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?

1 comment:

  1. Nice idea but it sounds like a neardesk if they are really doing the delivery as well as the ordering portal.
    I.e. most people who buy from you repeatedly will find the supplier and disintermediate you
    The potentially viable business here (imo) is the portal