Revolut, the challenger bank, lost £14.8m last year. As it raised £55m at the same time, and $250m this year, they are not in any immediate danger.
Revolut investors have had the chance to realise some of their gain - with a 19X ROI (Crowdcube's figure). This was part of the $250m raise in 2018. Revolut switched to Seedrs after the first £1m raise on Crowdcube.
These losses come against a confusing picture over Brexit, where Revolut is now applying for a second EU licence and a large uplift in revenues to over £12m. The Crowdcube pitch showed £10m for the year, so the expenses and margins have taken a battering.
Revolut also PRinged that they were breakeven in 2018. The comment now is that this position is changing month on month. IE they are not in reality even close to BE. Who would have guessed it.
These losses come against a confusing picture over Brexit, where Revolut is now applying for a second EU licence and a large uplift in revenues to over £12m. The Crowdcube pitch showed £10m for the year, so the expenses and margins have taken a battering.
Revolut also PRinged that they were breakeven in 2018. The comment now is that this position is changing month on month. IE they are not in reality even close to BE. Who would have guessed it.
Your basic point on pretty much all your posts is the same - 'Company X said it would achieve Y result by Z date, and hasn't'.
ReplyDeleteThe vast majority of high risk illiquid investments do not lead to big returns and most will fail. That is made abundantly clear by the platforms. I find myself often thinking, 'so what?' when I read your posts. Most of these companies will fail, but there is the opportunity to win (very) big if the companies scale, as well as S/EIS benefits as an investor if they do/don't.
Also, your reporting sits in complete isolation and out of context. For fairness, you shouldn't just focus on Crowdcube (one player in a niche part of the equity capital raising landscape), rather share where you feel this all sits in the broader funding picture. That would be helpful and balanced.
Thanks - we do get a lot of support from readers. Then we get a few who moan about our negativity etc. It is all free and you do not have to read any of it. The reason that all of the posts are about the same thing should be clear - Crowdcube are delivering (99% of the time) the same crap for people to gamble on - invest is really not the right term. Your analysis of this sector is weak - parroting the same old same old about high risk etc isnt worth the time. We provide caste iron evidence that the Crowdcube model doesnt work. We do also write about Syndicate Room, Banktothefuture, Funding for Angels, Seedrs, Venturefounders, Bill Morrows gang and a few others. Luckily I do not have to be balanced although I was under the impression that this site was helpful - or so people tell me. It is a counter balance for the BS and PR that Crowdcube and their paid newsfeeds supply in an endless and very misleading way. What you also fail to mention and probably do not understand, is that of the 70 or so failures to date (and this does not include the zombies) many have gone into liquidation - leaving many hundreds of thousands of pounds unpaid to HMRC and trade creditors, not to mention the potential knock on effects to these businesses. This is a real and evidenced problem that no one apart from us talking about. This is no way to build a sustainable SME sector for UKplc - as CCclaim they doing. Why is S/EIS money being abused to help hopeless businesses trade for 12-24 months, create debts with other companies and then go bust. Maybe you have a thought on this? TBH Im not really interested in the grander funding scene - its already covered and start ups are my thing. So no, we wont be looking at other funding areas for now. But thanks for the suggestion. If you dont like what we write about then the easiest thing to do is to move on.
DeleteIn fairness to Rob, Crowdcube regularly shouts that they are the equity crowdfunding platform with the greatest number of deals (https://www.crowdcube.com/explore/crowdcube/crowdcube-remains-top-crowdfunder-in-latest-data), so there would inherently be more CC deals to analyse/comment on vs other platforms.
DeleteIt’s quite right and proper that business should be called out by someone for projections that are wrong. Part of the problem with equity crowdfunding, particular on Crowdcube is that these businesses are permitted to make these pie in the sky projections which support inflated valuations. Too many lifestyle businesses have got funding on Crowdcube by doing this.
ReplyDeleteWhat Rob does deserves a huge amount of credit, for the content that he produces and places here, completely free of charge... someone has to be out there fighting the corner and putting light on some truly horrible ECF pitches, some of which border theft. If a company is out there PRing and achieving 'investment' in their businesses by using over inflated numbers or stretching the truth, then by all that is fair someone should be on the opposite corner pointing this out... bizarre that people love to have a crack at the messenger and not the original source of the issue! This area of finance is an utter shambles... and a financial wild west.
ReplyDeleteI often think that The Gambling Commission would be the best regulator of crowd funding, not the FSA.
ReplyDeleteRob, I recently discovered your site after stumbling upon a shambolic (and VERY popular) pitch on Seedrs, that left me scratching my head. I've experienced the blowback of trying to raise legitimate concerns. The more I look into this, the more I think crowdfunding functions mainly as a very sophisticated pyramid scheme. The aim is to create an army of cheerleaders who distort perceptions of the brand and bully critics. "High risk" is totally different from "fraudulent information", that's what nobody seems to understand. And when you're dealing with naive members of the public, even a lot of "technically correct" information is often deliberately misleading ("patents pending" is the classic - the CEO blithely saying how confident they are that the patent application will be accepted). Please keep fighting the good fight.
ReplyDeleteThanks for your comments. I do think that the principle of ECF is operable - but the models are currently wrong. Platforms need to lead by having skin in the game - that would instantly stop all the BS. We hope to be a part of that new era.
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