubs all around the country. It's a logistics nightmare. 

Meanwhile Crowdcube investors will soon be diluted out of existence even if the company does go on to make it. The accounts talk of more new and substantial funding requirements.

What might concern investors a little is that yet again the revenues for the company have fallen well short of their own recent predictions. Crowdcube reported that for the year just filed, they expected annualised revenues of £3m - here. This was when that year was well underway. They only managed £2.1m, so off by 33%. Crowdcube pitch projections and yes I know no one believes them, had revenues at £70m for the year. £2m as opposed to £70m. Nothing to see there. Maybe they dont understand the meaning of annualised?

Looking forward to one opening near us soon - although we already have 2 excellent farm shops and a farmers market, so maybe not. 

This will be one to follow the whole way - what do you think will happen?

Monday, 19 March 2018

Crowdcube's Luke Lang gives 'evidence' at HoC Treasury Committee.

First point is what the hell are Crowdcube doing at this committee giving MPs advice and secondly Lang is guilty of a blatant untruth in his response to Alister Jack MP. We really are living in a fantasy world.

Lang is asked a few very pertinent questions by Alister Jack MP at around 11.36am - why do things always go wrong at 11.36am? It turns out that Alister has invested in a company on CC - the outcome is not revealed but maybe the line of questioning is a clue.

Just as a note here, Alister Jack is himself a highly successful entrepreneur, having co founded an Edinburgh based marquee company back in the late 80's which grew to be very large marquee company - Field and Lawn. So he has some form when it comes to talking about successful start ups and how best to help them. I know all of this from first hand experience as we were both cutting our teeth at the same time in Edinburgh as entrepreneurs. You can tell he was rather better at it than I. 

He starts by asking Lang about the degree to which Crowdcube is liable for the information it produces on the platform. Lang says that they carry out extensive checks and get the companies to sign off all their pitch claims. Well that's not completely true as we know but it's passable. Then Jack asks about a company that had funded on the platform and went bust and it was proved information in the pitch was not correct or missing; who would be liable. 

Lang responds with a total untruth. He says that to the best of his knowledge this has never happened.

Luke you do remember Solar Cloth Co? Surely. It was on here and we helped the Times write it up - it was well covered and you were asked questions about it at the time. Investors were most definitely not given the right information about the founder and his previous businesses. They were in fact misled. Ethos Global is another one. Ovivo was another where the information was not too good. There are several others that have gone bust where claims made on the pitch were dubious at best. Tip of the iceberg.

Crowdcube took no responsibility and investors lost it all.

Of course Lang was only at the HoC as an 'adviser'; he was not under oath. Which in itself is total joke. It would be like asking Fred Goodwin to advise on banking reform. Or Tony Blair to advise on Intelligence Reports. 

Where is the counter balance?

Vested interests, as always, win the day - it is no way to run a country.

Thursday, 15 March 2018

Cape Fisheries - another Crowdcube success goes bust.

Cape Fisheries raised £136k on Crowdcube in summer 2015. Now they have been closed by CH. No news of what happened to the money invested by 121 Crowdcube clients.

There are some very large sharks off South Africa, the homeland of Cape Fisheries. Looks like some of them decided to pop over to the UK and help themselves to some easy money from Crowdcube clients. 

Since funding this company has produced only a few lines of accounts - hardly even a minimum. Now it is dead. Something stinks. 

You do have to ask what the platform was doing allowing this business anywhere near to their 'investors', with projections and a PD that showed impressive credentials and much jam the morrow. No point in asking Crowdcube though as they are now well used to batting away such complaints. 

Wednesday, 14 March 2018

Is this is why companies on Crowdcube believe it is their right to mislead investors?

We had a very enlightening chat with a business founder who had used Crowdcube to raise capital but had so far failed to get even close to its projections. 

His explanation was honest. Simply put, it is impossible to create sensible projections. So all businesses therefore produce overly optimistic projections. Everyone knows this. Therefore everyone allows for around a 50% reduction on net revenues when they look at them. The point was also made that it's impossible for businesses to know what costs and revenues will be even 12 months out, so trying is pointless. 

Added to that, he stated that the only sensible way to value new businesses was to look at further funding rounds where the value of the company will be dictated by the amount people are willing to pay for shares. 

We dont agree with either.

It maybe a fact that all the projections we see on Crowdcube are hopelessly optimistic but we believe there is a positive reason for this. Its done to attract investment. If any of the investors believed that these projections were out by 50%, they wouldnt invest at the value which is set by the very same projections. We know this because if you look at the queries on valuations on Crowdcube, they are all answered by pointing directly to the figures in the projections. If everyone agrees the figures are nonsense then so is valuation. Unless investors really are fools, they would only invest at a halved valuation. Its not a conclusion you can escape - people still invest. QED they believe the projections are in the right ball park. Most of then are not on the same planet. 

Regarding the company health check - we also disagree with this. How many times have we seen companies returning for second third and fourth rounds at increased valuations only for the company to go bust. There are quotable examples where the administrator's report states the company had been in trouble well before the funding rounds and yet the upward valuations indicated the opposite. These valuations are entirely subjective and investors have mixed motivations for reinvesting. Many believe that just a little more will bring about the outcome they dream of -  a healthy ROI. Otherwise known as the Gamblers Curse - once on the ride it is difficult to jump off. These dreams are initiated and encouraged by founders emails to shareholders giving them often highly misleading information. These emails are not regulated and do not go via the platforms. So they are legal lies. They can get away with whatever they like and often do. 

There is a fundamental problem with UKplc being littered with companies that have accessed ECf  funding based on these types of projections. It encourages them to over trade in a vain attempt to meet their aspirations - taking on crippling fixed costs that will if unfunded in subsequent rounds, bring the business to its knees. As down rounds are not really the thing on ECf platforms, these next rounds simply exacerbate the problem by raising the value - thereby satisfying everyone that the business is being successful. Given a more gradual climb many of these companies could become part of a healthy UK SME structure. 

All the while all of this mess creation is being paid for in part by the Goverment's S/EIS tax reliefs. What we need is a system where all directors of limited liability companies have to pass a knowledge based test or S/EIS is not available. This, backed by much more stringent assessment of the handling of the company's affairs on administration, would certainly help. After all you wouldnt want someone on the roads without a license.

It was certainly interesting and worrying in equal measure to hear this opinion from the horses mouth.

Crowdcube's Adzuna win Government contract to replace Universal Jobmatch

Adzuna has had a rough ride but has turned a corner. From Q2 of 2018, Adzuna will be providing what is one of the UK government's largest online services.

When the founder of Adzuna was diagnosed with stage 4 cancer, things looked bleak for him and the business. Remarkably he has now fully recovered and the business, which was on hold, is steaming ahead.

It's too early to know how things will turn out a couple of years down the line, but for now Adzuna is a success that Crowdcube can genuinely point to as a company they helped. 

Monday, 12 March 2018

Is Sustainable Power more evidence that Crowdcube companies suck

Sustainable Power took £1.84m off Crowdcube investors in 2014. The company showed projected profits of £2.7m and £13m for 2016 and 2017. How have they really done?

If you were to be kind, you would have to say  - could try harder. In yet another example of how Crowdcube investors are being misled by the financials the platform promotes in these successfully funded businesses, we find reality is a hard task master.

SP losses for 2016 were  £1.5m. According to the accounts, the directors thought this was normal for a company gearing up for production. Well that maybe so but then why tell Crowdcube a whole load of twoddle? Ah.......... it's an incentive thing again. If you had told them the realistic projections, you wouldnt have raised £10.

Accounts for 17 are late but what are the chances the company getting close to a £13m profit? No one with any experience in start ups expects all companies to always smash their projections. But out 400 companies we have on file, when only a handful get anywhere close to the projections used to promote their funding, something is wrong in the system. SP is the norm for Crowdcube funded companies; not the exception.

Berrywhite reappear on Seedrs having been delisted on Crowdcube - Are you going to love them just a little bit more?

Berrywhite's downround saga keeps on rolling...just keeps on rolling....rolling to the river.

We highlighted BW's odd and possibly illegal tactics on Crowdcube in Round 2 - here. In an attempt to get over the line, the founder had offered to sell investors his own shares at a discount - but only investors who came in at the end of the campaign ie a late incentive to drive over the line (maybe a clue there for Eddie). Thereby crashing the one sacrosanct rule of ECf  - all shares offered must be offered pari passu. As a result Crowdcube closed their campaign down, even though they were close to completing. 

Now we understand the company is on Seedrs and providing they reach their new target £50k at the lower valuation of £900k, before going public, they will be allowed to use this platform. Presumably BW hopes you will love them just a little bit more and £50k will over fund to £150k. It is very messy and really not what we want to see from platforms - even if they have so much to give.  

BW funded in their first round on Crowdcube at a valuation of £5m. The failed Crowdcube second round started at £2.7m and ended (just as it was pulled) with attempts to lower this to £900k. Desperate times. 

Anyone reading this blog, knows we have a thing about these crazy 'valuations' and how they have driven companies to make up ludicrous projections to justify them.  These crazy valuations then push the company to over trade and bang, it's curtains. You need look no further for an example of this than BW. It should have gone from £900k to £5m - not backwards. Investors on Crowdcube are not bright enough to get this  - yet. Although they must be catching on by now?

By way of a factual illustration in this case, for YE December 2016 BW, who was never never gonna give you up, projected profits of £1.6m. Accounts filed show losses of £275k. We would expect that a company with this history of dubious projections, might want to reassure investors now, by publishing YE December 2017 accounts - but they havent. 

One might feel a little sympathy for the founder if he hadnt been such a greedy so and so in the first place. Anyone looking to invest now, would do well to go over the numbers with a microscope and then half all the revenues and double the costs.  BW, what am I going to do with you?

Wednesday, 7 March 2018

Primo sued for patent infringement and adds £1m loss to its balance sheet.

Primo raised £274k on Crowdcube in 2016. Now in its first full year since funding, it has lost £1m and incurred a US lawsuit for patent infringement.

It's not what you would call a good start. Albeit the lawsuit has been dropped.

The company's claim to fame for the moment is that one of its backers is Mark Zuckerberg's sister, Randi. Projected profits of around £300k have been replaced with a £1m loss. Profits for 17/18 are going to be £1.7m according to the company. They make a kids' toy that teaches programming and it seems they may have been using it to create their financial plans.

They had started life by raising $1.5m in pre sales on Kickstarter and from the comments on their page, it has been far from a satisfactory outcome. They appear to have run two KS campaigns - one in 2015 for delivery in 2016 and another with pledges for $700k for delivery end 2017. It is hard to see where all this cash has gone. Complaints are numerous.

The accounts are something of a revelation - in that they show exactly what HMRC is capable of  - which is nothing. This company has been in deficit since incorporation and was at June 17 sitting on a £1.13m liability. Since then there is no evidence of any new money coming in. Randi must be the backstop but it makes a mockery of the UK accounting system that such a company is allowed to call itself a going concern. The Crowdcube 'historic' accounting information looks very dubious when compared to the filed accounts; something we see too frequently.

Finally Amazon sells it but has only 5 reviews. So maybe its not really selling. Who, you might ask, wants to train their 5 yo to code? 

Notes Music and Coffee file further heavy losses after raising £900,000 on Crowdcube

Times are hard. Evidence is plentiful. Notes, which raised over £900k on Crowdcube in 2015, has filed losses of £380k for YE June 17.

Notes had 5 central London coffee shops open when they pitched on Crowdcube, valued at £6.8m. Now they have 10, so they have not been shy coming forward in this climate. 

However, they are way off their Crowdcube target of a profit for last year of £410k. Whilst there is cash in the business, they are heavily geared and the grounds will hit the fan if things dont pick up this year. Their balance sheet is over £600k in the red and this is with rent deposits of £322k taken into debtors. Whoever heard of getting a rent deposit back? 10 units equates to lease liabilities going forward of £5.4m. Cumulative losses are touching £2m.

Projections for this year reveal a profit of £1m - lets hope they can pull that rabbit out of the hat. 

Tuesday, 6 March 2018

Fanny's Kebabs are exposed as total amateurs having taken £150k off Crowdcube punters

Fanny's Posh Kebabs have made a serious error. Now corrected, they are no longer posh. So what are they? Lads English Kebabs.

The 3 lads who created the idea didnt do much research and have now been rightly ridiculed in the national press and SM for their idea of posh kebabs. The tag line was their key USP when they launched their campaign on Crowdcube. Now it's gone, just over a year later, as they open their first unit in the Turkish restaurant mecca of Stoke Newington. Good luck with that.

Even the founder admitted it was an error.

This article is well worth a read if you want to have a laugh. Investors in Fanny's should look away now............. 

Jam Vehicles file new losses of £80k and are still striving to deliver their Jivr bike

Jivr bikes are almost ready to go. Having raised £160k on Crowdcube in 2013 and the same amount in pre sales on Kickstarter - the long delay is almost over.

In the meantime, the company has just filed accounts to April 17 showing losses of £80k. They would appear to be somewhat short of money unless they are about to raise more cash.

It is not clear from these minimal accounts whether the pre orders have already been paid for or indeed what state the business is really in. Still updates on KS declare that delivery of the bikes promised some years ago are about to start.

What will happen next? 

We told you so - Crowdcube success Pizza Rossa crashes out having taken £600k off punters

Pizza Rossa was hailed by Crowdcube as a great start up. It won the Crowdcube 2014 Start Up of the Year. The Kiss of Death. 

The company was founded and run by an Italian of extraordinary arrogance and as we predicted, penetrating ineptitude. In his first Crowdcude pitch he brushed aside our concerns about his numbers. This guy was big on his London Business School credentials but had no head for figures or business.

According to their projections they were due to be making over £500k profit last year with 5 outlets, when in fact they made a £44k loss with just one. Accumulated losses were £674k.  

The company made zero or even negative progress - closing all but one of its units as soon they opened them. The idea, the delivery and brains behind it all were poor, plus plus. This one was inevitable. There are plenty more still 'going' that will end up in the same hole.

In his explanation - below - there are no real reasons for the failure apart from the fact the idea was nonsense and the execution was dreadful. Whether the founder lied to you investors in an attempt to get your cash is a mute point. We know what what we know. LBS are partly to blame for all of this as they backed this guy. QED stay away from LBS backed ideas.

We have written about this shambles many times here

Here is his last attempt to make excuses - 

Sadly, I am not the bearer of good news as Pizza Rossa Ltd will close down at the end of the month.

The UK restaurant sector is under growing pressure from rising costs, with various rises in the legal minimum wage over the last 3 years, lower availability of staff in the market as a result of the Brexit vote, a strong appreciation of the Euro against the pound (which led to increases in the cost of ingredients, packaging, equipment and disposables), higher business rates, market saturation and a squeeze in consumer spending.

The casual dining and fast food sectors have seen widespread signs of decline, with Jamie's Italian and Byron due to close several stores as part of rescue packages, Eat and Prezzo possibly going into administration, Pizza Express converting dozens of restaurants to live entertainment venues to stop the decline. Four Italian pizzerias by-the-slice (out of about 20) closed in the last 18 months in central London alone: Marylebone, Tottenham Court Road, New Oxford St.

Our last update dated August 2017 exposed a decline in like-for-like sales compared with the first 6 months of 2016. This trend increased over the following months due to a number of factors:

  • street works in Whittington Avenue between mid-July and early September caused a collapse in footfall in the street that resulted in sales being reduced by 40% between August and September, with the impact being felt until November
  • permanent competition in our catchment area increased hugely. When we opened Pizza Rossa in June 2014, our direct competition (fast casual, fast food, takeaway) could be quantified in about 30 outlets in a radius of 400m around us. Over the last 18 months alone we have seen 25 new entrants in the area (including major players such as Marks & Spencer Foodhall, two new Pret, Itsu, Wasabi, even Boots with meal deals, etc). These new outlets did not substitute previous food offering: they were all brand new shops replacing retail or opening in new buildings. As a by-product of increased competition there was continuous heavy discounting and promotions for all new openings, thus resulting in further price competition and erosion of margins
  • besides the above permanent competition, new street markets increased the casual/mobile offering, with stalls routinely opening at least once and up to 5 days a week outside the Gherkin (St Mary Axe), Devonshire Square, Fenchurch St and, more lately, a Christmas Market throughout December under the Cheesegrater (Leadenhall St). During the better trading days (Wednesday to Friday) these markets can bring 50 additional cost-competitive food sellers in the area
  • overall permanent reduced local footfall in the last 12 months: among others, 650 Amazon staff left our building vacant last November, about 2,000 staff left the building opposite our street for complete redevelopment about 6 months ago. These two alone combined meant that an average of at least 50 regular customers per day do not show up at the shop anymore

Bearing in mind all of the above, we decided that leaving the City would be essential for the survival of the company.  We focused on different locations with a different mix of customers (residential, students, offices, shoppers and possibly tourists) and we increased our efforts in other revenue generators such as deliveries and events.
As part of the re-deployment efforts last year we tried without success to buy out one of our competitors and in Q4 2017 we opened a corner inside another shop in Finsbury Park, which ticked a few of the above requirements. This generates income but it is not a game changer.
Over the last weeks we started a negotiation for a lease of a great corner venue in Lower Marsh (Waterloo), but the landlord eventually decided to sell outright the shop rather than leasing it and we were left with no option.

The combination of the above factors forced us in December to meet the landlord’s agent and tell him that we needed to get out of the Leadenhall venue as we would struggle to survive the difficult period from Christmas to Easter. We were offered a significant rent reduction, with new payment terms that would allow the company to get through these difficult months and buy some time to find a different location.
Eventually, despite all previous conversations that suggested that we could stay at Leadenhall until the end of the year or, likely, early 2019, on Friday 23rd we received unexpectedly the notice from the landlord to vacate the premises. All tenants in the building received the notice on the same day. And this means that we will have to vacate the premises by the end of March.

A Board call was called on Tuesday 02nd of March. We discussed various options to maintain the company trading. These were all regarded as not viable financially and/or operationally. As a result, the Board voted unanimously to close down Pizza Rossa Ltd after the 30th of March.

At this stage there are three main options in respect of the route to closing down the company, in the following order of preference but in increasing order of likelihood. In all cases, sale of equipment, fittings and furniture will be attempted where possible:
  • sell the knowhow and brand to any interested parties and distribute any little proceedings (after repayment of all debt and liabilities) to shareholders
  • pay off all creditors and strike off the company. If any monies are left, distribute them to shareholders and dissolve the company afterwards
  • if none of the above works out, we may have to apply for Creditors’ Voluntary Liquidation (CVL)

Whilst we know that this news is frustrating, disappointing and unexpected, we gave Pizza Rossa our best.
I personally worked full time and was 100% dedicated to Pizza Rossa since December 2013. I did not receive any salary or other compensation for the first approx 18 months, I was remunerated with less than £1,000/month for the following 2 years and I further supported the company’s cashflow by freezing payment of the last 6 months of my salary.
None of the other Directors in the company were paid for their involvement. Moreover, the Board was formed by 5 of the 6 largest investors in the company, so that the best interest of the company was always at the core of all decisions.

We reached excellence in a lot of areas, from food quality to customer satisfaction to operations. All the venues we operated from (even the temporary ones) achieved 5* food hygiene rating, we delivered without problems in large quantities (Roadchef) and for major events (the largest, 2,000 people, the most recent 10 days ago for 600 people), we validated the business model with centralised production and distribution of products with superb quality and standardisation to other outlets that, indeed, did not require a kitchen.

With the benefit of hindsight we could have done some things differently. Besides systemic and local elements as described above, one of the main issues was that despite extensive research prior to starting up, we did not foresee the strong resistance by the British public to pizza for lunch and for takeaway, despite it being a successful evening and weekend food. The belief that pizza is unhealthy was stronger than it appeared in the initial interviews and trials and we had to fight against this perception throughout the life of Pizza Rossa.

As the Managing Director and founder of Pizza Rossa, I can only thank you for your belief and support and say how deeply I regret not having made Pizza Rossa the success we all hoped for.

I will issue another update in due course when we clarify the route we will follow to terminate the company.

Kind Regards,
Corrado Accardi
Managing Director, Founder

I think the 5 star hygiene award best sums up their achievement. Not sure about the claim that they validated the business model! As for the end game, option one is a non starter, option two is a dream and option three is a dead cert. Still in denial I think.

Monday, 5 March 2018

Brewdog EFP V slows to trickle as company slashes target

Image result for sad bulldog

Brewdog's fifth Punk Campaign to raise £50m has been a turbulent ride. Now as the funding dries up, the Dog is not looking so confident.

When Brewdog launched EFP 5 they had a stated target of £50m, with an initial aim of £10m in 100 days. 

When the time for the completion of the £10m was drawing near - the company were still at around £8m mark - things looked a little sad. However through some sort of magic within 9 days they had convinced people to produce the required £2m to get them over the line. This was some achievement, as the average investment per day at this time was around £50k-£60k.

Since this large injection, which just happened to be around the date the £10m target was set to be completed - 15 January 2018, the company has received only £3m in 50 days. Doing some maths this takes the investment back to around the average of £50k to £60k per day. You might be forgiven for questioning the coincidence.

Realising that this daily input was not going to get even close to their £50m target, Brewdog have now reduced this 'target' to £15m - with no explanation. Its their crowdfunding so they can do pretty well whatever they like. But you have question the honesty behind it all.

Brewdog is a very successful company run by almost brilliant entrepreneurs. This sort of mucking about and deception isn't necessary. It reflects very poorly on the egos of the two founders who it appears just cannot stand being wrong, even when they are. It also makes the whole EFP project a bit of joke. Like their US EFP project turned out to be.

Lets hope it's not.  

Thursday, 1 March 2018

New ICO from Spice being promoted by Crowdcube - is that legal?

So now Crowdcube are licensed by the FCA to promote an ICO? 

Ignoring for the moment the benefits that are claimed by Spice's new ICO to establish a blockchain operated investment fund, why are Crowdcube involved? Is this a last ditch attempt to get the fund filled? Darren Westlake, the Crowdcube CEO who sent out the promotional email, says that - 

I want to let you know about an opportunity quite distinct to others that have previously been available through Crowdcube. 

Applauding the appalling English - what does he mean? Crowdcube are not allowed to get involved in this area but here they are getting involved anyway; using their brand to positively promote this ICO. 
Ok, so we cant ignore the detail behind this offer. What is being issued is a new coin that has an asset value behind it - the NAV of the fund that the pot of money is being invested into.

The offer which is due to close in two days, is for $130m worth of new coin in the Spice VC Fund.

The BIG claim from Spice is that in the old world, VCs locked up cash in these investments for 7 to 10 years. Now apparently this new system will allow investors liquidity - the Holy Grail has arrived.

Well no actually - not so fast. The Holy Grail may be in sight but it is still firmly out of reach.

Reading fewer of the headlines that Spice are good at pushing out and more of the detail reveals the truth.

1. Spice will be putting aside 5% of the fund to allow coin owners to cash in. However the value offered will be automatically set by the calculation that keeps the value at 5% of the fund - so for example a run will mean rapidly falling value and therefore no cashing in. It looks like liquidity but isnt.

2. The NAV of the fund will set the price of the new coin in the 'market'. Who sets the NAV is not mentioned. We all know where that road leads.

3. They state that they have no idea if coin exchanges will accept their coin. So no guarantees of liquidity here.

4. The only liquidity here is that fellow Spice holders will be able to purchase your tokens and vice versa. That is not really liquidity as the attempt by Seedrs to create a secondary market for ECF shares has so far shown.  

In fact despite the pages of technical waffle, their is no real liquidity here at all. There might be but then there might not be. Worthless.

So the whole show rests on whether you believe that the team behind Spice have a clue how to invest in what they are terming companies between Seed investment and an A round. A gap they say is waiting to be filled. Your investment whether held in Spice coin, dollars or bananas will go up and down on the back of the performance of these companies. Which is pretty much where we came in. A fund's NAV is already worked out this way. Without liquidity, Spice offer nothing new. Liquidity can only exist where there is a buyer and seller - Crypto or no Crypto.  

It looks most likely to us that this yet another outfit climbing onto the Crypto tower so that when they waive their flag, someone notices.