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Thursday, 28 March 2019

Spring normally brings a Chirp or two - not this year.

Chirp have filed what shareholders who invested via Crowdcube and Angels Den, must consider disappointing results for YE June18. A loss of £1.59m against a projected profit. 

It is not unusual for start ups to miss their projections but with equity crowdfuding it has become guaranteed. Which is not sensible. 

Chirp are just one example. With losses now amounting to over £4.1m to June18, readers will not be surprised to see that this is not what they planned when they sold their equity on Crowdcube and Angels Den. YE June18 had a substantial projected net profit with balance sheet losses of only £1.5m. 

Spring is full of optimism - so here is hoping that they can turn this around. No one wants it to go tits up. 

Wednesday, 27 March 2019

Nutmeg on Crowdcube - the definition of insanity

Nutmeg have announced that they will be raising around £10m on Crowdcube this year. The valuation is rumoured to be £1bn. That is 4 times the valuation that VCs like Goldman Sachs, paid for the company two months ago. What a bargain?

In what really appears to be a clumsy PR stunt, Nutmeg has announced it will be on Crowdcube later this year. But investors have to be customers. Nutmeg claim that this will democratise the company. This is apparently how we are now to view 'democracy' in action. Join first then you can invest.

Nutmeg is making impressive losses and recently secured some serious VC backing (Goldman) - at a valuation of ~ £245m - so the Crowd is being asked to cough up 4 times that. An increase in 2 months which for a loss making outfit is impressive.

Nutmeg don't really offer much that you cant, with a little gumption, get for yourself for free. Unfortunately that very idea, making the possible achievable with zero effort, has become a highly influential business model. If I'm brutally frank it's rubbish and should be called out as such before we all lose the will to live.

Tuesday, 26 March 2019

Holly and Beau Singing in the Rain as it reaches Seedrs target.

Holly and Beau make fun kids rainwear. They raised £80k on Crowdcube in 2015 and had up until now failed to deliver any numbers that made investors want to sing. Now they are completing another small round on Seedrs. 

It is great to see small businesses trying hard. But it would make a lot more sense for all of us if they would be a little more sensible. Holly and Beau should be making many thousands of pounds of net profit by now - this year was supposed to be their third year in profit. As it has turned out they have filed nothing but losses since funding on Crowdcube.

Still with the backing of some 'anon' investors they have now completed on Seedrs. We couldnt find any mention on the Seedrs pitch of the Crowdcube one or the failed targets. Which is a shame; maybe we missed it. Statements telling punters that the revenue has doubled each year are so pointless  - from £1 to £2 is a doubling but it is still pants.

A couple of points here. They say that the patent is still pending. But the stated aim of the 2015 funding was to obtain a US patent. They have a 60% US export market and only sell a tiny fraction of their product in the UK.

Oh well when we have ECF.Buzz up and running, members will be able to instantly reference a company like Holly and Beau, look up their funding and see how they have performed since. Then they can make a sensible investment decision based on the full facts. Non members will continue to fly blind.

Monday, 25 March 2019

Seedrs Gartenzwerg applies for liquidation and plans possible phoenix whilst still accepting donations on Indiegogo.

Gartenzwerg raised £260k on Seedrs in February 2018. Now it has written to these same shareholders to say adieu and sorry. Ahhh. And if you are lucky you can still give them your money via their active Indiegogo Campaign!! Backers are not amused. 

Of course the £260k was well spent and there is the stated hope of a phoenix post liquidation - is stating that even legal? Acting with the intention of ditching creditors via an administration and liquidation is not allowed. But seriously, who is going to notice. HMRC  - no way.

They are currently still on Indiegogo, despite telling backers they are not now going to get anything,  where they have pre sold £36k of their product and the page seems to be still taking cash in 'In Demand' mode, which has a certain irony. Read the updates and comments here. All sorts of excuses about how expensive the moulding would be  - didnt you think of that before you took other peoples' cash?

Here is a Q&A from 5 months ago - remember this customer has already paid - :(((

I am not away on holiday in Dec. Can I get it delivered in Jan (already ordered)
Campaigner5 months ago
Hi Leanne! Yes, of course, no problem. :)

It is a free for all. We advise companies to help themselves to this free money whilst it lasts. Investors will not be let down time and time again without some reaction. 

Wednesday, 20 March 2019

Two Heads Beer puts its Beer Boutique into Liquidation. It funded on Crowdcube valued at £2m less than a year ago.

Image result for empty pub

332 Crowdcube investors put in £375k in the Summer of 2018. Now the founders have told them that The Beer Boutique Ltd - part of the group with 3 stores, is closing down via a CVL.

I dont suppose many of us are surprised. 

The speed of the collapse is a little shocking given the valuation just 10 months ago. And the reasons given are, to be honest, pathetic. But the upside is that they hope by off loading this loss making part of the business, they will be able to rescue the rest. I dont remember it being a loss making part in the business plan. 

I wouldnt be holding my breath given the horlicks they have made of this whole business so far. 

Friday, 15 March 2019

Stamplay sold to Apple as Seedrs investors receive a 2X return.

BREAKING NEWS - Stamplay, which used Seedrs to fund, has been sold to Apple for around $5m in a much needed boost for equity crowdfunding. 

Whilst Seedrs nominee SHs will have to wait 2 years for the full ROI, their initial return is two times the principle excluding EIS reliefs. Stamplay founders remain with the company and will now be employees of Apple. A great result for all.

The deal suffers from the now normal problems with Equity CF SHs not being given full disclosure and with no choice but to go along - or rather be dragged. But it is a return in a sector that is very lite on them so far.  

Stamplay used Seedrs for multiple rounds between 2014 and 2016. 

How to invest in Start Ups - or - How to Waste your Money - ?

A small start up funded via Seedrs in 2016 and then refunded 2017; valued at £750k. In 2018 it closed. No fuss, just closed by compulsory strike off. No accounts since initial accounts for Jan 2016. £140k down the pan. We could have helped investors avoid their loss. It was, put simply, a very pointless idea. 

It did make me laugh out loud when I came across it. You know the sort of business idea - ' Hey - you know the internet, well we have developed an app and it's really useful and it turns something that was 20C into the something 21C'. The problems arrive when you see that it does no such thing. In fact its only reason for being is the internet  - well that and to raise funding via Seedrs, who were stupid enough to give it space on their platform.

Muzeum is the offender. An app that takes all museums and personalises them for you. So you, the visitor, can have a fully personalised experience in the museum of your choice. Claims made on the video showed that an architect interested in buildings and schoolboy interested in gaming could both get personalised experiences from the same place. ..................Yes,  I know.

Complete and utter nonsense. Dont take my word for it - just look at the result. Farcical. 

Tuesday, 12 March 2019

Crowdstacker take another hit as Authentic AleHouses calls in the administrators with a £6.4m oustanding P2P loan

So following the disaster with Burning Night, Crowdstacker investors are now facing a £6.4m hole as Authentic Alehouses collapses. And AA were set up by the same team as Burning Night.

P2P lending is taking a bit of a battering. We will have to see what the administrator can achieve on this case.

AA took out 8 separate loans via Crowdstacker in October 2018 (see comment below) - so a little over 4 months ago. It now looks as though this money is at risk. We are not really sure how they managed that.

Monday, 11 March 2019

We are looking for partnerships and we are coming to London 4th June to 6th June

A sneak preview of one of our Pugh cartoons for the new ECF.Buzz site. 

So we want to talk to start up incubators and investors who are truly interested in creating sustainable UK SMEs. Get in touch via rob@ecfsolutions.co.uk.

We are also planning a trip to London and have spaces available to meet with people at The Grange St Pauls, on Tuesday 4th and Wednesday 5th of June. Our last trip provided some excellent results and with this one coming just before the launch of ECF.Buzz, we hope for even better ones.

The new website is coming along well - our Company Tracker database of over 1000 businesses funded via equity CF, will be the best resource on UK ECF in the world - I know that is some claim but it's true. We have some exciting experts lined up to take you through various specialist areas and the forum, which will be the first truly independent forum for UK ECF. And of course the library facility will give you access to all the things you need to make better informed, investment decisions.

If you have not already joined you can still  get the discount here 

Seedrs' Eat Square pack up and hand the keys to the Admin Boys

Seedrs had Eat Square on their site raising cash recently. Now Eat Square has gone into administration. The Gazette for this was posted a while ago. It does beg the question  - did Seedrs investors know that this was a last ditch attempt to fund the company at a valuation of £860k?

Eat Square had raised initial funding on Seedrs in 2017. Then a Morrisons' local listing gave them a boost. But lack of funding and planning (for the new funding) have left the company cashless and in a hopeless position. How many times do we have to see this classic over trading before founders start waking up? 

There is absolutely no point in having a fantastic product and listings coming out of your ears if you cannot get the basics right. Lack of cash is a death sentence for any business and it is all avoidable with planning. 

If you want to learn how - join ECF.Buzz. 

Wednesday, 6 March 2019

Fantoo da loo and Goodbye. Another Crowdcube Alumni hits the rocks. We did warn you.

A hommage to the recent departure of The Prodigy lead. Beats talking about yet another Crowdcube failure.

Fantoo talked a great game and came up way short. Backed, in a way that was never very clear, by Dell, this email organiser was run by a guy whose feet never touched the ground. Only a few weeks ago he was emailing SHs asking for more emergency cash so that they could get to the next stage and raise more cash before raising more cash to get to the next stage. Punters declined. Although there are filings showing new equity investments as late as last month.

At the end of 2018 the company gave shares valued st £40k to an OS creditor in lieu of payment - now that was some deal! And at the end of January 2019 the OS debt to Finstock Capital Ltd, which had only been registered in October 2018, was fulfilled. Neat timing on a very short term facility!

We wait to see what happens in the administartion but a pre pack wouldnt be a surprise. When is it?

Monday, 4 March 2019

Eebria, funded via Seedrs and Crowdcube, bring some good news out of the Gloom.

A good news story - I knew if I kept looking there would be one. Eebria have used Seedrs 3 times and Crowdcube once and for YE Dec17, they broke the mould and reported profits of £400k.

Farcical really. This company have now reinvented their accounts  - only after our intervention and are now reporting a £349k loss for the year. What a shambles. In fact on the Seedrs pitch now, which is almost completed, they state this 'error' was merely a technical and human one - nout to worry about. We do not agree. How can you as a director sign off your once a year annual accounts for filing at CH and not notice that it states a £400,000 profit and yet it really means a a £350,000 loss? It is not relevant whether these are micro accounts or not; the bottom line was out by many tens of thousands of pounds. Crazy stuff. 

Eebria is one of a newish breed of online craft beer and cider suppliers - on a monthly subscription model. The secret to success here is perfect service combined with keen pricing and a touch of imagination in the selection department.

We dont know why they switched for the last round, but they have blown their predicted Dec17 £200k plus loss, away. Valued at £6m on Crowdcube the jury is still out on that round but Seedrs investors must be pretty happy.

It does of course all depend on how they kick on now - now they have broken into substantial profits. Good SM and reviews bode well in a space where there are too many operators with less then healthy reviews - most of them Crowdcube alumni.

From the numbers we have, Eebria must have doubled their projected turnover of £4m and if they did, things look good again for 2018.

This story comes with a small but rather essential caveat. If one looks at Eebria's filed accounts and its new share issue filings - they are nonsense. According to the YE Dec17 accounts they have only £1,115 in issued share capital and no share premium account. But we  know that is wrong. So it maybe that the P&L account includes (incorrectly) the share premium account. As if to stress this worry, the last filing for shares issued for the Crowdcube raise, is total jibberish.

On the Crowdcube pitch financials, they have a SP account worth over £1m for YE Dec17!

Really, who knows. It would help if they knew how to do their accounts. We keep looking.

Friday, 1 March 2019

The true scale of the mess at Emoov is only now being revealed. It was all avoidable.

A bit like - Ukip, I'll drive;  Emoov- doesnt. It's administration is revealing the real facts behind its collapse, just months after Crowdcube allowed it to take £2.6m off its investors. The filed documents now reveal that someone somewhere must have known that the pitch on Crowdcube was not all true.

We warned investors not to touch this one, when Emoov came back to Crowdcube in June 2018, to raise more cash after it it had bought out Tepilo and Urban. Emoov had already shown that their 'projections' were completely untrustworthy. In their first Crowdcube raise, another £2.6m in 2015, the company told punters they expected the revenue for CY 2017 would be £15m and in 2018, £39m. That was without any mergers. The actual revenue for YE Apr 2018 was £2.2m. That sort of says it all.

No mention of this gap was ever made in their last Crowdcube raise. And for all of you who poo poo our analysis of this gap, maybe time to think again?

In the IM for this raise, checked and verified by the Crowdcube Broom Cupboard, Emoov told investors that they had a combined customer number of almost 50,000. They also stated that the business was built on TRUST (their caps). The filed Administration report states that the company had 2,400 active customers when it failed. So that's 50,000 down to 2,400 in 4 months. That is some churn rate - more like extinction rate. It doesnt exactly thrust the T into rust.

According to the same filings, the company's own management accounts showed a loss of ~£15m in the 5 months prior to September 2018 - so that would be from May to September 2018. A response to this came back from the CEO, here, in which he claims that the company could not have known of these losses when they were live on Crowdcube - as he put it, because they were in the future.

He told EAT: “The crowdfunding campaign was in July ... Just one month after the Tepilo merger. How on earth  could we possibly have declared ANY financial information about the ‘losses up to September’ in July - three months hence?

But they were live on Crowdcube in June and July and did not complete the raise until August. All three months are within the 5 month period. And these were the companies OWN management accounts! So you have to ask did Emoov knowingly promote itself on an FCA regulated ECF platform, knowing of the losses being incurred but failing to mention them. If so did the Broom Cupboard know? Certainly investors did not.

One problem here is that the only rule the FCA have set out for ECF is that pitches must not be misleading. No case has yet come to court to explore what 'misleading' means. Is it just about a false statement of fact or is it also about not revealing relevant information? Then, of course, the climax of lawyers start over on what 'relevant' means.  Whilst Crowdcube claim to check what companies tell them, they do not check what companies dont tell them. And they deny all responsibility for the IM anyway. So being FCA regulated is really as useful as being a donkey at The Derby. You're visible and lovable but of no use, unless you want to get rid of some carrots. Too many days at the Dogs.

In the IM, Emoov make no mention of Ebitda or losses. We saw this as a huge red flag. With Crowdcube pitches, what they dont tell you is always more important than what they do. I leave you make up your own minds.

Emoov owes a lot of money to a lot of people. Its valuation, £50m to £100m in August 2018 on Crowdcube, can now be laughed at. But the driver for this value was its performance  - past and future. Were investors given the real facts? The business was so successful, it could not be sold. In total, its assets raised just  ~£300k. Unpaid Creditors are likely to be north of £14m. Crowdcube investors have lost over £6m. It has been an epic disaster - one of Crowdcube's best.

You have to wonder if people will ever learn. We would say that there is little doubt that Emoov held back on the real information about their financial position and that Crowdcube, knowingly or otherwise, failed in their duty of care to check this out. But the signs were all there for anyone who read this blog. And we will continue with and enhance this service once ECF.buzz is launched in the summer.

This is not the first time this has happened and the only two winners are Crowdcube, who retain their commission and the administrators. It really is time the FCA got its act together.