Thursday, 26 July 2018

Two very different approaches to failure from Syndicate Room and Crowdcube.



Equity Crowdfunding needs a more holistic approach and Syndicate Room shows how this can be done. Crowdcube - time to wake up.


We received an email a couple of days ago from the Founder of SR - Goncalo. He said in it that one of the companies funded via the platform, Opun, had been sold to John Lewis but that this meant a loss for shareholders. The common cause was a lack of cash and inability to raise more. We are not commenting here on the way the company was run or the debts it built up. 

The email ends 'Personally, I’d love it if we could all be open about the realities of startup investing. It’s essential for the survival of this industry.' We would agree.

This email was sent out to all SR clients not just Opun's investors. It shows a real attempt to clean up what is fast becoming a swamp. King of the Swamp is without doubt Crowdcube.

When Crowdcube businesses go bust or are sold at a value less than investors had paid, Crowdcube are generally nowhere to be seen. A PR is issued and quietly slipped under a few doors, stating that these kind of investments are high risk and it's not their fault. Investors receive no communication. Crowdcube offer no help. You are on your own, sucker.

Which way do you prefer?      

Wednesday, 25 July 2018

How to turn hope to despair in three weeks with Seedrs and Oppo Ice cream



Oppo Ice Cream is a success - isn't it? A shareholder update dated 9th July said it was. Now a new shareholder update, 14 days later, says things are not quite so great. And it adds, we'd like to buy back some of your shares. Which is an interesting proposition. 


We wrote about Oppo recently as they had called for shareholders to flock to Asda online and post 5 star product reviews. Lots of you thought that was fine. We didnt.

Now having told shareholders just 2 weeks ago that all was great - ''Oppo has driven more sales in the last three months than the last year combined. We're growing!'' -  in a new update they want to go for more funding - as things are not great - 'Therefore to stay afloat we will have to complete another raise'. In order to prevent more dilution to the two founders, they are willing to buy back Seedrs investors shares. They dont say how many. So are they sitting on an offer where they can buy back shares at X of Seedrs investors and then bring in cash at Xplus 50% thereby recouping value? Just an idea. Cynical of me, I know. 

Casting the buy back aside it seems truly incredible that a shareholder update can be so misleading. But then you have to remember that the company thinks it's ok to post shareholder reviews on a UK supermarket site just to up their overall rating level. 

We thought Oppo looked good. But you really cant tell your shareholders two different versions of reality within 14 days. 

What do Seedrs feel about all of this? Maybe they could let readers know as they run a system where they are supposed to be much more involved with shareholder relations than the defunct Crowdcube help yourself model. But maybe that is just for show??

Tuesday, 24 July 2018

Another Crowdcube success, Hiroes, fails within 18 months having done nothing


Hiroes was never investible and yet Crowdcube investors invested. Now 18 months later they have lost all £150k. It remains to be seen what creditors have lost. When we asked the founder; he wouldnt respond. So assume a lot. 


Who is to blame?

Crowdcube for punting such trash. Incubus London for supporting and validating such utter tripe. Never believe what you see on the side of a bus - surely people know that by now. 

We did get a sort of explanation from one of the founders but to be honest it was so pathetic it's not worth printing, let alone reading.  The other founder is now helping the French SME sector - phew. For the record neither foiunder think they have done anyhting wrong - they are Rahael Shamama - now working for some French consultancy in the SME M&A sector called Effective Capital - which is fitting. They must have very low standards over there. And some girl who now works for Deliveroo. Neither lost much of their own money and neither really care that investors lost it all. 

When will it end?

When Crowdcube go bust. 

Note to Beauhurst - this company has failed but like a lot of Crowdcube funded companies it is still 'active' at CH. Do your research boys and stop peddling junk. 

Monday, 23 July 2018

Gamesgrabr AKA Teepeegames reports more losses and reduced value to almost zero



Teepeegames said they were about the sell the company and that progress was good back in February 18. Well accounts show a loss of over £100k and a value of around £3k left in the thing. They were due to make £2.57m of lovely profit this last year. 


This was the last comms received by shareholders -

At this stage we have reached the decision to look for a buyer for TeePee games to take the platforms forward.
We want to make all our investors a return on their investment but at this present moment we do not have a deadline in place for the sale, so we are unable to provide investors with further information on valuation at this time. However, please be assured investors will be kept up to date on the development of the sale of TeePee Games.


Radio silence has descended. It's odd that all the value in their various platforms is not reflected in any way in their accounts. Maybe the deal is so enormous that they have to keep it under wraps.

Another Crowdcube hit. They just keep coming for you lucky guys.

Cornerstone - a close shave or a butchers mess. £3.5m loss makes you wonder.



Cornerstone is a Crowdcube blue chipper. It took £876k off punters in 2015. Projections showed a profit for YE Dec17 of over £600k. It has just filed losses for that year of £3.5m (£2.4m 2016).

Now of course that doesnt matter - the company raised another £3.5m last year in a round led by Calculus Capital. Its a dead cert. Dead anyway. It's another Crowdcube company that can boast Will Hobhouse as one of its backers. What do you make of these conflicting messages? Exactly. 

Expect more funding calls (dilution) before the six o'clock shadow. They have a plan, it's just not the one Crowdcube published.


As The British journal of Photography files accounts, another Crowdcube company fails to deliver



1854 Ltd raised £400,000 on Crowdcube back in 2016. YE Dec17 was to see profits of  £210,000. Filed accounts show mounting losses, with the loss for the year at £113,000.


And so it goes on and on and on......................................

Sunday, 22 July 2018

Enclothed sold to The Chapar (?) and shareholders left in the dark. Another Crowdcube facilitated mess.


Enclothed raised £400k on Crowdcube and then failed in another raise on Seedrs - after we had pointed out some very odd goings on, on here. Now they have been taken over by another Crowdcube funded company, The Chapar. Enclothed shareholders have been told nothing. 

UPDATE 23 July 18 - A 100% reliable source tells us the following - Enclothed is in administration and will be liquidated with no money going to shareholders. Substantial secured and unsecured creditors will also lose out - numbers being worked on. The deal with The Chapar is not concluded and is now in doubt. From our perspective, these two girlies were cluelss rich kids, playing at being entrepreneurs. Which is fine with their own cash. But the gate keepers here ie Crowdcube - let them loose on the public and the result was inevitable. Crowdcube yet again to blame. Time for change. CH filings are not working - the only clue to this administration is the change of address.


In what is becoming a routine outcome for Crowdcube investors, they are the last to know what has happened to their investment. We wrote about Enclothed here when they attempted to raise more cash on Seedrs.

This deal may yet be a good one for investors in Enclothed. The company is still active according to CH. There is little evidence of the sale apart from what we hear and this article which has little detail


The company's SM and website are down. 

The Chapar has large backers, including the once successful Will Hobhouse of Whittard fame. Mind you the outcome there wasnt great. 

Any news please get in touch.


Saturday, 21 July 2018

Am I just a bitter old man who was rejected by Crowdcube back in 2012?



Recent comments we have published on the blog from anons, show that some people believe the story put about by Crowdcube, that the whole thing is the result of Crowdcube refusing to give me a job in 2012. Its time to find out if that is true.


Im certainly old - well almost 60 which back in 1982 when my career started, seemed ancient. Bitter, well maybe but I put that down to a healthy dose of good British cynicism. It can often be mistaken for bitterness in this world where if you can get away with it, it is ok. 

My working background has been and still is in SME start ups. So when Crowdcube launched in 2011, I was there, eager to find out more. If I had had access to capital like this in the 1980s and 90s, it would have been an enormous help. 

I joined the then small number of early adopters on CC. I invested in a small company, met other investors and thought to myself that this was a very worthwhile new sector. Then, through carrying out my own DD on the pitches on the platform and talking with other investors, I discovered what we all now know - Crowdcube is a sham. It uses fake information to promote investments - claiming whenever it is caught that it doesnt check. In 2012/13/14 I was rubbed off the platform numerous times for pointing these 'facts' out. They didnt like the truth. Im still banned from their Twitter and FB pages.

My first reaction to this in 2012 was one of  - ' Well these guys have had a great idea but their lack of experience is showing  - so maybe I can help.' I suggested to them that I run a remote DD service - free of charge - from my home in Scotland. Their response  - 'We know what we are doing and do not need any meddling from the likes of you'. This later became ''Rob Murray Brown asked us for job and we turned him down - that's why he writes the blog''.

If you just take a moment to think about it, in 2012, we had two children well settled at private schools in Scotland, we had a lovely house we were slowly renovating and I had access to the best golf courses in the world. Would I really be applying for a job in Exeter - 12 hours away - to work for a bunch of 20 somethings in a brand new and as yet unproven sector? 

The blog came about simply because I couldnt be bothered making up new names to join CC just to be rubbed off again. The blog reports the facts - just the facts. The way I write is just the way I think. ECF needs to be purged of the likes of Crowdcube, so it can really flourish to benefit companies, investors and lastly the platforms. Crowdcube's model benefits Crowdcube first, then minor criminals and ignorant so called entrepreneurs. It has had no real benefit for investors or companies if you take the results to date in the round Our records, 90% unpublished, show a massive collection of zombie companies, who only managed to get investors cash by lying about their potential on Crowdcube.

I genuinely care about this. When you run a few decent businesses from start up and have been permanently short of capital, with all your personal assets tied in, you understand the importance ECF could have for growing genuine SMEs in the UK. You can also see the charlatans. In my opinion the two greatest charlatans are Luke Lang and Darren Westlake. 

Friday, 20 July 2018

Crowdcube success Idleman shuts up shop.



Idleman closes its Leather Lane store - now to reopen as an Italian Street Food outlet. Whats next for the Crowdcube funded company?


Thanks to a reader for this update. Their website also has a very large sale on. 



Why the sale of Cake to AMEX has been played down by Crowdcube.



With Crowdcube's PR you would expect the sale of one of their funded companies to American Express in late 2017, to be headline news. Well as Crowdcube shareholders lost money on the deal, of course they have swept it into their large bin of failures.


We brought this story to you last year - here. But more details have now emerged. The buyer was American Express.

Cake got itself into financial difficulty and had no choice but to close or accept the AMEX deal, which valued the company at around £9m. Crowdcube investors had accepted a valuation of £11m when put in £1m in 2015. Large debts meant that most of the sale proceeds went west. Sugru style. 

We think that if Crowdcube had an ounce of honesty they would put both of these two companies up as examples of exits that left their investors out of pocket. After all they claim to be open and honest.

And Beauhurst where does this one appear in your infographics  - exit? dead? zombie?

And of course we shouldnt forget that this is another UK gov subsidised deal that has left the good bits drift overseas for a snitch of the real value - cf Sugru.  




Berrywhite liquidated. Not a pretty sight for 172 Crowdcube investors.



Well it has been coming. A failed second or maybe third attempt to raise more cash on Crowdcube has resulted in Berrywhite being turned into mush. They took £291k off 172 punters on Crowdcube in 2014.


As is now a common, we had warned investors on this one. Here.

The liquidation is in progress (may take a while) but from the initial report the company has left around £54k of trade creditors dead in the water. The S of A gives no value to Crowdcube investors and Crowdcube have made no mention of the liquidation on their Berrywhite page. Both have become standard ways of limiting the damaging PR. 

We report the facts. You decide what to do with them. Never Never goin'to give you up!

Another Crowdcube funded company - Wisdom of Crowds - says Goodbye nicely - Suckers!



Wisdom of Crowds raised £400k on Crowdcube at the end of 2015. Now just two years later the fun is over for their event organising outfit, The Crowd.


We cant find anything else that they do, so is that it? The message they have left on their twitter page will not please investors. Talk of how much fun it has been and how well they have done with other people'e money is crass. It's an insult.

As we keep on saying, this is another example of a business that was not investable, was certainly not scalable and looks very much to us like it was a bit of fun for bunch of friends. That's fine but if that's the intention, dont take money off the public for your entertainment. And dont rub salt hard into the wounds by pretending it was anything other than an expensive, loss making, flop. 

Shambles rules. Oh ok. 

We would love to know where this company sits in the Beauhurst ECF analysis graphics? Growth would be our guess!

Thursday, 19 July 2018

New June and July Crowdcube results. Plus ca change.



More results for companies that have used Crowdcube to obtain funding, yet again illustrate that the methods being used provide very poor results.

When 95% of something continuously indicates that the something is not working, surely it is time for a change? Well apparently not, as Crowdcube continue to operate their flawed model; propped up as it is by fake news PR which is then regurgitated verbatim by independent bodies like Beauhurst and Crowdfund Insider as fact - see earlier posts. Beauhurst have now changed their article replacing 'exit' with 'aquisition' and acknowledged our verification of the facts - shame they are not honest enough to give us a credit. They have also taken down all their 'research' into other ECF exits etc. We are happy to help but hope they dont just reprint Crowdcube PR again.  

Here are some more examples for the months of June and July - 

Crowdcube - projected £3.7m profit  Filed loss - £4.7m
Grub Club - investors lost all their money in an asset fire sale. Called an exit by Crowdcube. 
Crowdfunder - projected loss £150k. Filed loss £500k
Birdsong - projected loss £20k. Filed loss £70k
Floodkit  - projected profit £589k. Filed loss 50k
Fourex - projected profit £2.3m. Filed loss £1.4m
Good Egg  - projected profit £209k. Filed loss £70k
Health Connected - projected profit £3.6m. Filed loss £70k
Cauli Rice - projectd profit £93k. Filed loss £960k
Tempus Energy - projected profit £6.5m. Filed loss £360k
ISO Spaces - projected profit £2.6m. Filed loss £250k
Shopwave - projectd profit £2m. Filed profit £89k
Circuitree - sadly closing down due to illness of founder. We wish him well in his fight. 
Teachpitch - projected loss £53k. Filed loss £80k


This is an illustrative, not an exhaustive, list. We have not included Brewdog as they are covered in a separate article on here. The only company we can find that recently filed accounts and is ahead of projections is Hopstuff and those were new projections - their original ones were a joke. Missing targets does not mean its curtains for the company but our records show that a combination of missing targets, late filing and other failings (ie SM inactivity, lack of new stockists, poor reviews, no app etc) suggests a struggling company. Very few of these for which we have figures, get turned around. 

The following companies are late filing - 

Energie Corp 
Otti Prams
Ubrew
Albion Tea
Socapps
Faction Collective - havent filed since YE 15. French run a different accounts system.
Easy Property and E-Prop (moved date to Sept 18).
Teachy
MBJ London
Monetaflex

We are pretty sure that at some stage this particular merry go round will explode. 










Tuesday, 17 July 2018

Faction Collective have not filed accounts since 2015 - Whats UP!



Faction Collective, a French registered ski maker with a UK registered off shoot, raised £775k on Crowdcube in 2015. Prior to this, the company had filed annual accounts. Nothing since.


I know the French have a different accounts system but for accounts to be left for over 2 years seems a little odd. No new filings have been made at CH since June 2016.

Does anyone know how they are doing? Website seems live and active, brand certainly still out there. 

Saturday, 14 July 2018

Let's play What If.



So what if an FCA regulated ECF platform promoted a company and as a result the company achieved its funding target. Then sometime later, the company got itself into serious trouble and ceased trading. It turned out the founder had issues and couldnt cope. Or so it was claimed.

What if this founder was in fact not having issues of his own making? He was having issues induced by the things, illegal things, he was doing. What, if any, liability comes back onto the platform for not seeing this in the original pitch?

What if, when the company got into trouble, the platform and the founder told investors that the reason for the company's collapse was in fact nobody's fault - it was just a case of circumstances. And then what if there was irrefutable evidence that this was not the case. Would the platform be liable then for misleading investors?

As things stand today the platforms are not liable for any form of behaviour by the founders who use their sites to raise cash - even though the pitches are supposedly vetted.

Should this founder be banned from being a Company Director? Or do we allow this sort of thing just to happen and put it down to bad luck.

Im not sure but unless we start talking about these things and stop trying to hide them for the bad PR they will bring, then we will never come to a satisfactory answer.

Friday, 13 July 2018

What happened to Crowdcube success Grubklub? Another woeful tale?



Grubklub, who owned the online Grub Club app, raised £288k on Crowdcube in 2015. Their projections showed profits for YE 2017 of £2m. Accounts show losses £240k. But that is not the main story.


Update 14 July 18. A SH has been kind enough to share correspondence - which in turn shows this company up for what we believed it was - a sham. A sham that has ripped off shareholders and that Crowdcube have taken so little interest in since claiming their commission, that their own website tells people, is fine. Well it is not and will according to the remaining founder close shortly with all investors cash lost. For Vizeat it wasnt so much a takeover as a shovel and sweep job. Well done everyone. Here is the email to SH - 

Dear Shareholders,

As you know well by now, following my several newsletters on the subject, we have been endeavouring since early 2017 to find a sustainable way to continue the Grub Club business, whether by investment, strategic partnership, merger, or sale to an acquiring purchaser.

Following positive discussions with our biggest global competitor during the last few weeks of the year, I am now able to advise of Grub Club's asset sale to VizEat late on Saturday 23 December 2017.

The structure of the deal is such that the Grub Club business will effectively be absorbed into VizEat meaning, unfortunately, that there will be no return on Grub Club shares, whether for Founders or Investors alike.

On behalf of the leadership team, I would like to thank you for your contribution to making Grub Club the 'stand out' dining experience in London, resulting in:
·  100's of thousands of pounds being raised for charities, such as the Hands Up Foundation for Syria, Food Cycle and The Food Chain, to name but three out of many more;
·  Over 60,000 dining guests experiencing a completely new way to enjoy good food whilst meeting like-mindedly sociable fellow guests;
·  Dozens of underused cafe's being able to supplement their normal income through hosting evening dining events;
·  10 new permanent restaurants being established following the chef's experience with Grub Club; 
·  1 such restaurant achieving their ambition of being awarded a Michelin star of excellence.   
The sale to VizEat will allow the Grub Club team to continue shaping the London Dining Out scene and further expand into other UK cities, whilst also protecting current Grub Club suppliers and employees.

We will revert to all relevant shareholders latest by 31 March 2018 to advise on the possibility of claiming any EIS / SEIS loss relief. 

In the light of the above sale, I will be stepping down from my role as Grub Club Executive Chairman & CEO on 30 December - thank you for your support over the last 12 months of what has been a highly eventful 2017 for the business.

As the remaining Founder still active in the business, Sid will now be your main point of contact for all future business communication.

Best,

Paul

Paul Heritage
Executive Chairman & CEO

Grub Club 
"Creating Extraordinary Dining Experiences in Curious Corners" or 'Creating a bloody a mess'


And here is article by Beauhurst on Crowdcube exits - https://about.beauhurst.com/blog/grub-club-acquisition-crowdfunding-exit/ - which has now been corrected due to our data. But you would have to say that it is incredible and worrying that a company like Beauhurst can accpt a Crowdcube PR and just stick it out there as if it were true. We accept that Crowdcube are happy putting out misinformation but we wouldnt expect Beauhurst to do the same on their behalf.

The Crowdcube site shows nothing interesting has happened at Grub Club for 2 years - typically out of date. Yet the website they have puts you through to a similar business owned by a totally seperate company, Vizeat. Grub Club was 'aquired' by Vizeat - well it is now run by them. It is unlikly any money changed hands.

Having dug around a little we failed to find any legal connection between Grubklub and Vizeat. Crowdcube shareholders still appear to own shares in Grubklub, which was at YE technically insolvent, with accumulated losses of over £800k and £27k in the bank. 

We have asked Vizeat what happened but have had no reply yet. Vizeat has rebranded to Eatwith and guess what, the old founder of Grub Club, Siddarth VijayaKumar has been made the UK CEO. The other two founders have resigned. Is this good news for Crowdcube investors? Hard to say. Probably not as they do not own shares in Vizeat which now owns the Grub Club app.

In an interesting piece here Vizeat calls it an acquisition whilst Siddarth calls it a joining of forces. It cannot be both.

If any SHs in Grubklub have any interesting insights then please get in touch. It looks like another Crowdcube company that couldnt deliver and that has been picked off by a larger rival for pennies or nout - ring any bells? Success in Vizeat does not currently appear to mean success for SHs in Grubklub. 


Thursday, 12 July 2018

Brewdog - 2017 numbers are out and profits are down by 73%. Mind you, the Hatman is not worried.



Brewdog's 2017 results show a drop in profits, after tax, for the world beating brewer, of £2.2m on last year's £3.2 result. Does it matter for a company that became a paper Unicorn recently?

As always this post comes with caveats. We know that Brewdog is a phenomenally successful UK company. We only asks these questions about its recent progress so as to analyse the use of ECF on this scale.

Expansion is the probable cause and if they can keep the money flowing in as fast as it is flowing out, then no, it probably doesnt matter at this stage. Administrative expenses rose by £15m, from £20m to £35m. Meantime GP only rose by £12m with a fall of 1% on the GPM. Their favourite headline figure, EBITDA, has been given some treatment so that it appears to be increasing from £6m to £8m. However this would seem to be some accounting ruse as the non 'adjusted' figure is down by almost 40%. Of course that message is somehow lost in the mayhem of a Brewdog accounts presentation. The bottom line net profit number has not been adjusted. Other income from non controlling interests is set at just over £4m. 

The finance costs more than doubled to £1.2m  

Brewdog have been struggling a little to raise their punk equity both in the UK (still below the first target of £20m and so nowhere close to the real target of £60m) and the USA. In the US they appear to have taken down the running meter  - well we couldnt find it anymore. Their map of US investors is still bleak.

During the year, the company bought back shares to value of £705k at a price of £13.18 per share. In December 2017 the company sold B shares for £23.75 each. Not quite sure how that works? 

The company claims to have seen sales growth in the UK of 78% over the year. But the accounts show UK sales going from £58m to 89m. Not sure how that works either. 

Sales in the US were tiny at under £4m out of a total £111m. As the brewery has been in action there since July 17, this seems like a slow start.

As ever the plans are gargantuan. New breweries in Australia and the Asia are the headlines.  All in keeping with Hatman's love of Locke's advice -

IF WE DISBELIEVE EVERYTHING, BECAUSE WE CANNOT CERTAINLY KNOW ALL THINGS, WE SHALL DO MUCH WHAT AS WISELY AS HE, WHO WOULD NOT USE HIS LEGS, BUT SIT STILL AND PERISH, BECAUSE HE HAD NO WINGS TO FLY. 

With rising costs that will be difficult to cut, the ECF cash is looking more and more crucial, if his wings are not to be scorched. 

Tuesday, 10 July 2018

And here we go again Zzish are back on Crowdcube having lost £1.4m last year. Yet they have passed their target.


So  it appears you can tell Crowdcube investors whatever you like - they hand over cash anyway. Zzish raised £1.3m last year. Now they have burned this as their model didnt work. With a doubled valuation they are back and have already cracked their obviously fake target of £300k.

It is not until you read the forum on ZZish that you get the real picture. The launch in the US didnt work - the service/product wasnt right for its target market. You have to ask if they bothered to ask  schools in the US what it was they wanted, before offering them a product that wasnt a fit. £1.5m of loss later, they have an idea of what the required product is. That is someway to run a business. Is it possible to charge the enemy firing blanks - realise your mistake halfway through, regroup, reload with live ammunition and charge again with success?? We shall see.

In the pitch you would be forgiven for believing that all had gone to plan. So why do they do that? Why lie to investors? Just be honest and say ok we got it wrong but now we have got it right and we can go places. Which they can if what they say is correct. Mind you, the trust has just been shattered so maybe people will not believe them now. For sure they need far more than £300k.

One good point is that they have at least had the nous and honesty to file their accounts to YE May18. This is indeed very rare on Crowdcube - maybe a first.

As the Q shows, if they were going to do that, then there wasnt much point in trying to cover up the failure of 2017.


Daisy Green back on Crowdcube with the same old misinformation as always


Despite their best efforts to make you believe the contrary, Daisy Green are not anywhere close to their 2015 Crowdcube Bond projections. Of course they dont tell you that now.


It is the same old same old and it always gets the same reaction. Daisy Green have already burst through their fake funding target of £500k and had exceeded £1m before it went public. That looks like a huge success at a valuation of £18m.

But if you look a little closer, cracks appear. The company projected years 2015, 2016, 2017 and 2018 would all be profitable  - they were not (2018 is still unknown). So the 2015 figures given in the Crowdcube pitch were historic and showed a profit of around £40k. The company actually made a loss when these accounts were filed. This fudge is now so common on Crowdcube I suppose it is the norm - but it shouldnt be. 

Losses for year ending April 2017 were ~£500k. The company sold its bond to Crowdcube investors with a 2017 profit of £300k. Hey so what! Well the point here isnt the gap but its the complete lack of recognition that it exists.

One other trick they try and lay out in this new pitch is the mirage that they paid off this Crowdcube Bond early, out of profits. They didnt. Of course they dont claim they did but the way it's worded, as some sort of huge success - paying it off 2 years early - makes it appear like it is. In fact they had to borrow (at a better rate) to pay it off - thereby stitching up Crowdcube investors who expected another 2 years of interest. 


As always on Crowdcube, things are not what they seem. The company may go on to some success but I just hate the way this information has yet again been manipulated in order to obtain more money. Where is the integrity?

Looking over their figures they have been manipulated to make a best case and they totally ignore key numbers that would give investors a true picture of the situation. But then investors really should be looking for these numbers anyway. 

For me this has a similar ring to it as Sugru did. Asked why they are now selling equity when they repaid the bond early, the answer from Daisy is less than convincing. What if, as in the Sugru case, the bank loan Daisy has is under pressure (£500k loss last year is not what was planned). You have seen it once, well this might be a repeat. Worth asking before you throw your cash at it. 

How to get fake 5 star reviews for your product via Equity Crowdfunding


When Oppo Brothers are not asking their investors to post fake reviews on Asda, they make ice cream. I always thought this sort of nonsense went on but have never caught anyone red handed. Oppo Brothers raised £400k on Seedrs in 2016.

Here is the text of the Oppo Brothers latest shareholder communique. Since this was issued, many 5 star reviews have appeared on their product reviews at Asda. Dont think we need to say more -

Tell Asda shoppers that Oppo is awesome.

We're low on reviews in Asda and could do with a few more - every review will help accelerate sales! We need to have an average of over 4.5* to unlock more support.
It takes 30 seconds to add a quick star rating, you don't need to shop there, and one or two brief words and will help grow your investment. 
(Just don't say you're an Oppo investor 😉 )
Just click any of the flavours here, then click the reviews tab and you will get hero status:


Following comments below its obvious not everyone agrees on this. My point is that if you allow this by just saying its ok, then where do you draw the line. Oppo are asking indirectly for 5 star reviews (they say they need 4.5 plus ie 5). So for example you might not like their apple and gosseberry as much as their melon but because you are a SH you give it 5 anyway. That is a fake review. If the product was worth 5 stars then customers would give it 5 stars - that is the whole purpose of reviews. It may well be a 5 star product but you shouldnt be making it one.

Oppo Brothers are one ECF company heading in the right direction - they really do not need to be attempting to manipulate things like this. 







Monday, 9 July 2018

Halal Dinning Club makes a mockery of Equity Crowdfunding and Crowdcube



Halal took £200k off Crowdcube investors in 2016 - 30% over its target. The pitch financials were complete nonsense with no balance in the balance sheet and figures randomly picked because they looked nice. How does that pass the Crowdcube Due Diligence test?


Now SHs have received a final plea for cash, which if it wasnt so sad for all involved, would be hilarious. Not once in 5 pages of incoherent ramblings, do they mention the delivery of the numbers they projected. Instead SHs are told that the CEO was invited to No.10 recently - maybe to be our new FS. 

Year to December 17 was projected to be one in profit. They made a large loss. So to claim that they have been on target and cannot quite understand why they cant raise another £250k is puzzling. It is just pathetic that this sort of total drivel gets funded. 

The outcome is that yet another very poor business idea, run by even poorer management, that has taken advantage of people's belief that Crowdcube do some basic due diligence, will go bust. A large part of this letter is about how to claim back your loss relief. Some SHs update.

Thursday, 5 July 2018

A typical Crowdcube mess - valuations and management teams hopelessly out of their depth.



This company, unnamed for now, raised on Crowdcube 18 months ago at a valuation close to £5m. Now, having run out of cash, it's looking privately for more at a valuation of £1.8m. Sales have been harder to complete and VCs harder to persuade. Who knew that?

12 July 18 - We are now informed that this new attempt to raise cash on Crowdcube has been a flop - £3750 was raised from 9 idiots. Case closed. Company closed? We can now reveal the company is PepperHQ, which had raised over £500k on Crowdcube.

It's a right bloody mess. Any advantage the company had has been blown. What's more, shortly after funding on Crowdcube, the company disapplied SHs pre emptions rights. That was far too easy for them.

New money was sought and a new realistic value was set by this new money - a value of £1.8m against another round at the end of 2017 that was inexplicably sold at £10m. You wouldnt think so to hear the company explain away the drop - apparently in the market their business is worth £10m it is just not worth that to investors. That is a first for us. 

The company is offering a rights issue to existing CC SHs - but you would have to be pretty foolish to take it up. The management have not been open with its investors and despite the fact that the business may have some legs - they have managed a very good job of screwing it up. If they dont raise this cash they are toast. No wonder the valuation has dropped. 

According to the now customary fantasy  Crowdcube projections, the company was due to make a profit of £1.5m for YE Dec18. 

Where are Crowdcube in all of this? Hiding as usual, hoping the bad smell will pass. Well it will of course but Im afraid the bad smells are queuing up outside your door boys and you cannot wish them all away. Why not come out and admit, the real source of the odour is inside and is emerging from your hopeless business model. That is what is generating these noxious gases. And so long as you deny this, the problem will persist. 

Wednesday, 4 July 2018

So what really happened to Zapaygo on Crowdcube? We do some dredging.



According to Crowdcube's own records, Zapaygo raised £450k from 231 investors on the platform at the end of 2017. This figure is not reflected in filings at CH. The main feature of this campaign was a signed and sealed deal with the NEC Group - to use the Zapaygo app across their venues. 


In Zapaygo's confirmation statement dated 5 March 2018, the company only has 38 shareholders - none of them are Corwdcube. 

We spoke to one of the NEC venues today, they dont use Zapaygo as they have their own internal system Qbuster. They said that they had no idea when or if Zapaygo would be installed. We received a reply today from the NEC PR department confirming a 10 year 'commercial agreement' with Zapaygo but no mention was made of exclusivity or any time frame. 

The NEC Group PR dept put out this in December 2017 -  http://www.necgroup.co.uk/lifestyle-payment-app-zapaygo-and-the-nec-group-announce-partnership/. It is for a 10 year exclusive deal with Zapaygo. Although there is no detail. It helped persuade Crowdcube investors to back the company. 

We asked Zapaygo for answers a while ago but they have not replied. That is not to say there isnt a contract (see above) but it might have been helpful if the pitch had pointed out the start date or if it had to undergo trials? Maybe the lack of funding has caused the problem - although this would be odd, as the pitch never mentioned it being subject to raising £500k.

This PR from the NEC Group is currently being used by Zapaygo on another funding platform - angelinvestmentnetwork.co.uk  to raise another £1m. This platform is not FCA regulated but unlike nearly every other ECF platform, it does make a profit. The pitch tells investors that Zapaygo has a ten year exclusive contract with the NEC Group. In this pitch Zapaygo claim to have raised £500k at the start of 2018. No filings at CH suggests this has happened, although Crowdcube claim an investment of £450k. Investments have been made but not at this level according to CH filings. If Crowdcube investors had put in £450k and it been completed, then they would appear in the March 2018 filing.

And Crowdcube what on earth are doing? If you manage to get onto their CC page, it appears from the forum that investors have been left in the dark since February and one Q was from 3 weeks ago. It is farcical for an FCA platform to be involved in this - really.

There is this helpful piece from the ever unreliable Crowdfundinsider  - they do love to get it wrong -

https://www.crowdfundinsider.com/2018/01/127261-overfunding-orders-payment-app-zapaygo-investments-surpasses-500000-funding-target-crowdcube/- 

And this page on Crowdcube confirming the success - obtained with a simple Google search. No doubt following this post, this will disappear so here is a screen shot -



The upshot of all this is that the core deal that made this company investible has been delayed or cancelled and obviously, so have its revenues. 

We have not seen the 'contract' but it must have been worded in such a way as to allow for wriggle room. Either that or the app failed to pass initial NEC testing. Either way it looks as though investors were not told the entire truth when the Crowdcube pitch declared the NEC deal was signed, sealed and delivered.  

We had an email exchange in December 2017 with Zapaygo's CEO. He was annoyed we had flagged up some things in the Crowdcube pitch. Well as ever, it looks as though we were right again. Certainly Zapaygo is not at the NEC and is not due there anytime soon according to the person in the finance department. That is 7 months after Zapaygo and Crowdcube claimed in a pitch seeking investment for equity, that it was a done deal. How misleading is that, readers from the FCA?

Of course it is entirely possible that the mess has been caused by Crowdcube's inefficiency. What's the betting on that scenario? Either way is makes ECF look like a poorly run kindagarten - again. 

Tuesday, 3 July 2018

Our take on the new Emoov and its predicted £130m IPO in 7 months time.

The new Crowdcube Emoov campaign has topped its £1m target on day one. £500k of that was from one source. The valuation puts this newco, made up of 3 oldcos, at £104m. 


Wow! and I thought the World Cup was unpredictable. 

The hope seems to be that a £9m spent on advertising will rocket turnover in the next 12 months (for FY19) by 550%. Hmmm. Will it really be that immediate? Turnover has been stagnant recently - hence the merger? Even Purple Bricks, who spent £10m on advertsing in 2017, only saw UK growth at around £150% and that was from a more advanced starting point. 


The IPO is, according to the company, expected to value the company at around £130m and then they hope that the post float euphoria will lift this value by another 300%, as it did with Purple Bricks.

Purple Bricks spent ~£10m on advertising last year and £8m the year before. Can Emoov match that year on year? The winner will be the player with the largest market share and Emoov have it all to do. Purple Bricks have already crossed half of the Rubicon and are producing operating profits. Emoov and its two siblings were all loss making before the merger and two of them had negative balance sheets. PB raised £50m in the City post IPO in 2017. 

If on line estate agents are the future, another whole topic of open debate,  then PB have a considerable first mover advantage.

You will have to excuse me for being a tad reluctant to believe much of this will happen as they plan. I do hate to ruin a party but these numbers, going on the past experience of the 3 companies that have amalgamated to create this newco, seem very generous. The main thrust of the pitch seems to be we can do what PB did or better. Well there is little evidence to back this up and Emoov are starting from 30 yards behind the line. 

On Crowdcube's forum, we are told there is a very telling Q&A. The Q is, how have things gone so far for FY2019. The response skirts around the issue with lots of jargon and paff but does not attempt to answer it. Game Set and Match for me.

There is also the vexed question of EIS. If new SHs buy into this round and the company's planned IPO takes place Q1 2019, these new EIS reliefs will only be valid if the shares are held for 3 years from purchase. Nowhere in the pitch is this explained. In fact in a direct Q on the issue, Emoov prefer to indicate some tax loophole that they think gets around this. It is very simple - 3 years from purchase. HMRC do not consider an IPO an exit. So if the IPO happens and the shares then flop a year later, SHs will have to decide if loss of EIS is better than the holding a falling stock. To retain the relief they are locked in for 36 months. That's not quite the picture being painted on Crowdcube.

Maybe that is misleading - probably not though! It would certainly worry me that the CEO of Emoov doesnt know the EIS regulations. 

Of course the Q1 2019 IPO is perfectly timed to coincide with the crash of all crashes; that is Brexit DDay. Maybe that was the plan?

Strawberry anyone?