Filmore and Union is the latest Crowdcube success to join the scrap heap.

On, on, on we go, as if everything is fine. But it is not. As yet another Crowdcube success, the cafe chain, Filmore and Union, goes into administration. It used Crowdcube to take £860k off punters with promises of profits in 17/18 of just under £1m. Dream on.

Why cant we at least see how wrong this is and do something to change the outcome? Of course you will get the usual glib response you always do from the management at Crowdcube. They took their commission on £860k years ago.

Filmore had a much larger investor than Crowdcube. BGF (no not something out of a Dahl story but the Business Growth Fund) put in £3.5m in September 2017. That was a good call guys.

We warned about this outcome in January 19 - here 

The administrators have, according to a piece in the Beeb, managed to sell off the production kitchen and ten stores. That will not provide any crumbs for investors.

Onwards.......................... or maybe not. We had this sent to us today 28 May - disgraceful......

From the staff at Filmore & Union, Skipton. We regret to inform you that this site is now closed. All members of the team have been made redundant, with no notice period or payment and have been treated unfairly by those in higher management, leaving the government to pay us for their mistakes. We are all due six weeks of pay including holidays (AND the compensation pay - that we will not receive). Please boycott other Filmore & Union sites from now on, all they care about is their money.

Feel free to join our group --https://www.facebook.com/groups/2251632458261055/

Redchurch - Red Faces. Debts to HMRC of almost £950k.

Redchurch Brewery's collapse is being blamed by management on the departure of their Head of Sales. The fact that they owed HMRC £950k and were under threat of imminent action might also have something to do with it.

Looks like these guys couldnt organise a piss up in a cardboard box.

The Administrator's report is rightfully damning. Redchurch took almost £900k off around 700 Crowdcube investors in two rounds. And they couldn't even replace the Head of Sales or pay the tax that was due.

The big departure, which led to a 'significant downturn' in revenue according to the report, took place in 2017 - the same year of Redchurh's second round on Crowdcube. The timings would be interesting as this wasn't mentioned at the time. You also have to wonder if this is how business really works. Sales are generated in advance and once pull through starts, they carry on. The HofS' job is then to gain new business. So a significant fall in existing revenues should not be caused by his departure - not in the short term.

We have evidence that shows that the Head of Sales in their 2017 pitch had only joined the company in 2016. So how is it possible that someone who has been at the company for around 12 months can have such an enormous impact on departure?

We also have evidence from this second round that the pitch changed its rewards upwards to increase investments. Bet you guys who bought into this - in fact some of you requested it - are now regretting the move.

The Director owed the company £21k in an outstanding loan and the debtors contained £35k of write offs. Some creditors will claw back something and the Insolvency guys are happy, as the company was sold in a pre pack for £220k to a newco - Redchurch London Ltd. Investors lost the lot including their perks.

So here we have the crazy situation where HMRC are giving invetsors 30% tax breaks on investing in a company which 20 months later has wracked up unpaid tax debts of almost £1m - which are now largely written off. And investors were only investing for free beer and the 30%. Building UKSMEs my arse.

Next round's on you. 

Equity Crowdfunding is embarrassed by Loot administration

Seedrs and Loot were both promoting their up and coming funding campaign - Seedrs were already taking early interest. Then Loot spoiled the party by going into administration. Whoops. 

We have already seen quite a few instances of equity crowdfunding campaigns completing and then the company taking in the cash closing within 12 months. Some of these have looked like the company hadnt revealed the full degree of their financial distress - resulting in the crowd being taken for a ride. 

With Loot, Seedrs have claimed that the early registration was just that - it didnt mean that the company was about to launch a campaign, as Seedrs had not, apparently, signed off the due diligence. That will be an enormous comfort to Seedrs investors who might have thought they were promoting a company in financial meltdown. 

It seems Loot didnt know this, as they declared on their home page 'WE ARE CROWDFUNDING'.

It also seems that the Seedrs PR department had not been informed as Im told the London Tube thank you anon) is full of Seedrs adverts pressing home the Loot funding opportunity. Oh dear, looks like someone has been telling massive porky pies. 

Whichever way it happened, the outcome is farcical.

It is our understanding that the deal with RBS fell through - this is the deal that the likes of https://www.crowdfundinsider.com/2019/01/143021-digital-banking-startup-loot-secures-new-investment-from-rbs/ told everyone was completed. Seems RBS have more than one way of wrecking start ups.  

It's a jungle out there and you would be well advised to sign up to our new site which goes live in July - ECF.Buzz which will give you the tools to avoid many mishaps and also a chance to discuss successes and failures with other investors - free of the platforms' interference. 

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The saga that was Giftgaming enters its final stages - Seedrs investors should be unhappy.

Useful things brooms. Giftgaming has chosen a VML for its demise, or as the Liquidators have described it, a 'solvent liquidation'. Hmmm......

We have written far too often about Giftgaming. Nick Hatter the CEO has been at the centre of  this collapse. 

Now he has signed a declaration of solvency which shows no regard to Seedrs investors whatsoever. 'Creditors' under our current system does not include shareholders. Given that they are clearly creditors with the rise of equity CF, much the same as banks with O/S loans are, the law needs changing.

Seedrs have admitted to their customers, the investors, that there is no hope of them getting any money back. They claim to have made efforts to get some action from the Insolvency Service but the Service said NO. So now they say they just want this closed asap. 

Meanwhile out on the street, Seedrs investors are left High and Dry. OK, so its not a large sum but Seedrs promoted this company twice to its clients. How hard they tried to resolve this for their investors is an open to question - they certainly do not want to prolong what has been an awkward mess.

But that is where the broom comes in. 

Threefold rise in complaints to the Financial Ombudsman Services for Equity Crowdfunding.

 

As we predicted, the 3-5 year time lag for equity crowdfunded business to spend their investment and close down, is now rapidly pushing up the number of complaints to the FOS. Numbers are still small as are the failures but the backlog of zombies waiting in the wings is huge. Like a Fruitbat Rave. 

It is sort of obvious but people have been pretending it isn't. If you fund rubbish businesses run by mediocre business people, with crazy financials, they will not last. Now in 2018/19 we are starting to see the consequences. Our new platform ECF.Buzz, when it launches in July, will have a database of over 1200 funded businesses. You would be amazed at the number of these that are zombies or going nowhere - but that have not closed. Amazed  - not in a good way. Complaints to the FOS only ever come after a business has officially failed. 

So the 3 fold rise from FY 2017/18 to 2018/19 from 26 to 78, is hardly a surprise to us. We'd be pretty certain that this 78 is made up from Ethos Global, Sugru, Emoov, Recruitive Software, Fantoo, Stamplay and Gartenzwerg . We are now helping investors make these complaints and the FOS do not make it easy. Like Parkour, it isnt something you would try more than once, unless you live in Gaza. It actually makes you want to cry. 

We would not be surprised to see this number go up by ten times or more for 2018/19. Pigs are pigs, even dressed up at the bar. At some stage one of them will fart and give the game away. 

Another Crowdcube brewer runs out of hops

Following on the mess at Hopstuff, The RedChurch Brewery Ltd has gone into administration taking all its investors with it. This is not a place they wanted to go. It certainly will not deliver the perks that over 700 investors were looking forward to.

Redchurch, a London based craft brewer, used Crowdcube twice, in 2016 and then 2017. A total of just under £900k was invested by the Crowdcube faithful. Accounts were due next month.

The numbers are not out yet  - The Gazette posting was only a few days ago. Nothing filed at CH. Maybe this will be a prepack. Investors will still lose out. 

Lessons learnt - none. 

Members of ECF.Buzz will be pleased to know that we had them (Redchurch not our members) marked as hospitalised following last year's accounts, which showed a loss of £290k against a Crowdcube projected profit of £412k. You see these things do actually matter. 

Love making up projections as Crowdcube's Lovespace yet again disappoints

Space  - the final frontier. Etc etc. Love it or loathe it, it helps if the facts can be the facts. Lovespace's Crowdcube projections are now on their second iteration and they are still way off, somewhere in a Galaxy far far away. 

If they could hear shareholders screaming in space, it would go something like - FFS why cant you just be honest with us. Ok so it takes longer to grow a new business - who knew that? But why set out completely unobtainable goals, spend the cash to get there and then turnaround when it is obvious you are way off line and ask for more money. 

So here are the facts. Lovespace have used Crowdcube twice. Total raised of around £2.35m - so a large enough number to care about. In their first raise in 2014 they predicted net profits for 2017 of over £7m. Ok so they were young and ambitious. Needless to say they didnt get close. 

Short on cash they came back in 2016 - no one seems to have asked about the 14 numbers except us - here. In these projections, the accounts they just filed for YE Dec18, showed a handsome net profit of over £3m. When you read the accounts you will be surprised, like we were, to see that the real number is a loss just shy of £1m. In fact despite projections, this is their best result to date. Losses are now £7.5m.

The company has raised another ~£534k this year so far. It was at a lower share price than in 2017 which is never a good sign. 

Our new Buzz Rating - available to members of ECF.Buzz, has given Lovespace a 9 point drop since last year. 

I dont think you would get this situation in any other financing channel - without something being done about it. Isn't it time we did something?

How Crowdcube customers feel about Crowdcube

Crowdcube's new app claims to be a crowdfunding tool for entrepreneurs. Everyone knows that when the engine is smashed to pieces, installing a new satnav will not help your car get you where you are trying to go. It needs a rebuild.

On the App Store there are reviews - we think this one pretty well sums up what most shareholders think about Crowdcube - 

Brightonbee, 03/03/2019

Disappointed with lack of support

In 2014, I invested £5000 in a startup retailer selling goods from British craftespeople. I am disappointed at the lack of information and support I receive from both parties - the business and the funding platform . Whilst I know crowdfunding is risky and in hindsight, there are better ways of investing £5k, my shares have been diluted and requests for more information have been met with ‘ our accountants cannot deal with individual requests from shareholders ‘ Contact with other shareholders is non existent and I have been asked to vote on share issues and when I asked questions , I was met with ‘ no

Need , we reached our target ‘ where is the evidence ???? This lack of transparency is disconcerting . Similar experiences anyone ? Felt supported ? Kept informed ?

We think we have the answer. ECF.Buzz will hand the power or at least some if it back to investors. We know exactly which company Mr Brightonbee is talking about - they are on our database. Our Buzz Rating for them is 35/100 down from 40/100. All indicators are facing the wrong way. Accounts due out this September and the note above will knock them down further. 

Mr Brightonbee's story is one we come across weekly. 

So why not join us - we are the sum of all of our members experiences. Together we can hold the platforms up to the light and ensure that they improve their due diligence and as a consequence , their offers. It is common sense. 

The Lies We Tell. Seedrs caught promoting a successful raise in 2016 that never happened.

We came across this, by accident, when building our DB. It is the shocking revelation that Seedrs are happy to tell people that a company using their platform in January 2016, successfully raised £186k. In fact no money was finally raised and no shares were issued. That was 3 years ago - so why has this information on an FCA regulated site, not been corrected?

The company in question is a bar operator and beer producer in Brighton - now going great guns and they were extremely helpful in supplying the correct information. We hope that they go on to make something very special down there. 

Back to the culprits. Seedrs have a duty of care under their FCA licence 'not to present misleading information'. So do we think that completely bogus funding claims are misleading? Well, we do. Should it be up to us to tell them this? No. Why cant they just be honest or are they incompetent? Well you can make up your own minds on that one. 

There is a very good and very sensible reason why this 'successfully funded' pitch never funded. The plan had involved the Landlord of the building that The Bison Arms was to be created in. In the end he and they did not see eye to eye and the so they never called on the funds or issued shares, even though the pitch had reached almost 200% of its initial target. Or so they tell us and we have no reason to look for any other explanation. There are no records we can find of any shares being issued to this value. 

So Seedrs how many of your claimed 'fully funded' records are bogus? 

Zing Zing Express orders up a CVA and Pivot to save the day. Was this on the menu?

Bizarrely and much to the irritation of some Crowdcube investors, Zing Zing have applied through Begbies for a CVA at the same time that they were trying to raise more money privately from their shareholders. We are not sure if the one knew about the other. One thing thing is clear - no Crowcube investors have a vote in the future of their company. Crazy stuff they are putting in these takeaways. 

Zing Zing is one of Crowdcube's larger and more recent successes. For those of you who can stomach Crowdcube's endless PR, this is their appraisal of how successful they are -  https://www.crowdcube.com/explore/investor/zing-zing-where-are-they-now

Zing Zing raised just over £1.5m in 2016. Everything appears to have been downhill since. They were projected to be in profit from 2017 onwards. Obviously that has not happened. Losses for YE Dec17 were £750,000. We have them marked way down on our Buzz rating.

We wrote about at the end of 2017 when they tried again on Crowdcube - worth a read of the comment from a serious investor. http://fantasyequitycrowdfunding.blogspot.com/2017/12/zing-zang-baby.html

Whether they manage to get support for the CVA will be one to watch. Vote on 22 May.

One fact we are sure of now - Crowdcube are consistent in their ability to lose investors their cash. Why? Well simply because they dont care what rubbish they publish on their FCA platform. Nor apparently does the FCA. We do. Join us to make a stand for investors at ECF.Buzz. Equity Crowdfunding can be so much better than this.

Pod Point is a great illustration why Equity Crowdfunding platforms shouldn't bother with financials

Pod Point are well placed to take advantage of the increasing sales in electric cars. Or so they tell us. That is great, as their projections on Crowdcube stink.

The have used Crowdcube 3 times and Seedrs twice. Total raised to date via equity CF is ~£9m. 

So why cant they get their projections in the right ballpark? Out of the 3 attempts on Crowdcube not one of them is in the same galaxy and the originals are in a different universe. It just makes a mockery of the whole system. 

YE June18 shows revenues of £11m and GP of just £2.1m. It costs over £7m to achieve this. Deep pockets dont seem to be an issue so it is just a question of time and electric car demand. If for some reason that doesnt show the exponential numbers predicted - for example we find a better way - then that is that. Lots a power points with no users. 

2019 will see more cash required at a substantial level if these numbers are anything to go on. 

We look forward to the future.