Tuesday, 11 September 2018

Chilango cut losses to £1.4m


Chilangos may have turned a corner. Losses for YE March 18 are half last years and some of the dead wood has been removed as part of that loss. New ideas have been launched. The next 12 months will be critical.


Of course you can kiss goodbye to all the Crowdcube projections and promises of large profits by now. This has been a company on life support. The 50 restaurants by 2021, as per Crowdcube's 2015 pitch when they had 7, looks a little far fetched with the current number on 11. The £20m turnover for the last year is in fact £10m. This is what an immature Luke Lang had to say about it in 2015 when it raised over £3m against a target of just £1m. The proposal actually turned out to be nonsense.

“As before, Chilango has excited investors with the passion and high quality of its proposal and Eric Partaker’s video pitch particularly grabbed people’s attention as it was so vibrant. Also, the company is backed by a lot of top execs from high profile brands in the hospitality sector and that’s always reassuring for our subscribers.”

Recent funding suggests that the valuation is around £42m whereas in 2015 investors were persuaded to buy at a valuation of £43m post money. There has been some dilution since 2015. 

The company reports that the £2m Bond it issued via Crowdcube in 2014, is coming due for repayment but that a large percentage of holders have agreed to extend the date on for a few months by which time the company has plans to issue a new bond - good luck with that. 

Still the patient is alive and showing some signs of life. 

6 comments:

  1. You had to give them notice if you wanted your minibond money back, I bet many investors were not aware of it (they barely mentioned it at the end of a long newsletter).

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    1. Ah - thanks didnt know that. Could you send a copy of that to rob@ecfsolutions.co.uk

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  2. Rob - the only harm caused by this investment is whether CC has strong armed vulnerable people into investing into this company through its' advertising or if it has ever resorted to cold calling (not to my knowledge).

    To any investor in the know, retail businesses like these in London are the equivalent to a monkey with a dart board - and tell tell signals of a free burrito for the rest of your life if you invest x amount, just make the rational investor squirm.

    However, raising capital for business expansion has always involved some form of storytelling. It's just that the modern platforms provide a lower cost and faster route to new 'investors,' and CC have taken full advantage of this, whilst sailing close to the wind.

    The evidence you keep providing should at some point trigger a deeper investigation by the FCA or Treasury and although Luke Lang might be a muppet, he's a successful muppet playing the game. Less and less investors will use these platforms, and even for criminal proceeds the odds aren't that attractive for money laundering, and the platforms will eventually fail. The novelty and ease of throwing your money away will ware off, and the next big get quick rich scheme will appear.

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    1. I agree with most of your post, and many ECF fans will have to learn the hard way. But i would say that CC and others aren't really that successful when none of them are anywhere near break-even, and it's hard to see how they will be grow enough to achieve it. So much money in raising Finance, but is there a sustainable business model here?

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  3. I have to ask what you mean by successful? If someone abuses a position and makes loads of money out that before they are closed down, is that 'success'. Not in my book but we all have different views on these things. Certainly the Crowdcube claim, which is central to their Gov backing, of helping build UKplc, is utter tripe. In fact the reality is the opposite - by tainting the use of ECF for unsustainable, poor businesses, they are ruining the real chance of it helping UKplc

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  4. Successful in his own eye's - being at the forefront of the initial hype & wave of a 'nascent' technology/disruptor/industry - whatever you like to call it. He might get closed down, but if he is smart enough, he's already thought of this, and is drafting a plan B.

    Defending UKplc is a very honourable thing to do, but it's too big an entity to defend! There are too many Polly Pecks and other sunken vessels, which make this stuff look like small fry.

    I'd back you to create a framework for ECF, however there is no backbone to the regulator, or political will, as the false narrative of supporting SME's through ECF ticks short term policy goals..

    There will be a natural decline in investor support for this type of ECF, prior to any significant policy clampdown. The other way for a faster decline is if someone is caught with their fingers in the cookie jar...which can happen if you surround yourself with folk cooking the books :-)

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