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Saturday, 30 June 2018

Interesting results for Crowdcube's Just Park.

Just Park has had £6.2m invested via Crowdcube over two rounds. The company's original projections were a joke, as were their second round ones. They lost over £1m in the 9 months to Mar18, meaning their losses are rocketing again. 

They have enough cash to last till March 19, at this rate.

Whilst the accounts appear stable, a figure in the creditors account (current) listed as 'other' for £1.4m would worry me. 

Good news is reviews have improved. 

How much more money people are going to throw at this company will be interesting to see. Clearly the total invested so far of £6.9m is not enough. Just shows how naive they and Crowdcube were when they set out on this journey. 

As we said consistently, a major flaw in the model is that the company has little control over the end service offered to their clients - the parking spaces are controlled by their owners not Just Park. Unhappy clients do not tend to make for a successful business.

We will see.  

Friday, 29 June 2018

2nd July marks a whole year since Ethos Global was forced into liquidation. Yet the liquidators have produced nothing. What is going on?

For our system to work, people who abuse it need to be made to pay. Ethos Global took £709k from 388 Crowdcube investors in  2016. Then they went into liquidation, having opened up a London studio with these funds, which they transferred to their newco. Leaving investors and creditors out of pocket.

Under what system would that be legal?

So why has it taken a whole year to get nowhere?

We have contacted the liquidators many times on behalf of shareholders who asked us to help but they never respond. FYI Adam Harris of Mazars is a complete waste of space.

It cannot be that complicated  - it was not a large turnover business. There are no offshore accounts - there are barely any accounts. The trail from their Cambridge studio, to the new London one, is very clear and obvious. 

Wake the F up will you Mazars. 

Thursday, 28 June 2018

Some more disappointing news from Crowdcube funded companies.

Well one thing you can say for Crowdcube, is they are consistent. Here are a few more of the platform's chronic results for YE Sept17.

Eight point Nine - No website, FB two dormant for 2 years and Tw for 12 months. Losses of £144k against projected profits of £220k

Floodkit - losses of £50k against projected profits of £590k

Fourex - losses of £1.4m against projected profits of £23m. But have raised another £3m so maybe there is a plan. 

Good Egg Restaurants - losses of £70k against projected profits of £209k. Supposedly doing well. 

Property Moose - no idea from minimal accounts but Trust Pilot 2 star rating suggests curtains.

So when the next fantasist on Crowdcube explains why his company is worth £8m now, by extrapolating the projected EBITDA two years hence, blow him or her a large raspberry. 

Doisy and Dam fail to impress after using Crowdcube to raise £300k

Doisy and Dam should now be in profit  - £136k for year ending Sep17. But the Sep17 accounts just filed show yet more losses totalling £230,000 for the year. This year they are supposed to be making profits of £500k. 

If and when we come across a Crowdcube funded company that actually gets close to its projections, we will let you know. It seems to be a pipe dream at the moment. 

So if ALL Crowdcube funded companies fail to get close to the figures used to sell their equity, when is the FCA going to step in and say - ''Yes, this is all clearly misleading'? Because, clearly it is. We are talking about an almost 100% record for misleading projections. The normal distribution one might expect, would be for 40% missing, another 50% being there or there abouts and say 10% showing better results. Not figures showing 95% missing by a country mile and 5% max being there or there abouts. And this 5% is shrinking. 

We hear ECF evangelists say that this fact is not important - you expect all start ups to miss all of their projections. We think this is nonsense. They say this simply because to say anything else would cause harm to the worst offender, Crowdcube. They prefer to trumpet the now defunct option that an upward valuation in a follow up funding round indicates a ROI for investors. Come on.

We need change.  

Wednesday, 27 June 2018

A breakthrough - Crowdcube funded Beara Beara makes a profit.

Credit where credit is due. Whilst the £100k profit reported in the accounts for YE Sept17 is not quite the £1m they projected on their Crowdcube pitch, it is nonetheless a profit rather than the usual loss. 

So is it possible to take a company that makes £100k profit and scale it so that Crowdcube investors, who bought in at almost £1.4m back in 2015, see a decent return for their efforts. Maybe?

At least these guys are now heading in the right direction. Clearly a shop in Shanghai has been a smart move. It maybe sometime before we are raising a glass to their success but here's hoping. 

Crowdcube's Berrywhite finally calls it a day - or has it??

As we reported before, Berrywhite just refuses to lie down. In liquidation, the directors have now invented the Berrywhite Group and have arranged a share swop from one to the other. 

All the usual excuses are trotted out for the failure of Berryone. How many businesses were put to the sword by the 17.4 million in 2016 is yet to be revealed but it is excuse number one for the moment. Andrew Jennings, the founder, is funding the newco with a £7k loan to buy the assets of Berryone off the liquidator. £7k ?????

There are a number of posts on them here

We really didnt like these guys - they tried tricks to get investment. That's fine in a circus but it shouldnt be allowed in business finance. 

Anyway Crowdcube SHs, have a year to wait and see if Berrytwo can make a few bucks and give it back to them. I wouldnt hold your breath. 

Cant get enough of you - well some of us can, Barry. 

Tuesday, 26 June 2018

Hummus Bros failure illustrates a real issue with Equity Crowdfunding.

We have been saying this for 7 years - taking a nice little business and scaling it is not always a good idea. Equity Crowdfunding demands scale. QED ECF is not always a good idea.

Hummus Bros was a small business, running for 7 years before it started to use equity crowdfunding. It took £600k off Seedrs investors to grow large. Now it has collapsed - blaming all sorts of reasons but the one that did it in. 

For example, in the letter to SHs, the company blames the fall in the pound after the Brexit vote. However the second Seedrs round was in 2017, so after that vote and collapse. Did they mention this then - NO. 

To put it simply for you, this was a business that might have made the owners a living and paid its staff and dues. It was not a business to scale and in the old days a bank manager, whose job was on the line if he got it wrong, would have said so. They wouldnt have scaled as they wouldnt have been funded. They would have continued for many years happily running their 2 or 3 outlets. Since the funding started coming in in 2015, the only consistent rise for the business has been the magnitude of its losses.

ECF platforms are not in the habit of turning away businesses with a little sex appeal and the restaurant trade has always been considered that - despite the failure of so many.   

So who is really to blame. Its a mix between the actions and reactions induced by ECF - need to scale and need to exit. The lack of business sense of most of the investors on these platforms. The lack of the management team to do scaling and in the end the false idea that this was ever achievable. 

At some stage more people will wake up to these facts and ECF will alter direction for the better. It's not happening yet though. So you can expect this example to be repeated many times more. 

Monday, 25 June 2018

Administration report on Vibe Tickets reveals Massie's story is not accurate.

When someone states its time to move on and that they are only now looking to the future, you can be pretty sure the thing they have left behind is not quite as they described. So it is with Vibe Tickets and Luke Massie's phoenix operation.

The administration of Massie's original ticket re sale company, TheVibe Ltd, is now underway.

It reveals two important points. The sole reason TheVibe was placed into administration by Massie was the debt owed to HMRC and the company's inability to pay it. A debt of £57,000 had accrued since December 2017 - so the report states. We revealed this in our last post. It shows very poor management. And kicks many of Luke's published excuses into the long grass.

The second and possibly more revealing point, is to do with the pre pack. Massie has always claimed he didnt plan any of this. According to the administrators, Massie made an immediate offer to them to purchase the assets of the company for £30k. Now the company had been advertised as being for sale but Massie's offer was the only one. This £30k was pushed up to £40k on negotiation. Then out of the blue the largest investor in Thevibe, put in an offer for £150k. Does that strike you as odd? £30k to £150k is not a normal auction jump. Then to add to this oddity, Massie immediately (2 days) put in another offer for £160k. This was from a guy who has claimed continuously that he had no money - which is why he couldnt invest in Thevibe. Out of the blue he shook the money tree and £160k fell into his pocket. So having tried to buy it for £30k, he ended up spending £160k.

£160k would have been enough to clear the old company's immediate debts and problems with HMRC but Massie has always claimed he tried to raise this but failed. Hmmmm. There is TRYING and there is trying. 

Massie has also always claimed that he would be able to pay of creditors with the sale proceeds. Well that will not happen. Estimates are currently that trade creditors will see 78p - imagine what they would have seen if Massie had got away with his £30k offer - zero. Thank goodness someone had the sense to offer a sum that would clear most of the debts - and it wasnt Massie. Muck like his assertion that all Crowdcube shareholders have been satisfied, its another hollow one. 

Thursday, 21 June 2018

Anyone for a Brew - Crowdcube success fails to file accounts and open new outlets

The Tea Brew Pub took £180k off Crowdcube members back in 2015. The promise was to have 10 units open in four years and then franchise. The pot is looking pretty empty.

Holland, the founder, cant even manage to get a simple set of small company accounts together for the filing which was due in March of this year. That is really totally unacceptable and unprofessional. It is indicative of sort of trash Crowdcube promote - daily. 

Failing to open any units bar its first, is not great news for investors after 3 years but it's not the end of the world if there are good reasons. Failing to carry out your duties as a founding director of the company is simply unforgivable when you have taken people's money.   

Yet another Crowdcube moment. 

Some real, unspun figures for Vibe investors.

It now looks as though Luke Massie's new Vibe is being valued at well under £5m. On Crowdcube 2 years ago it was valued at £6m but investors who put in £600,000 in 2016 are going to get lucky, as Luke gifts them free shares in the new Vibe. HMRC who were owed £57,000 by the now defunct old Vibe and are the main reason it was put into administration by Massie, are waiting to hear if they will get anything. 

Vela Technologies plc, a previous investor, has announced a £200k investment in the new Vibe Group Holdings in exchange for a 4% holding - valuing VHGL at around £5m. VGHL owns 97% of the new Vibe Tickets and various other Massie businesses. The other 3% is earmarked for the old Crowdcube investors under a pledge made by Massie to this blog.

The £200k is part of a £700k round to launch the newco Vibe Tickets after Massie bought the old Co which he put into administration. We have now news on where the other £500k is coming from but the Vela investment is unconditional. Vela itself is not riding high on AIM and the mess with Vibe has certainly got some interesting comments from investors.

The numbers are difficult to be sure of, but it looks as though that 3% of Vibe Tickets will be worth considerably less than the £600,000 investors put in 2 years ago. 3% of £5m is only £150,000. Massie has chosen to give them 3% of Vibe Tickets not 3% of VHGL. As VGHL is worth £5m and most of that comes from its 97% holding in Vibe Tickets, we can assume that the latter is worth less than £5m. So claims that all his Crowdcube investors, who bought 10% of the old co for £600k in 2016, will get like for like shares in the newco do not stack up. But that is no surprise.

In a series of deals which he definitely did not arrange in advance, he has done rather well when his loyal investors have not. Pure luck. On the flip side, he is under no legal obligation to gift 3% of the new Vibe's shares, so one could see this as an act of the benevolent dictator or entrepreneur.

In all of this, it has always struck me as odd that Massie claims the whole problem was caused by Matt Ewing, the boss of Elite Telecom, who had invested £600k prior to the CC round, having too much control due to a SH Agreement which the young Massie had failed to understand. He goes and on and on about how this tied his hands and he couldnt operate the company - which is poppycock. All it did was prevent him from raising new cash without consultation. We know the real reason he put it into administration now that the first report has been filed - very poor management. But where in all of Massie's arguments are Vela Technologies - who were also a substantial investor in Vibe, putting on £400k, under the same SH Agreement. Vela is run by an ex stockbroker - so if he cant read and understand a simple SH Agreement, what hope have Crowdcube investors? Or indeed Luke Massie.

Meanwhile Vibe Tickets as a business seems to be viable so long as Luke remembers this time to pay the company's dues to PAYE and NI. His judgements are still highly questionable and his reasons given for the collapse of the old Vibe do not stand up to scrutiny. 

Tuesday, 19 June 2018

Will Energie be ready for its projected IPO this year?

Energie raised £600k on Crowdcube in 2016 at a valuation of £15m. According to the pitch, one aim was to IPO in 2018 with an EBITDA of £2.9m 

Their ultimate stated goal is to have over 1m club members and nearly 600 fitness clubs by 2023. The accounts show the membership numbers rose by 8% in the financial year from 104k to 113k. So a way to go. 

These accounts are not a lot of use - the company made a small loss on what appears to be a zero net revenue but its hard to tell. 

Anyway we will keep both eyes and ears open for the impending IPO announcement. Values mentioned in the Crowdcube pitch state that the management are looking for an annualised run rate EBITDA in 2018 of £4.6 million which would give the company a £46m valuation based on a multiple of 10. I dont think annualised used here is a fitness term. 

Well blow me down with a feather - that was an easy 3X ROI, eh. 

Videogram Worldwide is latest Crowdcube failure

Videogram Worldwide took £55,000 of Crowdcube investors in 2014. Later that year it took another £50k of investors on a platform called Crowd for Angels. Now it has filed for dissolution. 

Oddly the Crowdcube round has been taken down but its still mentioned on the C for A site. 

Accounts for YE August 17 show zero cash but a small profit, although we suspect this is mistake as the share cap account has reduced by a similar amount. They have refiled accounts before. We wrote about their joke accounts and their ridiculous pitch here many years ago. 

Really no idea what happened here. The only fact seems to be that this was never a business worth investing my socks in, let alone £1. 

Yet another Crowdcube moment. Happy losses. 

Mr Gripit knows a good deal when he sees one. Is Crowdcube just for suckers?

It's probably a good idea to strike whilst the iron is still hot - a good idea for whom though? Jordan Daykin is back on Crowdcube with a newco - whilst his Gripit Fixings fall off the wall.

Daykin certainly knows how to milk a run. His newco, VPS, which he bought for £5m is now overfunding on Crowdcube. There wasnt much made of Gripit in the pitch. Gripit has raised £4.1m in two rounds on the platform. Lastest accounts for YE Dec17 show losses of £1.8m for the company - a nine times increase on the latest projections. The figures suggest something odd - read on.

Should shareholders worry that he has now turned his energy and attention to being CEO of VPS - a totally unrelated business, in a totally different industry? Well time will tell. Gripit is due to deliver a profit of over £3m this year. Clearly it must be on track or he wouldnt go wondering off.

Debs Meaden is a SH in Gripit - via that wonderful comedy series Dragons Den. What does she think? No comment.

The accounts were moved, so this loss of £1.8m is for 17 months. Interestingly the first 5 months of this were included in the Crowdcube pitch as 'historic' data. However if you add the losses for 'previous 12 months' and the year Jan to Dec 2017, you get a projected loss of only £1m in total. Now it is impossible to know if the discrepancy (£800,000) occurred before the CC raise dated 03/17 or in the period after that to 12/17.

In the light of recent events with the platform and the fact that accounting dates were moved in June 2017, you might be highly suspicious that old tricks are being played here.

It is certainly more grist to the mill when considering Crowdcube's FCA licence.

Sunday, 17 June 2018

One we missed. Rateragent closes down after some very odd Crowdcube numbers induced investment.

This is the Crowdcube model in action. Rateragent made several claims and produced some very interesting numbers in their 2015 Crowdcube pitch. It managed to raise £134k from 133 people who really should be ashamed of themselves.  

The company then filed one set of accounts for 2015 and has filed nout since - being closed by compulsory strike off in December 2017. Con? Well you judge. Revenues went from £170k to £2.6m in 2 years - well of course they didnt but that is what Crowdcube agreed to print so they could claim their commission. We will never know if there were any revenues  - losses for 2015 were more than double the Crowdcube figure. Our ridiculous accounting system means that we cant learn much from their filings. 

We called this back in 2015 - here. 133 of you didnt listen. Crowdcube made around £6k, everyone else lost the lot.

Its worth noting before you read the final paragraph that the company's strapline is -

Rateragent - Where transparency is Key. 

In a final baffling twist, Rater Agent Reviews Ltd, with the same logo, is now operating here. This company was incorporated in August 2017. Joshua Paul Rayner is the sole director and shareholder and was until a few months ago a director of One Moment Ltd - the parent of the original Rateragent and the company Crowdcube investors put their money into. Ring any bells?

Yet another Crowdcube moment and groundhog day.  

More poor results for Crowdcube funded companies keep pouring in.

Saying everything is brilliant when in fact you know its all over, is not a sensible or rational act. But is happens too often.

On the back of some alarmingly bad results for Crowdcube itself, Crowdcube announce that have they just had a record year. Well here is some more good news to add to that - 

Powervault - still in test phase and reported £1.5m loss for year when they had a loss of under half that in their projections. Time will tell.

Health-Connected - Further losses of £71,000 filed against profits of £3.6m 

Cauli Rice - as already reported way off even the altered projections. Excuses excuses.

Freetrade - Still in trials. Supposedly with revenues of £3.7m for YE Sept18.

ISO Spaces - live on Crowdcube and going nowhere. Filed loss of £250k against Crowdcube projection of £2.6m profit. Is it any wonder people dont believe them?

Witt - as reported, way off targets. 

In all, we have files on 37 companies due to report in May and June. Not one of those that have filed, have come even close to the projections used to sell the equity on Crowdcube. Not one. We have a waiting room of overdue accounts and our experience suggests most of these will go to the wall. We are not making this stuff up - it is real hardcore fact - no spin, no PRing. 

When something is so obvious, how can people still be stupid enough to swallow up more of the same. Equity Crowdfunding might work, but Crowdcube's model doesnt. It is centred on Crowdcube making commission, not on creating viable businesses. 7 years on and that is an indisputable fact.

Saturday, 16 June 2018

Crowdcube 2016/17 results are out. Revenues fell!!!...................

Crowdcube have  filed their accounts for YE September 2017. The news is not good. Revenues fell by 5% over the 12 months and the company filed yet more large losses - £4.626m. So where do they go from here?

The company managed to raise another £1m in May 2017 but this was at the same valuation as the previous public raise in September 2016. You can hear the massive wheels grinding to a halt as the bearings explode. 

The only good news we could find is that the loss for the year was lower than the previous year but when your turnover is falling  - what does it matter? Falling revenues are the result of falling funded completions - a 5% fall at this so called 'growth stage' is a disaster. We didnt expect to see that sort of collapse.

In a good piece in the Sunday Times, Luke Lang of Crowdcube is reported to have said that the year was record breaking one for the company with £90m invested via the platform. So £90m produced £3.8m revenue. That's an average commission of just over 4%. But we know their standard rate for SMEs is 7.5%. So smaller companies are paying for the larger ones? We had heard a rumour that Revolut used Crowdcube for free - maybe we can see that might be true from these numbers.

At that rate the company needs to be completing well over £180m in funding just to cover its costs of £7.5m. That simply is not going to happen using their model. This all comes at a time when recent disasters like Sugru and Thevibe are putting Luke et al into the limelight for all the wrong reasons. More disasters are in the wings - see next post.

Someone asked if the ECF sector was seeing a fall in activity. Well we are not sure but Syndicate Room reported a doubling in their deal flow, which suggests if you have a decent model and are honest, you can still make good things happen. 

This is what Crowdcube said about its progress in a recent shareholder update - 

This has led to an exceptional year where we’ve significantly increased the volume and speed of launching pitches, which has positively impacted other key metrics. 

Is it just me or is that statement totally at odds with their filed accounts? The referral to the exceptional year must mean exceptionally poor? Increased volumes must mean that they have for some reason been forced to reduce their commission rate? 

In this report they also state that the 2017 revenues will be £4m - the largest revenues since they started. This is clearly either misleading or wrong. We dont know what the figure could be if this refers to the calendar year 2017, but we do know the accounting year to September 2017 saw revenues of £3.776m. In a update to your own SHs, you would think the date reference would be the accounting year. Why would a finance company use the calendar year unless to mislead?

It doesnt even bear thinking about the original Crowdcube pitch projections for itself - the numbers are so crazy out of kilter we cant bring ourselves to print them here. 

The fall in losses is a direct result of a reduction in costs of £850,000 - that must mean Darren and Luke have forgone their bonuses.

Upbeat references to increased deal flow - ie more pitches than ever before, ignores the essential point we keep on making. Pushing out lousy businesses with fantasy plans and numbers, will not lead to success. Increasing numbers of failures, with many having more than interesting stories attached to them, are a direct result of pushing through over valued, poorly managed companies for the sack of their own revenue. Now even that is falling. Why - well to the state the bleeding obvious, investors are wising up. 

There is talk of a new funding round in 2018 - there is just enough cash to carry the company through to September without one. Given these results it will be interesting to see where they go for money. The profit and loss account is at minus £17m and counting. Meanwhile all indicators are heading south. It's not a ship I would want to be on.

Of course non of this will get into the ECF fake news press and probably wont make a dent in the national newspapers. If you are an investor, we'd like to hear your take on the way these numbers stack up and the way Crowdcube have managed their release. Get in touch via email as we need to be able to verify you are a SH. All off the record and anon. info@ecfsolutions.co.uk Thanks.

Friday, 15 June 2018

Farmdrop could be Crowdcube's watershed?

Farmdrop raised another £10m recently. They appeared on Crowdcube at the start of their journey and raised £750k. Now the valuation is five times higher. What's not to like?

Well for one thing they dont seem to be able to make up their mind what they are. Since the Crowdcube round, where they were hub based and pick up orientated, they now deliver. Using electric vans for the last few yards. A completely different business really - more of a dig it up and move it than a pivot. It has certainly delayed their progress.

In the Crowdcube pitch they stated that in 2017 they would have revenues of £70m. So as we all know, these are projections and cant be taken as fact. But you would hope they would be on the same planet as the real figures - wouldnt you? Otherwise, what is the point?

In their latest PR - https://techcrunch.com/2018/06/14/farmdrop-picks-up-10m-series-b/  - they state that they are on target for £10m annualised revenue for 2018. This is a claim made with some considerable pride - one we should be applauding. Well guys when you compare that with your sales pitch for selling £750k of equity in your business, it looks well past its sell by date. 

Best we can say is; long way to go. I personally never believed that the UK shopper gives enough of a to take part in the Farmdrop revolution and if they did they would be already be out there supporting farmers markets. People's main anxiety these days is having it now, with as little effort as possible and as cheaply as possible. A very small percentage of us care enough to bother with this. The delivery is incredibly expensive to manage - much like the Deliveroo model - and profits will be elusive. It really doesnt have a USP and barriers to entry for existing food suppliers/delivery co's are low - if the model was ever going to be a success.

Then of course you have to consider the dark clouds of Brexit - which were not even on the horizon when 351 piled money into this via Crowdcube. Small farmers - the core of Farmdrop's supply chain - will be hardest hit and will likely go to wall in numbers in the first 5 years of the chaos we have brought down on ourselves.  

Might well be wrong but the numbers suggest not for now. 

Tuesday, 12 June 2018

Now we know - Thevibe or Vibe Tickets went bust because Luke Massie, the founder, failed to pay HMRC and owed them £57,000 on going into administration

The more we get to know about Thevibe's demise and resurrection as Vibe Tickets, the less we like it.

Not all the information is out - yet. But the initial filing shows Luke Massie's company owed HMRC PAYE and NI £57k. For a small business that suggests some seriously poor management. All his excuses turn to dust as we find out the real reason he called in the administrators. Debts to HMRC, once out of control, do tend to have this effect. 

We note that the total deficit is only £87k so the 'sale' of the company back to Luke Massie should leave that cleared up. We will have to wait and see. We will also wait to see if his promise of free shares in his new venture (well the old one rewrapped) Vibe Tickets, for all Crowdcube SHs, comes to pass. 

If I was an investor, which I wouldnt be as his ability to run anything is highly questionable, then I wouldnt want shares in this company, I'd just want rid of him.

Luke's PR keeps on purring as he gets Steve Bartlett - the wonderkid of SM - to interview him about how the poor lad has been hard done by in the press. FFS get a life. The interview is over a hour long and riddled with inconsistencies, lies and half truths. Bartlett should be ashamed of himself peddling this type of nonsense, when he removes comments and refuses to respond to Qs about why he has ignored the facts. Mind you, Bartlett says he thinks one of the most valuable lessons an entrepreneur can have is cold calling selling double glazing - essentially nuisance calling which is or should be illegal. The guy is a flake. Maybe one day Steve you will join the grownups and make some money but from looking at your accounts it wont be anytime soon. 

Monday, 11 June 2018

Stakis Daycare Nurseries - never opened and is now dissolved.

For all the use Stakis was  - it may as well have been a plant shop. Evros Stakis, the founder and son of the late Stakis empire builder Sir Reo Stakis, took £101,000 off Crowdcube investors in 2013 and spent it - but he never opened a single nursery.

This story is nothing unusual on Crowdcube - made up business with fictional plans and then a 3 year delay whilst it slowly dies. We will never know what happened to the money or indeed the idea if there ever was one. The plan was to open 80 nurseries. His other company Stirling UK Ltd has also closed.

This is what Evros said about the company's exit plans on the Crowdcube, FCA regulated, platform -

The Exit Strategy

In terms of exit, Investors should be encouraged to take a 3-year view given the Seed EIS cover, which they would forfeit if they exited within that period. Having said that, once it has built a story and track record, the Company intends to list within the next twelve months on the London-facing Danish exchange, GXG Markets. That, of course, does not preclude a trade sale in the interim to a recognised player in the childcare sector.

Yet another one to cross off my list.

Wednesday, 6 June 2018

Witt Energy top the Crowdcube pile of May disappointments

Witt raised £2.4m on Crowdcube in 2016. Their projections, used to encourage this investment, which was over 3 times their target, are now in pieces. Other companies also followed the trend in the month of May. 

Witt is a serious company creating a very serious renewable energy facility. Why then, you have to ask, are their financial projections on Crowdcube a total joke? There can only be one answer, the same one we have been giving for 3 years here - it's to get investors hands deep into and out of pockets.

There is one very consistent feature with all Crowdcube pitches. They dont just miss projections - they totally blitz them on the low side. When something is so bleedingly obviously wrong, why is it it cannot be corrected?

Witt had forecast profits for the YE August17 of £394k. They made losses of £470k. Whats more, this year, they have projected profits of £4.08m. How's that going Witt? And as we are on the topic, the one we never get off, how is this fair and not misleading?

Witt declared a £200k loan in the Crowdcube pitch, which was due for repayment in November 2018. This loan was in fact repaid in April this year in full. Obviously as the company raised an extra £1.65m on Crowdcube, they have cash. But it does seem a little odd to be giving £200k back 8 months early, when the company will need more cash soon. 

Other members of Crowdcube's over subscribed Disappointment Club for May are - 

Pallet Eater
Tidy Books Europe.

Plenty waiting in the wings for June and plenty late filing. 

Brewdog relaunches its US fundraising

Just when you thought it was safe to go out.......... Brewdog launch another $10m punk equity round in the USA.

Each one of the 800,000 new shares in the US subsidiary, is going for $50.  As you can see from the comments we didnt do a very job guessing the valuation. Its a lot. The now rather tattered fat cats were once again thrown from a helicopter over the City. I do hope the reaction to the funding is more imaginative.

The one crucial issue with BD is cash - they have stuck themselves a very long way out there - sort of a Napoleonic advance on steroids. There can be no retreat if the cash runs dry.

Should be fun to watch.

Phew - At long last Little Brew is shut down by the Government.

Little Brew raised £110k back in 2013 on Crowdcube. Its last filed accounts were for YE Sept 2014. So you can imagine it will come as some relief to Crowdcube investors that they can at last claim their loss relief 3 years late. 

Its a typical Crowdcube story. Great enthusiast Stuart Small, liked beer. He saw all these other beer enthusiasts raising money on Crowdcube and eureka, he invented Little Brew. He had no experience in brewing or business but then in 2013 on Crowdcube you couldnt get through half a pint before you had been given £100k. Of course all of this was and still is, orchestrated by the promotion of magic bean like profits and ROI. 

The fact that the company has been trying to close down for 4 years is something of an oddity. Is that a record? Eventually HMRC have stepped in and closed it will be on 18 June 2018. 

Thank god that's over. 

Tuesday, 5 June 2018

Here we go the round the ............... Bidstack reversed in to Kin Group.

So Bidstack. Founded by the same guy, James Draper, who was Head of Commercial at Shopwave (according to Crowdcube). Both used Crowdcube. Bidstack was valued on Crowdcube in 2015 at £1.1m. 

Bidstack has now been reversed into Kin Group - a shell co listed on AIM. It has been termed a reverse takeover. Kin had to take over someone by August this year or lose their AIM listing. The deal is still not completed.

It appears from said deal, that Kin are paying £400k for the entire share capital of Bidstack by way of investing this sum in the company. We are not sure what sort of accounts Bidstack have but from previous filings it doesnt look too pretty. Bidstack have been playing ping pong with their accounting dates since their Crowdcube raise. 

The other company Draper used to work at, Shopwave, had projected net profits on Crowdcube of £1.6m for 2016 but only managed to bring in losses of £50k. Silly old projections. 

Crowdcube investors, there are only 66 of them, will receive shares in Kin Group. Their shares are currently suspended.

This story reminds me of a few other recent events involving Crowdcube investors and steam rollers. I suppose it is that time of the year when the country fair lunatics are out and about and the ale is flowing. 

Be careful out there.

Monday, 4 June 2018

Cauli Rice aka Fullgreen are looking for money again - this time their numbers really dont add up!

As an investor, I am interested in how well company management deal with important issues. There isn't anything much more important for a growing company than raising capital. So why would you send out an email about a new round with a massive typo?

Ok, so I know this blog is littered with typos, but Im not asking for your money, yet. 

In its latest announcement to SHs, Fullgreen tells them that its 2018 expected revenues will see an increase of 869% on 2017. That is certainly a eye catching number and if true Id be putting some money in. But unfortunately it's not - the real increase is a somewhat sad 86.9%. Talk about handling expectations. 

What must be alarming for SHs is that the company raised £1.47m on Crowdcube (for the umpteenth time) at the start of 2018 and now they are back for more. As usual with Fullgreen, it's what they dont tell you that carries importance, rather than what they do. 

Ignoring the unbelievable gaff on the percentage increase, the sales for the UK for 2018 have already been reduced from £2.6m to £1.8m - that's since the last Crowdcube pitch in February 2018. This reduction is made up for (or most of it is) by projecting heavier future sales in the USA. Whilst they have achieved excellent distribution there and are looking to do the same in Australia, these projected sales are not certain. They are not numbers based on pull through. 

What happens if, like in the UK, sales flop? If you read reviews of their products, they get a large number of yuks. Far too many in our opinion. Is that why sales in the UK have been slashed by £800k or 30% in the last 3 months? Initial listings were excellent here but pull through sales have slowed (the yuk factor?) and now numbers for overall UK sales have been cut. That pattern has to be worrying. We have said many times on here and many many times about Fullgreen: initial listings are not the crucial thing - pull through sales are.

In the last Crowdcube pitch, they explained away a fall in turnover of 50% from the previous projections, as being down to a major listing being delayed. As they dont mention the large fall of UK sales in this latest email, they dont have to explain it either.  

This new raise is at the same value as the one earlier this year - so is essentially a down round if you take into account the £1.47m that went in in February. 

Another problem we have is that the last round, just 3 months ago, was to raise £400k and they achieved £1.4m - so that's more than 3 times the 'required funding' they talked about. Has turnover risen by 3 fold? No. Do they expect it to? No. So why have they run out this £1.4m when it's so much more than they told investors they required to do the same numbers? I think they are just not good with figures. Their reasons are that growth has outstripped the funding they have. Enough said.

Finally we couldnt help notice that in the Crowdcube IM for last February, Fullgreen wrote the following for investors information -

'We expect UK sales to continue to grow at a healthy year on year growth of 50% due to continued introduciton of new flavours and new product formats.'

So not only have they reduced the UK sales for 2018 by 30% (£800k), only 4 months ago they were confident that these sales would see increases of 50%. I think even they might have a problem explaining that. You also have to factor in the dramatic fall in the GDP for the product about ot be manufactured in the US  - a fall from 41% for UK sales to 29% for US sales. Meaning that for every sale lost in the UK, US sales have to increase by around 1.5 times just to stand still. 

In case you are wondering, the bronze geezer is the earliest example I could find of cauliflower ear. And why not.

Matt Newing casts new light on the TheVibe and Luke Massie

We will never really know what happened with Thevibe when it went into administration and was then quickly bought out by its founder Luke Massie. But at least now we have another side of the story.

An interview with Newing, who lost £600,000 when Thevibe closed, published in Business Cloud here makes for interesting reading. 

The total loss from Thevibe is yet to be known but one thing is for sure - there are some 'facts' out there that do not quite add up. 

For example, Luke Massie had enough money to buy the company out of administration and put it into his conveniently, newly formed Vibe Tickets Ltd, but he didnt have enough to rescue Thevibe. Yet the two amounts seem to us to be almost the same; especially as Newing had pledged another £75k. Newing claims all the talk about Massie being backed into a corner by legals is just a red herring. We have already said we think this too. Yet two of the three main backers of Massie, in fact all but Newing, have decided to fund him again. So how does that square?

Recent press does Massie few favours when it comes to taking him seriously

Massie says he has moved on. Which is fine so long as he hasnt forgotten his promise. 

Whatever the truth, Massie has now stated through this blog that he will give all Crowdcube investors shares foc, in Vibe Tickets, equivalent to the £600,000 worth of shares they held in Thevibe. Now this hasnt happened yet but he had better follow through on it if he wants to maintain any credibility, anywhere.

Sunday, 3 June 2018

Did the sale of i-Comply to Veracity UK Ltd give Crowdcube investors any return?

Around a year ago, i-Comply which had raised £50k on Crowdcube in 2012, was 'bought' by Veracity UK. Almost immediately it has started to make profits. But what did the 46 Crowdcube investors see?

We really have no idea. Nor do Crowdcube. Their web page for i-Comply doesnt even mention the sale. It would appear no one has informed them. Clearly if there had been even the slightest positive news for the 46 Crowdcube investors, the platform, never shy of creating a good story, would have plastered it wall to wall for all to lap up. 

Oh well at least the invention is now safe. Isnt that what they said about Sugru? Looks like the Crowdcube crowd are really just do gooders who love to see a great idea succeed but dont care if it benefits them. Hats off for that. 

Will Emoov's amalgamation solve anything?

We'd say the merger of Emoov, Tepilo and Urban is a positive move. But as the Irishman said when asked the way,  where are you coming from?

All three of these online estate agents have one thing in common, they burn large amounts of capital to make increasing losses.

The last year of filed accounts shows an accumulated loss of around £8m. So maybe there will be economies of scale with one administration cost instead of three? Will this scaling up of the brand (whatever the new one is) have an impact on the Purple Bricks market leadership? Probably not. 

Amusingly, according to the ex Dragon James Caan, who is a major backer of Emoov, this was not a merger. His story is that it was a takeover by Emoov of the other two. If this is true and no one but Caan is claiming it is, then that could be good news for 765 investors who put £2.62m into the company via Crowdcube in 2015.

The 2015 Crowdcube pitch had the usual grotesquely inflated projections and showed the company making losses for YE April 2017 of ~£1.6m, when in fact the loss was £3.1m. But who cares, eh? According to Crowdcube the event was a merger.

Now the 765 have a smaller share in larger pie. Lets hope that it doesnt fall to bits when its cooked.