Tuesday, 15 May 2018

Crowdcube declare a vintage 2017. We say it's corked.

You can never be sure with Crowdcube's figures, but the company has declared in its latest infographic, that it funded £90m into businesses for the calendar year 2017.

They seem to think that is good.

Well it is slow progress on 2016 but it is progress. When they say funded we never know if they mean really funded or just pledged. It's their own fault for so often giving misleading information.

Given this is a genuine £90m funded, then at an averaged commission rate of 7% (we think in reality it is lower) that amounts to £6.3m in revenues. Accounts out shortly will confirm this for their financial YE Sept 2017. Odd isnt it, that they choose to ignore these YE figures (verifiable) and PRing the calendar year ones (non verifiable)? Wonder why.

As most of you now know, Crowdcube spend around £9m pa just keeping the doors open. You can do the math.

Losses on this scale, which appear to any seasoned commentator to be a fixed feature of this model, will mean new money is required. This will be a round worth watching. Will all the great and good investors,who have already shovelled so much into this hungry engine, be game for more. We would reckon at least another £10m more for another 2 year runway of losses. Will Crowdcube's 490k 'members' fork out?

In their customary slick infographic, with its ever escalating run of world beating achievements, one item is conspicuous by its absence - a successful exit or ROI. 2017 was a year with none. This doesnt seem important. Maybe there isnt a negative graphic in their software?

There is still, after 7 years, no evidence that funding businesses this way (the Crowdcube way) works for businesses, investors or UKplc. Luke Lang, the excellent PR front for the platform, is running out reasons for the lack of exits, other than liquidations. We have plenty. Luke was to be found misleading the House of Commons Treasury Committee earlier this year - what is the graphic for that?

Some of the featured businesses in the 2017 Crowdcube Hall of Fame, are looking a little less glossy than when they pitched. Kokoon has yet to set a date they can stick to, for delivery of their headphones - with increasing numbers of Kickstarter backers demanding refunds. Faction Collective havent filed any accounts since funding - the French! Emoov have made far larger losses than predicted, with accounts due out shortly. Mondo is really the only one that has achieved anything. Oh and of course there is Wool and the Gang, who returned investors a jumper each. Hilarious.  

To be honest I am surprised they have managed to get to here. It simply flies in the face logic to keep piling money into a lost cause. Their demise would be great news for the sector and would allow the more professional platforms to grow and take equity crowdfunding from the fringes and into the mainstream.

1 comment:

  1. I envision a new financing round that sees a large reduction in the founders percentage of ownership. New and past large investors will rally together, de-executise the clowns and replace them with professional leadership.