What is quite a sensible and balanced piece on EIS and investment in start ups in the Financial Times, is ruined by the paper allowing Luke Lang of Crowdcube to further promote more of his PR nonsense about the sector.
At the end of this piece Lang states that -
' But Mr Lang says exits are becoming more common as successful companies raise follow-on financing.'
This is simply and very patently untrue. Where are these exits Mr Lang? You go on to mention the share sale for Revolut - but this is a tiny drop in the ocean as you well know. Why didnt the pink paper check this out before giving Crowdcube yet more free promotion? Are we now seeing it stooping to the same levels as the Express - a promoter of whatever wacky story is going. No fact checking here.
Crowdcube, 7 years on, has built its entire wilting edifice on this sort of half truth. Sure there have been a few exits - around 5 - but nothing memorable when you consider the shams and collapses. When writing a piece like this, why not mention the shareholders in one of the many (used advisedly and true) companies currently either closed, closing or in limbo, with liquidators and administrators and with no hope of Crowdcube investors seeing a penny of their money back - let alone the mass promoted (used advisedly and true) ROI. All c/o S/EIS reliefs. UK plc is being ill served.
Well probably because they failed to contact us as well as speaking to Mr Lang. Mr Lang knows the truth, it confronts him everyday but he has chosen to bury it deep amongst platitudes and PRing about how well things are going.
Someone needs to be held to account - clearly the FT is not the paper it was.
I do not know if this is possible, but,
ReplyDeleteIf you can get a "total gain on exit/ipo" value and compare that with a "total loss on failure" value for cc, then we could see if the platform as a whole is making money for investors.
I know this will be lumpy, but there will be a trend that emerges over time.
From your post, it seems you either have done that, or have pretty clear idea of what the value will be.
That sort of hard data is what the FT and CC cannot dodge.
You are quite right but to get that sort of data takes time. Although CC started in 2011, volume in deal flow didnt start until 2013/14 onwards and many of those companies are still 'active' at CH but are on our records not doing much and certainly not doing what they planned. So our data to date, which is accurate up to around a 18 months ago (because of the delay in accounts), shows that 95% of the CC funded companies have missed targets. Around 60 of these have gone bust and an estimated 80% are nowhere near to their projections. Crowdcube survive on the fact that many companies remain open even when the hope in them is long gone - up to 5 years. We can say for sure that the exit/roi as a fraction of the overall invested is so small as to be negligible if you ignore the interest payments on what Crowdcube used to call mini bonds. CC produce their own highly misleading ROI figure which lumps this interest with the few exits they have had. We have been waiting to produce a figure for the total invested and total lost and total ROI but until more of the zombies are struck off this number doesnt tell the true story.
Delete