Are Monzo guilty, as charged, of promoting their overdrafts to buy shares in their new £20m equity round?

This is one of those instances where different people see different things in the same statement.

In this case we think the Times have got it wrong. Which is rare.

https://www.thetimes.co.uk/article/monzo-lends-customers-money-to-buy-its-shares-375nmdc6r 

Monzo state in the prospectus for raising £20m, that customers need to have enough money in their accounts to purchase shares. This 'enough' can include their OD if they have one, it goes on to say. Of course we all know that these shares in Monzo are illiquid for now and may always illiquid.

What is does not say is that Monzo recommend or even suggest that customers use their Monzo OD to purchase shares in Monzo. That much is very clear. At this stage of the process only Monzo customers can purchase these shares - it has not been opened up to the public yet. This is all part of the requirement for Monzo to offer existing SHs first bite. And Monzo state that customers must use their Monzo accounts to buy these shares - a solid way of increasing usage. It seems this may all have been misread.

This wording doesn't reflect well on Monzo but the article doesn't reflect well on The Times. Monzo could have been more careful to separate the sentence about buying shares and the one about the OD.
If the prospectus was promoting an offer of a Monzo overdraft to buy illiquid shares in Monzo, then the Times piece would be legitimate. But Im really struggling to make that case by reading what Monzo have actually written. 

What would have made and might well make a better article is to ask just how Monzo go about judging if applicants should be given a £1000 OD. We are told that it's really pretty easy to get one and that the 'checking' is largely self assessment. Now that is something to worry about.

Driverless companies, plane-less Airlines and accounting errors make up Crowdcube successes.

Two of Crowdcube's successes that are about to file accounts, are less than they seem. Cgon has no one driving the company and Odyssey (Airlines), one the longest tales in ECF history, has no planes. Another one that has just filed more losses has admitted a major accounting error in the previous year. 

£1m was invested into Odyssey and £160k into Cgon. And £191k was invested in Water to Go. 

Cgon make and sell a fuel enhancement box but all the original directors have now left and the company is being run by a director appointed just this year - someone who recently came from a PPI claims company aptly named Claim Hunters, which us run by the guy who set up Cgon but is no longer a director. Seems cosy.   Claim Hunters' last accounts show a profit of £170k. It does seem odd that Cgon, an engineering company with cutting edge technology can be run without its engineers at the helm.

Odyssey Airline have yet to take off. It is a tough ask without planes.

Water to Go have filed more losses for YE Dec17, on falling sales and it leaves them in deficit for £450k. Sales for the year were almost half the figure of two years ago. Their accounts show that the previous year's stock had been over valued by £100k. Software error. So a small company declares it has £280k of stock at YE but it turns out £110k of this is thin air. Come on. Software error or should have gone to Specsavers? The warehouse must have seemed a little empty. 5 aside anyone?

All three companies are currently in Crowdcube's doing well PRing. Surely we need an independent platform that produces this information and allows investors to see the real state of affairs - not Crowdcube's version.

You should all look at this - https://www.indiegogo.com/projects/ecf-buzz-the-crowd-investors-information-centre/x/19804529/

Rentify file losses of just under £2m as they reach for more stars.

Rentify are one of Crowdcube's million plus club. £1.38m in 2016 to be precise. They were due to make heavy losses whilst they gained traction but it appears that subsequent funding has not materialised and now the company accounts show a deficit of £2.25m; up from £500k. 

Rentify are also backed by Crowdcube's big daddy, Balderton Capital. Helps to keep it in the family.

Rentify are not a million miles off their p&l forecast - well £300k isn't a lot on Crowdcube. The main problem seems to be the lack of investment. Projections show the company having over £12m in share capital by YE Dec17 but the accounts are over £3m short of that.

Why Balderton have not reached into their deep pockets for this one is unknown. They have of course spent quite a sum on Crowdcube since 2016.

Rentify had £2.5m of current creditors and only a fraction of that in the bank or due. One of the major debts is to HMRC  - around £160k in back taxes mostly related to the staff of 26 - this £160k being more than double the year before, when they had more staff. Trade debtors has fallen by 75% from £40k to £10k. Could be new systems or something else less helpful.

These are the same guys we wrote about recently who have made up their Trust pilot star rating. According to them it's a 5 star. According to Trust Pilot it is 3 star. Who believes star ratings anyway but you'd think they wouldn't make them up! Latest one posted is a 1 star. Our rule with these ratings and we have some experience in the last 20 years, is to look carefully at the poor ones to see if there is a common thread. Many of the good ones are set up and so are many of the rest but a thread leads to the truth. There is a thread with the 1 star ratings for Rentify.  Onwards and sideways.

 

Kokoon - selling on line to raise funds to deliver 3 year old Kickstarter stock?

This is a Cuckoo Clock. If you watch it for long enough it will chime. Well it will chime before most Kokoon backers get their 3 year late headphones. 

We thought that recently Kokoon, which raised £1.65m on Crowdcube a year ago, might have got their act together. Like their deliveries, we called it too early.

When Crowdcube punters invested in this company, on the back of promises that the product was ready to go, they were duped. We shouted this out at the time - it was obvious from the feedback on the then 2 year overdue delivery, that the company had some serious problems. Having sold several thousand units on Kickstarter and spent the cash, they came to Crowdcube to raise money to make the units they had already sold. The money from these sales was promoted as an asset rather than a liability. As of today, only a few have been delivered. The spec has been lowered the tech reduced. Refunds have been demanded.

Now if Crowdcube investors had been members of our soon to be launched ECFBuzz site, where all of this information would have been available and they could have chatted to KS backers, they might still have invested but with the full facts.

https://www.indiegogo.com/projects/ecf-buzz-the-crowd-investors-information-centre/x/19804529#/  

Neither Crowdcube nor Kokoon told investors the full facts. The headphones were not ready to make and ship out - they were still in testing. Testing that has resulted in the product being altered and delayed.

Now their website is promoting a Black Friday Weekend 30% off offer, for delivery by December 2018 in the UK. But people who bought this product on KS 3 years ago have no product and no idea when they will get one  - if ever.

Is it possible that the company is selling product on line now, knowing it cant deliver (this is after similar to the outcome on KS) to raise funds to make more items to deliver? Cannibalism on speed. 

So why is the launch of ECF.Buzz so important for the future of Equity Crowdfunding? A Call to Action

It's a little like the current Brexit conundrum. Ignoring whether you voted to leave or remain, no one in 2016 could have known what we now know. The vote was based on misinformation, spin, lies and good dose of inevitable ignorance on both sides. Many things were simply unknowable. 

Well the same is true of the 8 year journey that ECf has taken. No one knew in 2011 that the information supplied by the major platforms and their pitching companies would prove to be so far from the real outcomes. No one knew that successful exits would be so low. No one knew that so many companies would become Zombies. No one knew that PR would be the main channel for the creation of these investment platforms and that the truth would be sidelined.

But we do now. Do you?

A state of ignorance suited the platforms - who would invest in a newco that projected steady unspectacular progress or a down round 2 years later? Who would invest via a platform where time and time again failed companies reveal that not all the relevant information supplied was correct. No one, if they knew this but the PR has drowned out the truth. 

ECF is a great idea for both investors who want to be involved in start ups and companies who genuinely have a good plan and need funding. But that equation has a fundamental flaw - greedy platforms that have used misinformation and PR to make poor decisions to gain commission income. It is time the investors took back some control. But most do not know how to. Investing is a professional activity  - it's not like fishing or golfing at the weekend. The platforms will tell it is - they want your money. But would you really ask a mate to fly you somewhere, without proof he had a licence? People need educating - only then can they invest sensibly. 

Take for example the recent Crowdcube raise on their own site. People have asked Q's that have been removed on topics that did not paint the required PR. This blog has been mentioned and removed. Censorship is a sure sign that what's in that closed cupboard is not all on the inventory. 

Investors are being hoodwinked and I have to tell you that the platforms are finding it far too easy to do. When you get Qs from people, who claim to be regular investors in ECF,
about when they will get their money back or what it will buy, it is clear that they do not know what they are buying. Like the guy who gets on a train, buys a ticket and then asks where it is going.

Now a lot of people do not like the way I go about this - too aggressive they say. Well this is not about me. Most people I speak to - investors,companies and the platforms, agree that if you keep presenting poor ideas run with poor management and dress them up using glamorous projections to sell them - eventually investors will turn away. The evidence for this was clear on Crowdcube's latest round. It is clear from the 1100 posts here.  Give investors the right tools and they can ask the Qs and solve this for themselves. Crowdcube, with decent companies pitching, can be a great success. So forget about Marmite. 

The idea behind ECF.Buzz is to help level the playing field, so that investors are not at the bottom of a 1:3.We want to give you the tools to find out for yourselves what makes a good company and a great idea. The tools to scrutinise company accounts and financial forecasts. The tools to know about IP and patents and make the most of your investments. As well as a place where you can talk to other investors without your Qs being censored. A place where you can find out about what really happened to company XYZ or Joe XXXX its founder, rather than accepting the guff the platform told you.

In the 2 days we have been live, Crowdcube's campaign has raised over £200k to add to its £7.1m total. Do you really believe there is any chance that these investors know what they are doing? At the same time their forum has had unanswered Qs about how many zombies they have funded - we know the answer to that!

But we cant make a difference without your help - you will be helping yourselves. We need you to get involved to help spread the word. Post us up on Crowdcube's and Seedrs' forums - give people the chance to look at our research at least. Tell friends and colleagues about us. Tell them about the Indiegogo campaign we are running to raise funding for the new site. We need to raise a minimum of £15k in reality to allow this to happen. We will need funds to build the site, join a variety of information resource companies, have guest experts answer Qs and build our community.

Please take a look - 

https://www.indiegogo.com/projects/ecf-buzz-the-crowd-investors-information-centre/x/19804529/

If we fail to get this funding then that will be that. It is unlikely the blog would continue if I know that the support just isn't there. That's why we launched the Indiegogo campaign, to confirm one way or the other if we could build on the blog. I cannot accept that the status quo, where most investors are throwing away millions without having a clue what they are doing, is as it should be. UKplc is not gaining. You are not gaining. Failed companies and their creditors are not gaining. Only the platforms are gaining. Surely it is time for action? 

Powervault lose £1.95m. Crowdcube cruise on. Sunset waiting?

Powervault is a Crowdcube favourite. We think it has raised 4 times now and for YE September 18 it raised another £650k off the platform. 

Of course this is not the picture investors were sold. 

Losses for YE Sept 18 were £1.95m. Looks like more money will be required shortly.

And what is the £500k CA marked Corporation Tax Recoverable? R&D? No real increase in intangibles and no real intangibles in FA. For it to be recoverable corp tax it would have to be against a very substantial profit for 2019. Since when did current assets include projected profits?

Why the very early filing of their accounts?

A new deal with EDF Energy will surely turn things around? Investors will have to hope so.  

Verv launch new downround on Crowdcube - just as Crowdcube take £7.4m off their own investors

It's a crazy world. Just as Crowdcube complete an almost successful £7.4m round for themselves (target £8.5m), Verv, a recently funded Crowdcube success, has opened a new campaign with a 20% discounted valuation. 

Sounds like the sort of thing investors might like to discuss on an independent forum - like our new ECF.Buzz.

It is even crazier that the director of the Verv company, answering a Q on the CC forum about how the original valuation was created, has stated that they used discounted cash flow. DCF cannot be used without a good depth of historic revenue data. Verv had no such history. He then compounds this by stating that they have lowered the current valuation in order to raise much needed new funding! Sort of explains a lot doesnt it.

Had investors in round one been better informed, by using ECF.Buzz, then they might have persuaded Verv to lower what has now been shown to be a nonsense valuation and spared everyone this nonsense. Maybe had Verv used ECF.Buzz, they might not have made themselves look so totally ridiculous. 

You can see why ECF.Buzz is such a good idea here - https://www.indiegogo.com/projects/ecf-buzz-the-crowd-investors-information-centre/x/19804529/

Rentify tempted to tell you what is not quite true

Rentify raised £1.3m on Crowdcube. Now their website declares the company has a 5 star rating from Trustpilot.

The real TP rating - the one on TP's site - gives Rentify 3 stars.

What Rentify have done is cunning. They have produced an image of 5 stars with the TP logo as if it it is the TP rating. Its there front and centre on their home page; you cant miss it. Then underneath they have written 'over 400 5 reviews', where it is quite easily missed. They do have over 400 5 star reviews. But Trustpilot produce an aggregate star rating - they are not about the 5 star or the 1 star reviews only. For example say a company has 5000 reviews - 450 of them are 5 star but the rest are 1 and 2 star. You could not claim that your Trustpilot rating was 5 star - unless you lied. It would be below 2. But you could still claim you had over 400 5 star reviews.

This is certainly misleading if nothing else. The claim is they have a 5 star rating with Trustpilot. They do not. Is that indicative of a company ethos?

Balderton Capital, major Crowdcube backers, are also one of Rentify's main funders. The company is currently late filing accounts. According to their Crowdcube numbers this year saw them leap into £1m+ net profit territory. Hope that wasnt too misleading.

We are LIVE - our new Indiegogo campaign to raise cash for a new platform has just been launched.

You can find the link to the Indiegogo page below. WE are now LIVE. A campaign to fund the first Independent Information Resource for Equity Crowdfunders. Your chance to help make it happen.

https://www.indiegogo.com/projects/ecf-buzz-the-crowd-investors-information-centre/x/19804529#/

Please take a look and let us know what you think. 

Memberships are discounted for this campaign and early members will receive special perks. 

It is time investors took back some control!

JOIN US.  

Fanmade Services now file accounts for a dormant company

Fanmade Services raised £224k on Crowdcube in 2014. Now with a website that says it has expired and an app, Sporting Mouth, that we couldnt find, the company has filed accounts for YE Feb18 stating they didnt trade. That is a lot that isnt happening. 

The accounts show the money is all but gone and that one of the few activities for the year was a  partial repayment of a director's loan.

This result for a Crowdcube funded company is particularly pertinent right now. Coming as it does at the same time as Luke Lang from Crowdcube has been telling everyone that their selection of businesses is far superior to any other ECF platform. Right.

This giant is asleep but not dead. It does make you wonder though, that a company can take this size of investment and then file dormant accounts. It has no fixed assets.

Maybe if we all shout WAKE UP that would get him moving again? 

Crowdcube's disastrous launch of their investor fee confirms their poor management.

Management is about is managing clients and planning ahead. Crowdcube decided to try and sneak a new investor fee passed their clients in conjunction with their new raise. The clients noticed. 

We say they decided to do this but in reality it probably just happened wihtout any planning - like many things on he platform. In fact in the same rather haphazard way they have grown the loss making company.

After a barrage of questions, Crowdcube have now been forced to admit that not only did they not tell investors about this new tax on their investments, apart from in the FAQ section (who reads that regularly?), they also failed to charge the VCs who have put money into this round, whilst hitting the small investors with the full amount. 

Luke, who has never knowingly apologised for any of the company's many flaws, has been forced to publish an apology and pay these fees (eventually collected) into a charity. Nice gesture but it wont let you off the hook Luke.

This is clearly some gross mismanagement and quite rightly investors are angry about it. To rub salt into the wound, both Luke and Darren have made a good load of cash in this round by selling some of the their shares to Draper Esprit. When asked to explain why this facility wasnt passed onto small shareholders (ie their clients) they said that the management had earned this right. Eh?

Well we have been saying for some years that both Luke and Darren do not have what it takes to build a large successful business. Nothing we have seen so far changes this opinion. Darren, as we have pointed out before, claims to have had successful telecom businesses in the past but on checking these, they turn out to be less than successful - liquidated in fact. Luke is just good at PR. The idea of crowdfunding is good but their model is rubbish. We produce almost daily proof of this here. Why dont their investors get the message?

Some of Crowdcube's successes recently filed accounts - we just report the facts

Below are some Crowdcube funded companies who have recently filed accounts. This will give you an idea of how most of these companies do, post funding.

I'm not an advocate of the apologists' theory, that all starts ups have to miss their projections because that is the way it is. Why, if we have known this for so long, have we not adjusted the projections? Are we all really that stupid? Of course the the other answer is that these projections are being used to encourage investment. Well if nearly all of the companies that have funded via Crowdcube have missed their projections by many hundred percents, what other logical answer is there?

A point often missed in this debate is the fact that these projections are used to calculate the current value of the company; so they dictate the price of the shares being offered to consumers. So it's a bit like a buying a house which is yet to be built on a spec that turns out to be a million miles away from the poorly finished, shabby building. You simply wouldnt pay that price - nor would anyone expect you to. 

You do have to ask  - what is the more important to know - the number of raises Crowdcube have facilitated and the money they have raised or what has happened to those companies since? Surely the latter is the true test of how the platform is doing? What the platform's PR tells everyone ad nauseam is the former - the latter is never ever mentioned. 

Try these recent filings - 

Dirt Factory  - loss of just £13k but hasnt opened a Dirt Factory anywhere yet.

Facewatch    - loss of £550k versus projected profit of £2.9m

Hire Space   - loss of £900k versus projectd profit of £550k

Silkfred and Hab we have already covered.

Enistic          - loss of £55k versus projected profit of £3m

If you have read a few of our posts, you will know that this is the norm.

One piece of good news - British Boxers, which had sensible projections, came in bang on its projected £28k loss. So it is possible. Hats(or should that be boxers) off. 

Some clarity for Crowdcube investors and supporters who seem incredibly ill informed about the platform's methods.

The current Crowdcube pitch has thrown up some interesting questions on the forum. We dont use the Crowdcube forum but thought we would answer them here.

UPDATE - Here is a very recent example of the sort of smoke and mirrors Crowdcube use to fudge figures. Asked for some simple p&l info in the current pitch - they replied - 

Hi Rathgil_78 & RBIPURITY,

Our audited 2017 financial year end accounts are available via Companies House and we are currently working on the audit for our 2018 YE September accounts.

We're pleased to report that our turnover is on track to be around £6m for 2018 (calendar year), compared to less than £4m in 2017, without significantly increasing our costs or team. The current trajectory of revenue growth and reduction in EBITDA loss means we are targeting a break even point in 2019.

We are unable to provide any further financial information due to its commercially sensitive nature but hopefully the above is helpful.

Bill

So why mix Calendar Year with filing year which ends in September? This £6m has two months projections in it and doesnt include Oct/Nov and Dec 2017, months that were far slower than Oct Nov and Dec 2018. They already have the YE Sept18 numbers, so why not used them? Could it be that the promised £6m revenue for 2018 (financial year) has been missed? And it's not clear if the reference to 2017 is calendar or financial. Why? It makes a substantial difference. 

One of the main issues has been the introduction of the investor fee. 

Crowdcube is a loss making business. £4.6m last year and a total to YE Sept17 of over £17m. The PR does not do these numbers.  It is desperate to change that before the curtain falls. They have hiked the fee they charge companies using their platform, from its original 4% (free for the large PR campaigns) to around 8%. They have also started demanding that companies produce as much as 40% of the their total before the pitch can go public - they charge commission on this money even though it is not raised on the platform. They also include this 40% in their annual PR figures. 

Given that the company needs to net revenues of £9m just to break even, you can see why they need to push to get there. Last year's revenue was under £4m and this year's is projected to be under £6m - so still a long way to go. In 2016, they told the world they would be at break even by the end of this year. That will not happen. They also talked about secondary markets and IPOs - they havent happened either. What they didnt talk about was multiple failures, loss of investments and collapsed, often dubious, businesses. They have happened. 

The timing and rather sly way they have unannounced the investor fee has also caused concern but this is exactly in keeping with the way Crowdcube handle all their difficult issues. It amazes me that punters on the forum do not seem to understand this. 

If the company was forced to cancel its investor fee, which will bring in around £1.5m pa on current numbers, then they will not get to BE in 2019 either. We doubt they will anyway but it certainly increases the chances. Crowdcube are relying on their punters inability to stop. It has worked so far with no exits to talk about. 

Another Q asked is why the company costs so much (£9m pa) to operate. That is a very good question. It certainly shouldnt. After all when you strip it back what have you - an active investor list of 40,000 max and a website that functions well. Most of the jobs the staff do are done very badly - due diligence, dealing with investing companies, dealing with investments, S/EIS and investors. We are constantly hearing complaints first hand on all of these. 

What keeps Crowdcube afloat is the mountain of aggressive PR. C4 are about to join the mountain. This is expensive. They are also known to have written to at least one company, considering them and other platforms, to pass on less than verifiable or favourable information on their opponents. This is done in order to seal their deal and their commission. It is not only unprofessional but it is also amoral. 

It is about time you punters woke up. 

HAB Housing revenues crash from £800k to just £45k in what has been a challenging year.

Hab Housing, one of Crowdcube's gleaming stars, has had a year to forget. A turnover of just £45,000 and a loss for the year of £1.37m. 

The timing of the late release of their accounts for YE Dec17 could have been better for Crowdcube, who are currently lashing out ladels of PR for their new, must have, cash grab.

The company issued a bond in 2017 for over £1m but was still in deficit YE Dec17. 

This was a cash crisis rather than a fundamental problem; serious delays in two major developments. What this year brings will be interesting and we are told that heavy cuts in overheads have been made - not exactly the role out plan that was sold via Crowdcube.  

HAB raised £1.97m on Crowdcube in 2013 and should by now be making profits of around £2m on revenues of north of £5m. Well they aint and Crowdcube investors should want to know why..........before they give the platform more of their cash to promote similar businesses. 

Where is that good news Luke?

River Cottage Bond Holders are thrown a life line

River Cottage has a new owner. Which is a good thing for the Crowdcube bondholders who want their money back next July.

We have written a few pieces on Hugh Fearnley Wittingstall's empire. It has not been plain sailing. In 2015 they raised £993k via a Crowdcube bond - to bring his style of eateries and philosophy to a greater audience. We said at the time that the projections were fantasy. Since then, the number of restaurants has gone up a little and down a little more. They currently run 3 and have 3 new inhouse tearooms in well selected tourist hubs. The company filed a £1m loss last year and was £1.2m in the red.

Now the company that has used the £993k, has been bought by River Cottage Holdings - set up at the end of 2017. This is a company majority owned by Guy Baring. RCH are now the sole owners of River Cottage Stores and River Cottage Bonds plc. The latest accounts for the latter give comfort to bond holders, stating that the directors intend to be able to repay the bond principle when the time comes; even if profits wont cover this - which they wont. 

It has amazed me that this brand has struggled to make it. There must have been some seriously idiotic decisions made and money wasted but hopefully, now under new control and with lessons learnt, the HFW eateries can get back into profit and promote the sort of eating life style we would all do well to adopt. 

Happy peelings.  

Silkfred reports losses of £2.5m but hopes to raise more capital soon.

Silkfred is doing well, according to the company, who contacted us the last time we wrote them. Accounts just filed for YE Dec17 show losses of £2.73m up from the previous year's £2.54m. It's a long play.

The company is expecting a new round of funding giving them another £2.3m in cash. This has not been field at CH as of today. That of course does not mean it hasnt or will not happen.

What must be slightly disappointing for SHs, who have put in a considerble sum, is that recent comments from the company said they were continuing to see a fall in Ebitda losses. The YE results seem to contradict this.

We did ask them to comment. 

As we said it's long haul flight this one. 

The Great Crowdcube Gamble.

This is Crowdcube's last chance. The hyperbole has now run out and a results driven flat valuation round confirms that their big backers are getting twitchy.

Below is a table of Crowdcube's funding history to date - all pre money valuations - 

2012 Valuation £3m

2013                 £6m

2014                 £14.5m

2015                 £45m VCs only

2016                 £65m 2500 plus investors put in over £6m

2018                 £73m

In 2016 the company raised over £6m at £65m making the post money value ~£71m.  The pitch that is about to be launched onto the public is at a pre money valuation of £73m. The obvious fact staring at investors is the steady decrease in the optimism behind the valuations. Start up funding valuations are based on what the company hopes to be able to achieve. A flat valuation is essentially saying help  - we have run out money before getting to where we told you we would be. Put in money now and you may save what you already have but will it ever increase?

Of course punters who got in early will, if they have been able to find buyers, have made a very good return. But what about those who invested in 2016. They were told then the company expected to be at BE by the end of 2018. But we are now at that date and we know that Crowdcube are at best £2m short of that achievement. Whilst losses maybe down on the last few years, they are still substantial and will mean that this raise will be largely spent filling holes rather than increasing the road network.

And what real value does Crowdcube have? A failing investment model, loss of first mover advantage, huge overheads of £8m plus pa. Undisclosed real membership - you can forget the PR figures. We only hear now from people shouting that they will never use them again. All the investment has been spent and they have ended up with a neat website and some ok branding. Worth? £5m as a shortcut for a newbie?

In their 2016 cash grab, Crowdcube had this in the prospectus -

Q. Will you need to raise further equity finance in the future?
A. Based on current market conditions and our estimates we do not anticipate at this stage having to raise any further equity finance.

And whilst all of this is going on, the competition is hotting up. Seedrs are about to receive a huge boost with the listing of Weswap on AIM next month. As any regular reader will know, we believe their model is far superior to Crowdcube's and always have done. The evidence for this is not there yet but the evidence for Crowdcube's model being flawed is. The failures are now regular and there are plenty waiting in the wings. The promised returns have vanished. Some of us might believe their new projections if they were able to admit that things have not gone to plan. But those are not words you will hear from these PR junkies.

When back in 2016, Luke and Darren where fending off Qs about achievements versus promises, they must have hoped that by the time the cash ran out, ie now, they would have seen at least two or three successful big time exits. Something to thump the table over. Something even we might have hailed as a success. 

Well it just has not happened. Now the same investors, who were asked to believe the hyperbole in 2016, are being asked to do the same again. We warned you.

This time they can see that the valuation hasnt gone up like before. The VCs behind this round couldnt seriously reinvest at a higher valuation, based on the facts. They dont wish to look like total idiots. The truth has been stretched to breaking point. They are being asked to put more money into what is clearly a failing business - by the founders' own admission. If they dont then it will surely go down the pan.  

So the big Q is, will they? 

Seedrs' Weswap aims to launch listing on AIM in December

At last some potentially good news. Weswap raised £2.45m on Seedrs two years ago. Valued then at £24m pre money, the company has raised £20m in total and is looking to list on AIM next month at around £40m

The company has almost doubled its 200,000 customer base since using Seedrs.

Investors in the Seedrs round will have to wait a year to realise their gains if they want to keep their EIS benefits but at least this gives them some liquidity options.

This is a massive gain for the Seedrs platform and investors should now be better able to see what we have been saying for years - this platform is a better bet than it's rival Crowdcube.

Shamba Technologies put out their own lights as another Crowdcube success fails to deliver

Shamba Technologies raised £112k on Crowdcube in 2014 from 144 investors. Now they have applied to be dissolved.

So here we are again. According to the Shamba Crowdcube projections, the company was due to be turning over £6m plus and filing profits of £1.75m last year. Actually last year it sold nothing in 12 months. Not one bean. In 2016 it had sales of £7,000 and no we are not making this up. 

Since then it has been waiting to close and has now started the process. We wrote about them a year ago here. 

The only positive thing you can say about the company and its team is that they have at least closed down without bothering the liquidators. The loan funds indicated in the Crowdcube pitch  - a total of £800k taken in over 2 years, never materialised. That is a common trick which Crowdcube seem to be happy to condone. 

Low or no sales and no cash brings a quick end. Well in this case they limped on for another year.

A common outcome, which is only encouraged by the appalling quality of the Crowdcube vetting system. Wonder if this one will make the first batch of C4 ads. It is still trading according to Crowdcube. That's customer service 4U. 

St Vibes buys back Crowdcube investor shares

St Vibes - an unheralded Crowdcube success which makes a profit of around £500k pa, has bought back some of its Crowdcube SHs shares at £625 each share. Investors paid £500 per share in 2013.

We have written a lot about the guys at St Vibes - we like them. However this move is an odd one. Sure it offers liquidity to SHs with no open market but to take a 25% return over 5 years on your investment or very simply 5% pa, seems pretty hopeless form an investment standpoint. The company is making serious profits so why would you want to bail out now?

Of course with SEIS this gain will be considerably more but we still ask why get out now?

We love these guys for showing the rest of the ECF sector that scaling is not always the holy grail and for being a very rare example of a company that has exceeded its forecasts.

Seedrs Macrebur forum illustrates a fundamental problem with their equity crowdfunding model.

Macrebur are about to close a £1.9m funding round on Seedrs. Yet if you read the forum and the latest updates by the company, you would think this company has plenty of serious questions to answer before it closes on such a large sum of the public's cash.

UPDATE - this one really needs a live feed! Macrebur have now announced, just days before they close a £2m round, that the investment from Pontaq of £500k has been rejected by the Macrebur board. This investment has been a key element of their campaign, so why now at the very end is it being rejected. Surely these terms must have been sorted long ago - or it WASNT a definite investment. The CEO told investors on the Seedrs forum that '' Pontaq have already invested'' and claimed that Macrebur were, via Pontaq, talking to The Minister for Transport for Tamil Nadu. Now the CEO states that India was never their focus. What's next?

Most of the outstanding Qs revolve around a £1.8m investment by a potential strategic partner (although much more established)firm, Instarmac.

This has been ongoing for a while - we wrote about it before on here.

Two days ago the company posted an update on Seedrs stating - ''We have been offered a £1.8 million investment by a UK manufacturing and distribution company. The company operates in the same market as MacRebur and, subject to the investment completing, the investor will help us develop our business using their experience and connections. The investment would be made in the form of convertible loan notes and these notes would convert automatically into shares at the same subscription price as the Seedrs’ investment round if MacRebur meets certain financial targets.

'This investment is of course subject to us agreeing final terms and conditions with the investor.'

Since then the forum has been filled with investors claiming that this £1.8m, which the company has said is from Instarmac, is a concluded investment. Whats more they have declared enthusiastic support for the company based on the fact that Instarmac's due diligence has concluded in their investment. That is simply incorrect. It has also been pointed out that a convertible loan is not an investment as such, until it is converted - ignoring the fact that in this instance the company has told everyone that the 'investment' terms have NOT been agreed yet  - ''subject to us agreeing etc etc''. Prior to this conversion, which maybe be a few years down the road , it is a loan. A loan is not an investment - even if the liability of the conversion may make this such in the accounts. Anyone asking about the terms of the deal or the date it might be signed, is ridiculed as some sort of troll.

All of this confusion is continually increased by investors comments which make it plain they could not tell a convertible loan from a pancake. Then this is added to by the statements from the company in answer to requests for clarification that this is indeed an investment in the company. For example, the CEO states on 7 Nov '' Fabio - it's Instarmac who have invested.'' But there has been no update on the 'invetsment' terms being agreed. 

I have to say it is the most ridiculous mess and does nothing for Seedrs attempts to make ECF open and informative. 

We are not making a judgement on whether this is a good investment or not. We are just shining a torch on the bleeding obvious - there are some very contradictory statements lying almost side by side. If it were my money I would want clarity. Im sure the CEO would as well.

What if the terms of the Instarmac deal cannot be agreed? For example they want a conversion rate that puts them in a better position than current Seedrs investors - something Macrebur has said they wouldnt allow. How many ECF funded companies have we seen talk about large investments from strategic partners or VCs, for these to suddenly disappear months after investors have handed over their cash. Too many is the answer. 

Readers might also be amused to read what the CEO has to say about us or rather me on the Seedrs forum. First of all I am a scam solicitor working for Bird and Bird who cons people into handing over cash by writing rude stuff about them. Then he recants on this and declares he has done some looking into me and has found that my company has filed no accounts. We have filed 2 years of accounts. He also accuses me of planting comments on the Seedrs forum - which is wholly untrue and really just makes him look rather foolish. We do not make comments on the Seedrs forums. All of this was done late at night which might suggest something. He also makes another false statement that we have no relationship with Seedrs - untrue as Jeff Lynn would confirm. I would be very wary of slagging off Bird and Bird my man! It speaks volumes for the sort sales pitch he has presented on Seedrs. And unfortunately the sort of investor who has backed it.  

For the record Qs still not answered by Macreburs - 

1. Patents - especially for MR7 which is their main revenue driver. 
2. What are the full terms of deal with Instarmac. Why was a VC deal talked about  - Instarmac are not VCs. 
3. How will they get from £2m to £8m revenue by end of 2019? 
4. Conversion of loan to equity target dates - Seedrs state May 19 and CEO states October 19. Big difference in projections.

Hire Space Website joins the pile of Crowdcube successes

Hire Space help people and companies hire venues. They raised £500k on Crowdcube in 2016. Is this another pointless online venture?

The company told investors on Crowdcube that it expected to make a profit of over £500k in the YE March 18. The company's filed accounts for that year show a loss of £900k and the company is sitting on £900k deficit. No new money is filed as being raised since March 2018.

The accounts show that the company has a £500k loan outstanding with Barclays. The accounts state that the intention is that the bank will re finance this loan upon the company raising more capital via an equity release. Do we think the bank will want to know why a £500k profit has been turned into a £900k loss?

Debtors were 22% down on the previous year. 

Profits for YE March19 are expected to be £3.15m. 

Please do not forget that none of this is Crowdcube's fault. They do not encourage companies to create fictitious sales and profit targets. Investors, who are shortly to be charged by the platform for the privilege of investing in companies like this one, hand over their money willingly and in the full knowledge that they will never see it again. 

God bless them all. 

Cgon lose all their founding directors and have just one new appointee at the helm

Cgon raised £157k in 2014 from Crowdcube investors. It makes and supplies a converter for car and lorry engines. Now all of its directors have left the bridge and a new one installed this year is the sole active name at CH. 

Founders do not normally leave a successful venture. Well not until they have cashed up. 

We have written about them before here

Accounts are due out next month; the last set left the company in deficit. Those slightly disappointing results showed a loss of £160k against a Crowdcube projection of a £14m profit. Still, as Crowdcube keep reminding us, you have to allow for variances in these projections. 

We may need a new definition for the term Entrepreneur. 

Teachy joins Crowdcube's A list of failures as familiar names reappear.

Teachy or Learn Lingos  has eventually been wound up by a compulsory strike off at CH. You might be forgiven for thinking that this class ended a while ago. Accounts due back in June remain unmarked. In 2015 this Crowdcube success raised £148k from 82 poorly informed 'investors'.

Crowdcube projections in 2015 for Teachy, had the company making a £3.4m net profit by the end of this year. Maybe that had a part to play in the sale of the equity? Just saying.  

Huge losses replaced projected profits and new money was unavailable. The usual Crowdcube storyline. Although in this case, it seems the management team have gone AWOL and left the Government to clear up the truancy issues and classroom mess. That wont look good on your term report guys.

One of the Directors, Simon Grice, can be found on a number of Crowdcube raises. He was behind Ineed, which used CC 4 times and is now closed and was a member of Rentify (well before their 2016 CC raise), which also used CC and is currently late filing accounts, according to CH. Another one of Grice's companies, Ideas.ORG Ltd, is listed as being in liquidation and appears to have outstanding creditors of over £370k. It will be useful when our new site, ECF.Buzz,  publishes a list of people who have used ECF to fund and what happened to them and their companies. 

Dont forget, punters, to empty your pockets on the 14 November when the new Crowdcube drive for £8.5m opens up. You will need to be quick. With results like this one who needs caution.

Are we really trying hard enough to get this right?

Seedrs Transfer Guru closes down and reveals the truth behind many equity crowdfunding businesses - the lack of any planning or research and easy money.

Transfer Guru wont break the bank - they raised just £82k. Mind you 100 £82ks suddenly starts to add up.

In their end of life letter sent to Seedrs SHs they reveal a startling fact -

In short, after the round of investment on Seedrs, TransferGuru soon came to the conclusion that the consumer market was not able to offer the repetitive revenue required to grow the business. We made the decision to pivot into the business space. This is where we managed to prove some demand, but over the last two years, were unable to scale this with the limited funds available to us at that stage, and unable to raise further funds without being able to prove the scalability of our operations. Meanwhile, at a macro level, the new introduction of services such as Transferwise and Revolut for business provided additional pressure on TransferGuru's use case.

Well the first line says it all. Get the money in and then try to decide if the idea works. That is not how this is supposed to work  - You were only supposed to blow the bloody doors off.

We need entrepreneurs to underdstand that having an idea and getting funding to play with it is not really what ECF is about. You are supposed to use your own F&F money to get to that stage. This cash is far too easily accessed and is being far too readily wasted. Why would Seedrs allow this? Ah yes a thing called commission. Someone has to pay the bills. 

Lessons learnt? Well alomost certainly none. Roll up Roll up. 

Crowdcube's Emoov disaster was well signposted for anyone with their eyes open.

You dont have to dig far to find people telling you that Captain Quirk, CEO of the startship Emoov, is a bit of a fantasist. We supply below some links etc. In future, when we have our new site up and running,  ECF.Buzz, members will be able to use our research to find these things out before they invest.

So in the same week that Crowdcube are due to launch their latest funding round, based on the a lot of selective PR, we can tell you about Emoov, which raised £1.8m in September 2018 and another £2.6m in 2015. The company is now in considerable financial trouble (Quirk out) and has put itself up4sale. The 2018 Crowdcube investment at a £100m valuation now seems to be a galaxy away from reality.

Read the comments from the following.....................

Try this - from 2017

www.propertyindustryeye.com/emoov-boss-hopes-to-be-on-stock-exchange-and-have-5-share-of-entire-estate-agency-market-within-five-years/

Or this - from 2018

www.propertyindustryeye.com/emoov-to-close-crowdfunding-campaign-early-after-nearly-800-investors-chip-in/

This -  from 2015

businessadvice.co.uk/finance/equity/how-i-ran-a-successful-crowdfunding-campaign/

There is plenty more.

Dont forget to sign up to our new service next year - then you can avoid the more obvious howlers. 

Crowdcube raising more money...........here we go with the company that knocks the C out of exiting.

NO PICTURE CAN DO THIS JUSTICE

Use your Imaginations

Crowdcube looking to raise several million at a value as yet undisclosed. Where will the madness end? £6.7m already raised from existing institutional investors.

In the usual Crowdcube PRing sent out this morning to likely investors, Crowdcube talk a lot about their positive numbers. £335m has been successfully invested via the platform since 2011 - they trumpet. What does 'success' here mean? It has certainly been successfully transacted from the punters on the site to the companies pitching - but surely that is not too difficult. What has really happened to it since then. On this the PRing is eerily silent. Well of course it is; there isnt any good news

The answers are there for anyone willing to look. 

Yet another year has gone by with no real exits and plenty of failures; some of a very questionable nature. Crowdcube is still a long way off BE - and that is the real reason it needs yet more cash. An annual burn rate in excess of £8m with revenues 'projected' to be £6m. And we all know what Crowdcube projections mean. 

You can expect to see CC on Channel 4 soon as they done some sort of deal there. Which is a shame as I did like watching C4, especially their news. 

For all you punters who just cant keep you hands out of your pockets - the great opening of this latest farce is on 14th of this month. You have a week to get exited!!

Emoov, sadly going where no investor has been before....................for good reason.

Emoov may well turn out to be the end of Crowdcube. The company raised £2.6m in 2015 on the platform. It then merged with two other loss making online estate agents this year and on the back of a promised IPO, was allowed to raise another £1.8m on Crowdcube just 2 months ago. Now it is toast - albeit toast that is for sale. So what is it worth? Certainly not the £100m Crowdcube investors paid 60 days ago. 

We warned you all.......again. We knew about this a while ago but didnt want to prejudice the sale process by writing it up. Now it's hit the headlines. We had a sad email from an investor who says he has lost a large sum of money and that that is the end of equity crowdfunding for him. Well done Crowdcube.

The latest Emoov Crowdcube pitch has been 'taken down' by the platform to save some of their blushes but we wrote about their merger and the new campaign here. What investors were being told about the state of the company does not now appear to be quite true - ring any bells?

The captain of this ship is now saying that the cash runway has ended - that's 2 months after raising over 150% of the cash they asked for on Crowdcube. Yet another one for the good book - Russell Quirk (no typo) for the record. Quirk is reported by the FT to have said that the business ran very well for the last 8 years. That's the same business that has collected losses of over £10m. Yup that is some success story and we have not even seen last year's accounts yet. 

He can be seen here at end of the recent Crowdcube raise thanking people for all their cash - sends shivers..................

In a piece in the FT  - here, the same Quirk is now saying all this cash has run out. I would be surprised if anyone could find a more glaring example of gross mismanagement of anything, anywhere in this whole bally world.

Reports say that Northern and Shell, a major backer according to Emoov, failed to come through with the funds - leaving Crowdcube investors as the only source of new money after the merger. Who would have guessed that?

This is what Luke Lang had to say about the second Emoov Crowdcube raise -

We’re delighted to welcome our good friends at Emoov back to Crowdcube’s platform for this next raise, as the company continues to innovate rapidly in the property space. Emoov made a highly successful raise on Crowdcube in 2015, providing £2.62m of growth capital to help fund expansion.

Emoov’s crowdfunding success is a great example of how Crowdcube helps growth companies find capital to take advantage of market opportunities and build their brand while allowing investors who believe in the company to take part in that growth by investing as little as £10.

Luke Lang

Co-founder, Crowdcube

This is exactly why Crowdcube needs to lose its FCA licence. The evidence is there for the FCA, who do not need to go anywhere where man has not been before - they just need to wake up. 

Beam me up Scotty. 

91 active Crowdcube businesses filing accounts in the last 2 months show total losses for the 12 month period of over £47.5m.

Evidence does suggest that Crowdcube funded businesses dont do very well. All of these 91 and these exclude the 80 plus failures, were funded before the start of 2017. So they have had the money for 2 years.

This is not us trying to depress you - it is a fact. Of the 91, a handful have produced small profits  - in the low tens of thousands. Most have produced eye watering losses. All but one of the 91 have missed their projections by miles.

The one and only good news story is a company we have backed for a while - a London based restaurant that has not scaled. It remains a one unit business and it now makes an annual net profit of £500k. The Clove Club is a real business success. Why cant Crowdcube manage to get more of this type of success on board?

Of course there are a number of companies that are late or very late with their filings so there is still ahem........hope - ??

As we dont like others who choose to screw stats to make their point, we didnt include Monzo in this analysis. Their recently filed accounts for YE Feb18 showed losses of £30m. I'm pretty sure that had the analysis been 100% reversed and CC were PRinging it, they would have included this figure taking the total profit (in their fantasy world) to over £77m. They cant help themselves - but it really doesnt help anyone else.

LocalPropertyIndex.com joins Crowdcube's list of failures

LPI raised £159k from 40 Crowdcube investors in 2014. It spent the money on god knows what and has now closed.

We mentioned back in January that they had no website here - tricky for an online estate agent.

Founder Gary Smith has a lovely smile. As usual Crowdcube make no mention of this failure.

Evening all.  

Lickalix melts further into the red

This is a typical Crowdcube story. Lickalix Ltd raised £230k on Crowdcube in 2015. Things have not gone to plan. Pivoting has not produced profits and the company is now in deficit for £218k, up from £50k. 

The notes to the accounts state that profits in 2018 will address the deficit. In the year a director's loan for £300k was issued so that covers the shortfall. 

In 2015, the company had 'traction' in terms of sales of £40k - which is essentially no traction. The following year they projected revenues of £580k with profits and from here it was take off time. None of this has actually come to pass. Which is really no surprise to anyone with any experience in start ups. To drive sales from £40k to £580k in 12 months, Lickalix had a marketing spend of £60k. Then the following year they spent all of £120k to take sales to £1.25m. Both of these sums were based on real time cash generation which didnt materialise.

There is your problem - well at least one of them.

Recent pivoting into the baby food market with their Baby Cubes could be a solution - although it's a new product into a new market which is so much harder than keeping on those two variables constant.  The traction is hard to gauge with low numbers of reviews on Ocado. 

It is such a shame that a business with a good product by all accounts has, through a lack of knowledge, managed to dig itself quite a large hole. It remains to be seen if they can get out of it. 

Renovagen pivots and turns to Indiegogo to spark production of its mini unit for free distribution to NGOs.

Renovagen used Crowdcube to raise £1.25m from over 900 investors in 2014 and 2016. Plans have become a little crumpled since. In a new PR push, the company is now raising $50k on Indiegogo to enable it to hand out its mini unit, FOC, to NGOs. It is certainly a novel approach.

The company has not delivered as per its Crowdcube sales pitches. The larger units have taken too long to sell through. 

What is striking about this new Indiegogo pitch is the chaos. Looking at the 'rewards' we gave up trying work out what was what. There is a branded baseball cap with no branding and some fast fold cups and water bottles. There are also potable solar power things  - a key ring torch for example and a branded solar charger. It is a very mixed message. Prices for these rewards suggest that this is charity drive rather than a creative project. Not the norm for Indiegogo.

It is incredibly vague about how the cash will be spent. A minimum target, we are told, is $50k but they hope to fund to many times that. We are also told that these mini units are not yet in production - they are prototype. Then we are told that the cash will be split between 'our overhead costs' of production and the delivery of the free units. No percentages are given. Hmmm. Vague assurances are given that X units will be dilivered FOC but that depends on getting in an undisclosed level of cash. So, for all donors know the 'overhead' may be taking 50% or more of the donation. That means that people donating may be, in reality, paying for the company to stay alive. That is not what Indiegogo campaigns do and it is not what this campaigns claims it is doing.

So why so vague?

There is a list of NGOs who have expressed an interest in receiving a free a solar power unit - in reality this list could have included every single NGO on the planet. Who wouldn't want a totally free unit?

It will be interesting to see where this raise goes. There can be no doubt that it will benefit NGOs working in some of the worlds poorest and most needy areas. But what will it do for the 900 investors in Renovagen?  

Airlander gets a boost from £21m insurance payout

The Airlander project, backed by over £2m via Crowdcube investors, has had a windfall of £21m from the airship's recent escape from its Bedforshire home.

As the company admits, the machine was badly damaged when it slipped its moorings. However silver linings come in in all shapes and sizes and the company is now reporting a net profit of over £2m due to the excess cash from the £21m  insurance settlement.

Which is fortunate as the company recorded losses of over £2m without this exceptional item. On the back of all this, new investment to the tune of £5.4m has been raised and new debt for £2m is now on the books. 

Might be a while still before shareholders get to see any fruit. But the lucky calamity on the 18 November 2017, is just the sort of thing this type of project needs to see it over the line.   

Crowdcube's Ideas Britain makes the case for full reporting.

Ideas Britain raised £270k on Crowdcube in 2015 at a valuation just shy of £5m.  It has not done much since. Crowdcube projections had the company making a nice £3m profit in 2017. There appears to be no website, which for an online company seems a little careless. 

We wrote about Adan Shaw and his company a year ago and received threats of legal action from Jonathan Coed, who is a consultant solicitor at Keystone Law and a director of another one of Adam's dormant companies. What is a consultant solicitor?

There is more about Adam and Ideas Britain here 

The accounts for 2017, just filed at CH, are odd. The figures for the previous year in this filing are materially different to the filing at CH for YE Dec16. The bottom line, which was in deficit at the end of 2016 is now in credit to tune of £287k. No new cash is filed as being raised in the year and the cash balance is £4k. FA remain constant. 

The long term debt has been hugely reduced. Can it be that large profits have been used to pay this down? Without a website? 

None of this makes much sense to us. Micro accounts really are a bit of a farce and shouldn't be allowed when companies access cash from the public. Fine if you play by the rules and access your capital privately, but enter the public arena and you should be obliged to file a P&L, balance sheet and notes.  We have notified HMRC about the 16-17 issues and asked Adam to comment; via his consultant solicitor.