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. 

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