So there we have it - Crowdcube investors put in £6m and will lose 90% of it. Another great success for the platform - by far its largest disaster yet.
We predicted this as soon as we saw that Sugru couldnt get close to their projections from 2015 - we warned investors in 2017 that this would go pop. Read about it here
Sugru always made bold promises but never delivered. A bank financing deal recently collapsed, nailing this innovative product - or you could put it down to naive management. There is nothing wrong with the product. In fact it's a fantastic.
We revealed a few weeks ago that this was happening only we didnt reveal the company name, as we didnt wish to harm the deal. Thanks to our source on the inside.
Sugru tried and failed in 2016 to raise £1.5m on Envestors at a valuation of £30m - so its not just CC getting this all wrong.
We revealed a few weeks ago that this was happening only we didnt reveal the company name, as we didnt wish to harm the deal. Thanks to our source on the inside.
Sugru tried and failed in 2016 to raise £1.5m on Envestors at a valuation of £30m - so its not just CC getting this all wrong.
Sugru is now owned by a German company, who have purchased this £40m company for £7.6m - most of which is going to pay off debts. No doubt the Germans will pull and push it into shape and go onto make a fortune with it. The founders all get to carry on as before. We the tax payer, get to help the Germans make loads of wonga. A sort of 8-0 world cup defeat.
This is a classic case of over trading. Stretching out your company so far on the costs side as you rapidly expand, that if there is a failure in either funding or sales, even just for a short period, then a perfectly viable business gets into trouble. Here we have both sales failing to live up to the expectations and the bank withdrawing - perhaps with an eye on the sales. In military terms its known as over stretching your supply lines - See US Marines at Coshin, North Korea, as an example.
It is our opinion - you knew we would have one - that the way Crowdcube operate has brought this about. Businesses are encouraged to grossly exaggerate the up side of their performance - in that way they can raise their valuations on future expectations. It sexes up the platform and gets the investing juices flowing. As no one at Crowdcube has ever run a successful business, building it up gradually from the bottom and avoiding this mistake, then they have no advice to give campaigns except - max it out. Formformform Ltd, the founders of Sugru, fell straight in to the trap. As so many others have - all via Crowdcube.
Their first Crowdcube raise projections had them making £1m loss in 2016. The actual accounts show a £3m loss. Are you surprised given this gap that they got into financial difficulties? One major issue was the fall in their GPM - whether through discounting or higher COS it was projected at 54% but came in at 42%. You simply cant run a business based on that sort of error.
This is a classic case of over trading. Stretching out your company so far on the costs side as you rapidly expand, that if there is a failure in either funding or sales, even just for a short period, then a perfectly viable business gets into trouble. Here we have both sales failing to live up to the expectations and the bank withdrawing - perhaps with an eye on the sales. In military terms its known as over stretching your supply lines - See US Marines at Coshin, North Korea, as an example.
It is our opinion - you knew we would have one - that the way Crowdcube operate has brought this about. Businesses are encouraged to grossly exaggerate the up side of their performance - in that way they can raise their valuations on future expectations. It sexes up the platform and gets the investing juices flowing. As no one at Crowdcube has ever run a successful business, building it up gradually from the bottom and avoiding this mistake, then they have no advice to give campaigns except - max it out. Formformform Ltd, the founders of Sugru, fell straight in to the trap. As so many others have - all via Crowdcube.
Their first Crowdcube raise projections had them making £1m loss in 2016. The actual accounts show a £3m loss. Are you surprised given this gap that they got into financial difficulties? One major issue was the fall in their GPM - whether through discounting or higher COS it was projected at 54% but came in at 42%. You simply cant run a business based on that sort of error.
The only losers here are the shareholders. But they should have known this one was going to come unstuck with the valuations Crowdcube allowed them to sell themselves at and the ridiculous projections which they missed year on year.
Isnt that what we have been saying for a while now. Sugru would have been a mainstay in the Beauhurst CAGR fantasy ROI nonsense they annually churn out. It was one of Crowdcube's golden boys.
Filings at CH are not helpful here. The company has only filed one list of SHs in and that ws in 2015 when they had 4 of them. Obviously this has changed considerably and I not sure why they got away with miss filing subsequent CSs. Too late now. The Q is did the VCs who backed the company get out on different terms to the Crowd?
