A Suit that Fits enters the realms of fantasies and nightmares.

Simply - it doesnt. Never has done and never will. ASTF funded on Crowdcube and Envestors. Went bust, was exhumed and now sits on the edge of the hole about to slip back in. Meanwhile it appears investors may well have lost more cash. 

This isnt a case of a poor idea or even a good one poorly executed - although execution has not been great. This is about a team who will, by looks of things, end up wanting to kill each other. A team made up of various cultures where it also appears these cultures and their differing attitudes, may have clashed. The story has more twists than a bowline.

We have written about ASTF many times - here - we may make it into a book.

Enough from us  - below is the latest mini saga  - for a read when on a boring train journey.

Since this went out, another desperate email has gone out to SHs asking for more cash.  

Good afternoon. I am afraid to say that your help is needed, please read on. Following the recent raise to buy out David Hathiramani and Keith Watson I would like to provide you with a candid timeline of events and the current critical position of the business. A total of £203,000 was pledged from our investor network, however only £160,000 was actually transferred post raise. Adjustments were made to budgets and I had every confidence with your support I could drive the business forward and deliver on the objectives outlined. The day following the raise, David's discontentment was evident at the buy out fee achieved against the amount pledged. A series of challenging text messages were sent to me demanding more money then was communicated to our investor network,with spurious claims of historical money being owed for services rendered, only communicated once the round had closed. I held firm and committed no more then what was agreed. I believe that David's discontentment continued to put significant strain on our relationship to this very day. During the raise I was lead to believe that the official and legal side of the buy out would take around a month, at which point David and Keith would exit and share certificates would be issued, the new board formed and a fresh start ready for all. To this date the buy out is still not complete, following taking on the role of leading the company there was little to no handover and David and Keith hold all historical investment and financial records which have not been handed to our solicitor in a timely way. It was decided that David would oversee the transaction until today when I intervened challenging why some 5 months later there has been little to no progress. I quote a part of the response here "Part of the delay issue has been due to not receiving coordinated instructions or full  responses to the various emails I have sent". I have now arranged a call for tomorrow with our largest investor and the solicitor where I aim to understand how this process may be expedited. The funds raised went to the company you initially invested in, DKSG Bespoke Ltd which owns the ASTF brand, and leases this to Tailored Franchises Ltd whose ownership structure replicates that of DKSG. This is a company I am a co-Director of, holding a bank account with Lloyds Bank. I have had no access to this account or until recently up to date statements which were assured weekly, the account has essentially been held to ransom by my co-Director and the only person with access to it Keith Watson. I still await a statement for June to have full visibility on the outgoings and an understanding of the true current balance despite requesting it one week ago today. On inspection of historical statements I see David has paid himself £17,700 in recent months, a figure I am yet to receive any justification for and was not agreed with me, his co-Director. The impact on the business as a result of this has been significant. £50,000 of the amount raised was intended to fulfil the outstanding orders, as communicated during the raise I was unable to take any new orders until we made a start in completing the historical ones, as such we have not taken a single new order this year and funds raised have been used to sustain the business in the hope the buy out would complete, we could make old orders, take new ones and commence trading again using every penny for the purposes communicated. The constant stalling with the buy out has been detrimental to the business to the point where Tailored Franchises Ltd has zero cash is unable to make business critical payments to suppliers or staff payroll this week. My understanding is there is around £25K remaining in the DKSG account which would cover these expenses, however David is unwilling to release funds meaning I essentially have to close the trading business immediately unless David relents or I am able to rally support from you, our investors. In recent months operating costs have continued to drop and if we expedite the buy out and raise a relatively modest amount of cash I believe we still have a business that can essentially flourish, however I am effectively fighting for something that I am not drawing a salary for and have committed not to in the upcoming months. Short term (as in the next 24 hours) I need to raise £50K to see us through the next month, by which point I would expect us to be self sufficient and be able to commence trading again. I have looked at institutional lending for which we are not eligible however I believe we would be eligible for a Funding Circle Loan. This is a high interest loan that requires a personal guarantee. I am happy to offer this personal guarantee such is my belief in the business. I am also looking at a personal loan so I can contribute where necessary and claim back when the business is back on its feet. I appreciate the context of this email is startling, I frankly feel quite startled also and like I have been fighting a losing battle against people presently yielding more power than I. Whilst late in the day felt it appropriate to reach out in an attempt to rally support before it is too late. I understand there are likely to be many questions, whether I/Tailored Franchises achieve the mission outlined here. I would like to invite you all and openly invite David Hathiramani and Keith Watson to an event on Tuesday 8th July whereby I /we can answer any questions or concerns this email may raise or how the companies persistent failings lead us to this point, in the interim my sole focus must be survival so please forgive any late responses to questions etc. In exchange for £50,000 raised in the next 24 hours. We offer BOTH 10% equity in both businesses AND complete complete payback of the amount you support with at this stage over 12 months next year - a modest liability to the business of £4,166.66 a month. You can commit from £500 up to the full £50,000, funds will need to be received by the end of tomorrow. If you wish to support please just reply to this email and I will come back to you immediately, any other questions please email ..............................(my other account) and I will come back to you when time permits. I thank you for your time and will send a progress update tomorrow. Kind regards Daniel Warwick

We talk to the CEO of the newly launched Envestry for Startups

Envestry for Startups is a new whitelabel SaaS for SMEs and start ups to raise funding via equity crowdfunding using their own bespoke site - well one borrowed at a cost from Envestors, the new platform's parent company.

We emailed Scott Haughton, Envestry's CEO, a series of questions and he kindly replied - the text is below. 

Does this help ECF? We dont really think so. It wasnt an issue in our eyes in the first place. The issue is the lack of information symmetry between the companies pitching and the investors investing. Envestry still use self assessment as the mainstay of their vetting process - which, as you know, we think is a very poor idea. The fact that an FCA regulated member of Envestry sanctions the pitches means not a lot - as numerous scandals on FCA regulated platforms have shown. In the end Envestry have no skin in the game.  See what do you think......................

1   

     How does this ‘new’ idea help to improve the quality of the businesses that currently use equity crowdfunding?

Envestry for Scale ups helps early stage and high-growth businesses to raise funds from seed stage through to maturity or exit. Our aim with the product is to empower these businesses by giving them total control over their fundraise.

Controlling the quality of businesses fundraising is not the purpose of the software product, however the due diligence that we conduct on each business as part of our sign-off for financial promotion creates a high level of transparency which is uncommon in crowdfunding.

We provide all companies with a Key Investment Data Document (KIDD), which is a comprehensive template that must be completed prior to sign-off for financial promotion. The document forces companies to be transparent about the accounts, liabilities, conflicts of interest, corporate governance and deal structure. Making this information accessible through the platform makes it easier for potential investors to evaluate the opportunity.

2   What you are offering is essentially already available via Sharein and other white label supplier companies that offer SaaS for ECF companies.

Envestry for Scale ups gives businesses their own dedicated platform that they control. Other businesses in the market offer a shared platform for fundraising, where multiple investment opportunities are hosted and/or marketed to a network of investors. With Envestry for Scale ups, businesses can market to their own community, drive them towards their own site and retain 100% of investor data.

Envestors is loss making – what message does that give

     It shows that we are committed to investing in our software product to deliver our vision of giving businesses control over their fundraise. Our business strategy requires a planned upfront investment in product development.

     

     Who is liable for the information that your platform provides to investors and will this be checked? Under the FCA regulations for equity crowdfunding, information cannot be misleading. How will this new platform deal with this? Will you make investments in these companies?

     

     Any deals posted on Envestry for Scale ups require regulatory sign-off to meet with FCA requirements. We offer a service, through our corporate finance team, to review documentation and provide the sign-off. Businesses also have the option of using a third-party to meet regulatory approval. However, sign-off by an FCA regulated professional is always required before a deal can be posted on the platform.

What will you charge and who will pay?

Our pricing for Envestry for Scale ups starts at £95 per month. Businesses have the option of adding-on additional services should they require professional assistance with their fundraise. Our corporate finance team provides a range of support covering everything from deal structuring to valuation guidance to shareholder reporting.

An entry level package that includes the platform for six months, onboarding, training and financial promotional regulatory sign-off, is £1450. Service fees of 3% are applied to funds raised.

We have priced the software to be affordable to growth businesses, who are typically lean and want to keep the cost of raising capital to a minimum.

The platform is suitable for startup and scale up businesses with their own networks who seek to raise more than £150,000.

Where will companies have access to a crowd outside of their own

Companies using Envestry for Scale ups, have the option of applying to ‘share the deal’ with the Envestors’ extended network which includes over 7,000 sophisticated investors. Deal sharing is at the discretion of each investment network and is not guaranteed

What marketing budget have you? What credentials does your team have?

Envestors is not a marketing company and partner to provide marketing services to our customers.

Is there a min or max raise?

The maximum amount a business can raise in a single round is €8,000,000. This is in line with FCA regulation and not set by Envestors. There is no minimum amount for companies raising finance, however, we recommend a minimum raise of £150,000.

Who will carry out the legals, share issue and the S/EIS claims?

Envestors has a number of recommended partners to help businesses with legals, share issues and S/EIS claims including CMS and Seedlegals. Businesses also have the option of working with their existing providers.

Will the new platform be involved at all after a raise is completed and shares are issued?

Envestry for Scale ups is designed to support businesses throughout their growth stage to maturity or exit. Businesses typically do four to five funding rounds; the platform can support them through each round. In addition, Envestry for Scale ups has a built-in investor relations tool. With this tool it is easy for businesses to keep all of their shareholders informed of their progress and to market any additional funding rounds.

..........................................................................

Our thanks to Stuart for taking the time to reply. 

DW Clothing collapse throws up some interesting patterns.

This story is long and painful. It involves Crowdcube, Envestors, various defunct companies, Nepal, an accountant and some very dodgy numbers. It is rotten to the core. Are you sitting comfortably? Then.........

First things first - we wrote about this crew twice here, warning people. So investors have no excuses.

We start in 2006 in Nepal. David Kishan Hathiramani had an idea to make suits for Londoners using tailors in Kathmandu. He set up ASTF Ltd. They traded quite well for 2/3 years and began looking at taking on pop up fittings centres. The crash in 2008 was where it all started to go wrong.

Skipping on, according to the liquidators for ASTF Ltd, they had failed to pay HMRC over a lengthy period of time and by 2012 owed them large sums of money for Corporation Tax, PAYE and VAT. A monthly payment scheme was agreed but ASTF failed to adhere to it. In 2012 the company filed large losses. In some mad attempt to rid himself of these debts, David declared that the accounts for 2011/12 were be re presented. The company told HMRC that this would remove £29k off their bill. Well quite obviously HMRC saw that one coming and proceeded against the company for full recovery. Then RBS stepped in.

To cut a long story short, ASTF went bust owing HMRC and RBS large sums but also owing large sums to creditors. It was a mess. 

Round about 2012 ASTF used the services of an accountant, Keith Watson. Now it turns out that Watson was in the market for a failed company and was the only offer the administration for ASTF received. He paid a few thousand pounds for the business. Keith we will meet again. 

So when you read in the Crowdcube 2015 pitch that David and his team had almost bravely saved the business by restructuring it in 2012, you know you are dealing with some degree of bullshit. ASTF was appallingly badly managed. Full stop. It then tried to hoodwink HMRC in plain sight. End of. It wasnt restructured so much as pre packed by pouring all the broken bits into a bin liner and handing them to Keith Watson's newly incorporated DW Clothing. 

So back to 2015 and Crowdcube. Keith Watson - the new owner of DW Clothing which now owned ASTF's assets decides to Crowdfund. They select Crowdcube. 

Was there a reason for choosing equity crowdfunding and Crowdcube?

We think so. Easy money. Now for a short detour............

If you delve into the world of Keith John Watson there are clues.

Most of you will remember the failed Front Up and Front Up Retail. The latter funded three times on Crowdcube in 2012/13 taking £227k off punters before crashing out. Well Keith Watson was a director and SH of both companies. We wrote a lot about this outfit, we felt they were being less than honest with investors and that Crowdcube had failed to warn people. Does that ring any bells? Between them, they went down owing creditors in excess of £500k - all facilitated by Crowdcube. And whats more in a pre pack deal (yes another one) to Lyle and Scott, the founder of Front Up got himself a well paid job with Lyle and Scott which included his business loan being paid off.

Ok, so you might say this is just a coincidence and for just this one case, we might agree. However more recently, Keith Watson has reappeared on Crowdcube - this is for the third time. He is listed by Discovery Yachts Group as a director. DYG raised £2.2m on Crowdcube in January 2018, just a few months after Keith had joined them. DYG are still in business. However, you have to ask  - if investors had known about Watson's involvement in Front Up, ASTF and the now refunct DW Clothing, would they have been as keen to invest? Would they also have viewed his numbers, he is their FD, with more caution? They were not told - this is the description given for Watson on the Crowdcube pitch -

 KEITH WATSON - FINANCE DIRECTOR (58)

Keith is a highly experienced FCCA with extensive experience of fast growth businesses. He has worked primarily in the luxury retail market, at brands including Joseph and Aspinal of London. He has enabled a number of acquisitions and successful exits.

Keith John Watson gives his birth date at CH as May 1959. Well that is until you come across an entry for a Kieth John Watson with a birth date November 1959. This Keith John Watson gives the same address and its the same address that Keith Watson used to sign off the Front Up liquidation papers. We have said for a long time that CH needs to issue company directors with one unique registration number so that this 'confusion' is avoided. Of course knowingly giving false information as a company director is an offence. To all of us.

Looking at the numbers for DW Clothing and DSKG, we find some patterns. 

In the Crowdcube pitch in 2015, the historic financials given do not tally with the numbers given at CH nor do they tally with the numbers given in the 2016 Envestors ECF pitch, which raised another £426k for the company. So either the company filed false accounts or they gave fake figures to one or both of Crowdcube or Envestors. The differences are material. We know that Crowdcube dont check anything but we didnt know that Envestors operate a self check system. Which if you think about it, is a little pointless. The Envestors raise was after the management at DSKG had pivoted the company and attempted to go for a franchise model. We dont think Envestors did their clients any favours putting this business their way!

So, as the Times reported today here, DW Clothing has been binned and a newco Tailored Franchises Ltd, set up by the same people, has taken over. According to the Times there was no comment from the Administrator. Well Im not surprised  - he seems to be struggling to get at the truth. The fact that really matters here is that DW Clothing owned the brand and the logo for A Suit that Fits - trade mark EU011657781. This TM was registered in 2013 at Keith Watson's given address. According to the UK TM office, it is still owned by DW Clothing. So the Administrator can sell it. Whats more, all of the SM that Tailored Franchises is now using to sell suits, is still owned by DW Clothing. We know this because their pages were started in 2006 when ASTF was the name of the company. DW Clothing bought all of the assets of ASTF, so they own the SM and all its mailing list etc. That should be a valuable asset?

If this was an attempt to crook the system, then they have not done it very well. If the Administrator would get off his fat arse and do some work, he could attempt to sell all of these stolen assets - to the people behind Tailored Franchise Ltd. That would at least be the correct way to do things.

Meanwhile Crowdcube and Envestor investors, who own shares in DSKG Bespoke - the holding co which owned 100% of DW Clothing, are in limbo. Their only source of revenue in this business, DW Clothing, is being liquidated and somehow the directors have hived off the only things of any value into Tailored Franchises - even though they are not allowed to do this.

It should be noted that   -

• In the Envestors PD for DW Clothing, they didnt use the registered TM for A Suit That Fits. We dont know why.
• Tailored Franchises was incorporated in October 2017
• The current A Suit that Fits web site is copyright to 'A Suit that Fits' 2013. This has no legal meaning. There has never been a legal entity with that name. The site is still owned by DW Clothing, even if the Administrator doesnt know that. In the T&C Tailored Franchising is shown to be running the site. Purchasing from this site is not advisable.

This collapse bears worrying resemblances to another Crowdcube fiasco - Ethos Global. With Ethos, the original appointed Cambridge Administrator couldnt cope with the depth of deceit that the old founders had perpetrated, so had to hand on to another one. So far nothing has been filed and the old founders are using the old company assets, which they do not own, to build a new business in London. Again all only possible thanks to Crowdcube. 

Well we did warn you.

Have a coffee - you've earned it.

An after thought -

When The Times contacted DSKG Bespoke about this story, they were told by DSKG, that the newco was owned by DSKG. This was simply wrong. Later they changed this story to -  they would issue new shares to all CC SHs in DSKG. We have yet to see this happen. If, before this story broke, the directors of DSKG and DW Clohting had had any intention of 'looking after' their SHs (without The Times holding their feet to the fire), they would have made DSKG the sole owner of Tailored Franchises Ltd from incorporation, as they had with DW Clothing. They didnt do this. QED they are a bunch of crooks. Time for the FCA to actually do something. Crowdcube need to have their wings clipped. Enough is enough. Crooks can only get away with what the platforms allow them to chance.

   

How many times can Sugru promise the earth and deliver a teaspoon? Endlessly it seems.

Sugru are back - not once but twice. Having raised over £3m on Crowdcube in 2015, they then raised over £1m on Envestors in 2016 and are now looking for loads more on Crowdcube. They just love spending investors money.

The really good news for investors is that the valuation on the current pitch is around £34m, up from £27m back in 2015 and also up by £30m from last year. All of this on the back of vastly reduced revenues and vastly increased losses. But wait; growth is just around the corner to be sure. Is someone taking the Michael.

If you care how they are really doing or are wondering where they come on our scale of missed projections; they are winners. Projected revenues for 2016 were over £8m. The actual delivered revenue was just over £4m. Whats more worrying is that the overheads to deliver just £4m where the same as to deliver £8m and the inventory has actually increased on halved revenues. Long term debt has ballooned. Similarly, the crucial GPM was a sorry 48% against the projected figure of 60% and its progress rapidly north in 2017 to 64% is now projected to be a mere 55%. Of course given their record so far, it would be amazing if they get even close to these reduced figures.

In a helpful explanation of the current valuation, the management come up the usual. However if we sure to believe this valuation, then we have to believe the projections. History dictates that this is not sensible. Reasons given in the forum (there is no mention of this in the pitch) for the 2016 £4m revenue shortfall in no way cover this shortfall.....QED the £8m 2016 projection was nonsense and if you extrapolate this, the current projections are nonsense. So the valuation is nonsense.....so you are paying too much for your shares even if this company does make it. 

The glue maybe good but by heck the management stinks.

In the in-between round on Envestors, in 2016 and not mentioned in the current pitch, they projected revenues for that year, that they now appear to have failed to meet. It is a constant story of making up some figures which they never get near to. 

Sure they might get bought by other larger sniffers, but where is the upside on £34m when they always fail to deliver those crucial sales. With an advertised 2m plus users, it doesnt say much for repeat business when they are only buying less than one product each pa! The claim that it's used in over 170 countries is also an odd one - how could they know that? 

The Crowdcube pitch says they are poised for growth - an awkward position they have been holding for 2 years. Profitability is due next year......of course it is. If you are into a little self flagellation, this one might be for you.  

More sticky business for equity crowdfunding

Sugru's recently published accounts show why we need to change the way company accounts are filed.

Sugru raised almost £3.4m on Crowdcube last year. 

More recently they tried to raised more equity funding via the Envestors platform. 

The problem here is that their accounts were due out about the time that the Envestors round was live; September 2016. But they were not filed until afterwards - or to be exact 2 weeks ago.

Now in the brief summary for the Envestors pitch the company showed a series of actual numbers for the financials which included YE December 2015 (the one they had failed to file on time). The 2014 'actual' accounts tally with the ones filed at CH - which they would have to as these were readily available for all to see.

The 2015 certainly 'actuals' do not.

One crucial figure, which is the main driver for all businesses, especially those in a rapid growth phase, has been incorrectly given to potential investors by the company and the platform. Assuming the platform have to work on the information given to them, then the responsibility lies with the company. The miscalculation is so large it is hard to believe it is a simple error.

The GPM for 2015 turned out to be only 42% against a given 'actual' figure on Envetsors of almost 51%. Now a difference of 8-9% on turnovers heading north of £3m is highly significant. Not just in cash terms. The projected GPM for future years is crucial to Sugru's progress and if the 50%+ figure is not attainable then investors should be asking why? They cannot ask if they are told it is 50% 'actual'. On the 2015 revenue figure, this 8% shortfall would lose around £280,000 of gross profit. In reality they were £306k down on GP for 2015. 

Losses were in fact lower than the 'actuals' shown by Envestors - by cutting the overheads by around £300k. This in itself should be of interest to investors, who were given the wrong figures. But the main point here is that the future 50% GMP for 2016 and beyond must now be in doubt. With projected turnover for 2020 of more than £28m, a change in the GPM of this magnitude will not be welcome.

At the end of November 2016, the company arranged three new facilities with the Clydesdale Bank - we'd love to know which figures it was working off.

If, as we have been demanding for sometime now, all companies raising ECF had to produce up to date filed accounts, then this wouldn't and couldn't happen. It would be a very simple fix for what is a very major problem - as anyone who reads this blog will know.

Last orders for London Distillery and Dodds Gin?

The London Distillery Co raised money on Crowdcube back in 2012.

We have written about them before here 

Its now unclear how much they raised on Crowdcube. The original Crowdcube site stated that they had raised £250k  - which in 2012 was a great success for the platform and was overtly used by it to promote Crowdcube. This now appears to have been a lie. The current CC platform states that they only raised £95k.

Who is surprised?

Anyway, whatever they raised, they have not managed to deliver much. Despite having new equity backing of almost £1.4m, they continue to make large losses. YE March 2016 showed a loss of £350k.

Recently the company set up Dodds Gin. This is 98% owned by LDC.

Dodds are very late with their accounts and have had a compulsory strike off placed on them. They did try to raise £1.5m via help yourself equity crowdfunding portal Envestry, which is part of Envetsors. Seems to have failed from filings at CH.

Drink Up.

iNeed website goes dark but a new one appears with a new offer.

In a month where the wheels are rapidly coming off the Crowdcube company carrier. another Crowdcube success looks like closing. Or does it.

ineed has raised over £200k from Crowdcube in various quantities since 2012. It has consistently failed to deliver on any of its Crowdcube promises. Now its website is off line and new one has appeared offering a new service. Our first report that this company was closing looks like it was wrong - apologies and thanks to the prompt from Anon below. 

In other news, Crowdcube recently presented a Sugru update PRing, declaring that the business, which took over £3m off Crowdcube investors only a year ago, has sold over 10m tubes of its glue. There was no mention of the enormous gap between the Crowdcube sales forecasts and the actual sales and the slightly sad attempt currently live on Envestors to raise another £1.5m - a raise that was not in the Crowdcube pitch; which took more than 3 times its £1m target. But who the hell cares - right?

Transparency is still not a word Crowdcube seem comfortable with. 

Suit that Fits is raising its own funding on its own site just 10 months after taking over £800k from Crowdcube.

A Suit that Fits has launched its own funding exercise, under the shade of Envestors' FCA license, having achieved little that the Crowdcube £800k pitch promised less than a year ago

One thing the Crowdcube pitch did not show was a new funding round. This after the amount in the pitch financials to make this business work was stated at only £500,000 against the achieved £800,000 plus. Now they need another £500k at approximately the same valuation. 

The new prospectus shows that the company has strayed off the path they so carefully laid out only months ago and which Crowdcube verified in their OTL dept. Namley losses of £310k against realised losses of £460k.

Of course this fact doesnt quite make onto the new pitch deck.

Envestors are the platform that recently had the Early Bird business pitching.This was then withdrawn once it was pointed out they were touting their wares elsewhere and had failed on numerous occasions to explain why their projections were so far removed from the reality of their performance. They also currently have SUGRU asking for more cash - not it appears with much luck.

One interesting point that Envestors might like to look at with regards to the Suit that Fits offer. The offer gives a variety of rewards based on discounts for suit orders and a 20% bonus share award. Now it is our understanding having recently dealt with a similar offer and HMRC, that if you take up these cash incentives as part your investment, you lose some or all of your EIS relief. All comments welcome. 

Earlybird Envestors pitch is 'postponed'.

Envestors have postponed the Earlybird pitch that we highlighted here

Sensible move in our opinion. If Earlybird really do have sales of 2400 boxes per week (£10,800 revenue) as they claim, then they have enough cash coming in for now. Oliver may have to take a salary cut but hey who hasnt been there if you run your show.

Go away and get some real traction, like you promised you would in the Crowdcube projections and then maybe raising more cash will be easier.

Earlybird breaking all the rules

Earlybird have raised money on Crowdcube twice, tried to raise money on Angels Den and are now trying again on Envestors at £2m pre money. We have written many times about them on here.

We have been sent this plea for help from the CEO of Earlybird ( via a friend) -

From: Oliver EB <oliver@earlybirdsnacks.com>
Date: Sat, Jul 23, 2016 at 11:13 AM
Subject: URGENT - Requires Immediate attention. EarlyBird
To: .............................

Dear Shareholder,

EarlyBird requires urgent investment as our large funding round has been unexpectedly delayed.

The EarlyBird business is performing well: The product is loved by the market, customer retention is on target, and we have new board members joining the company in the autumn bringing expertise to help us grow - including the founder of ...............................  However we now face an urgent funding gap as the funds we are seeking will take longer than anticipated to come through.

We are asking our investors to help us bridge this gap in return for a significant stake in the company. Please note we are asking for initial indications by Friday July 29th.

Please read the attached letter and do not hesitate to get in contact with me if you have any questions.

Oliver Pugh

CEO/Founder

Below is the text from the letter - 

Dear Shareholder,    

We need your help.     

EarlyBird’s product is in a great position and is loved by the market, we have significant funding  lined up to grow the business and new board members bringing expertise to help us grow.  These funds will take longer than anticipated to come through and so EarlyBird faces ​ an urgent  funding gap​ .    We are asking our investors to help us bridge this gap in return for a significant stake in the  company. Please note due to the urgency of this gap we require indications by ​ Friday July 29th.    

As I’m sure you’re aware, we’ve been raising a significant funding round that will allow us to  scale our subscriber base and to launch the product into new markets both online and offline.  So far the funding round has been extremely successful with £150k of new money indicated,  and a further ­350k in the pipeline. However this money is insufficient to close the round  now.    

We have also lined up amazing new board members that will help us grow the business and  raise money in the future: .................................... and .................................... These board members are lined up to join ​ assuming  that we raise sufficient funds.    All that said, we are almost out of money and so we are asking our investors for urgent support  (investment). We planned to close our round before the summer July/August, but key investors  have held­off investing due to the current uncertainty in the UK market. This has pushed the  closing until after summer (September/October). In order to get there we need a bridge: We  need more funds now to give us the time to pursue this additional investment. This is why we  are asking our investors for urgent support.    

To reward our investors continued support and encourage investment now we’re lowering the  pre­money value of this round to £660,000. This represents the best value for investment in  EarlyBird. Current investors can buy shares up to their pro­rata investment level at this valuation  and ​ existing investments in this round will be converted to this valuation​ .    

Please see the pro­rata schedule for this round attached below (the number in the third column  means if you invest that amount your % holding will stay the same). For this round, for example, 

a £10,000 investment would yield a c. 0.9% stake in the company post­money. We expect (but  cannot guarantee) the round to be EIS eligible.    

Thank you for your support to date, it has allowed us to build what our customers are telling us  is a truly game changing product not just for the market but for the way people perceive and  consume healthy snacks.     If you have any questions please do not hesitate to contact me on:  Email:​ oliver@earlybirdsnacks.com   Phone: +(44) (0) 7796 193 711    

Please send indications of interest by reply to this email.    

All the best,    Oliver Pugh

................................................................................................................

So Earlybird are offering two different deals at the same time - one here to existing shareholders and one at a much higher price to investors at Envestor. Im sure Envestor members will be delighted by this. Envestors have confirmed that they didnt know anything about this.  Ignoring this duplicity, the facts are that Earlybird do not and have never done well - see review here https://www.youtube.com/watch?v=vaW2SuYrvn0

Yet again equity crowdfunding shoots itself in the foot. This is totally unacceptable behaviour even if it is not illegal. And it all stems from the first two nonsensical raises which Crowdcube facilitated. 

WHY?? Early Bird regurgitates on Envestors

Earlybird is a snack best eaten cold. 

The company is like a bad lunch  - it keeps on repeating on you. 

They managed to raise twice on Crowdcube, the second time at a value of £1.5m only a few months ago. This raise was farcical, having had to change the end date several times and increase the equity to squirm over the line. Now they are back on Envestors with an increased valuation! They are apparently worth £2m. They have been on Crowdcube, Angels Den and now Envestors - see here . Where to next govner?

The revenues on Crowdcube were due to go from £11,000 to over £1m in 12 months. Need we say more. 

As they have changed all their dates, from the Crowdcube raise to now, its almost impossible to tell if their projections are realistic. Our bet is that they are worse than most, which means they are not great - CAVEAT IPSUM EMPTOR. 

We love the line in the pitch (again sent to us anon) about the Exit strategy. 'Exit is most likely via a trade sale'. In our opinion the exit is most likely out the back door. 

Are Sugru coming unstuck after Crowdcube raise figures are missed?

Sugru, glues answer to post-it notes,  raised £3.4m on Crowdcube in 2015 at a pre money value of £24m.

Now they are back - but this time on Envestors, valued at £30m. Why stop there, why not £40m?

So how have they preformed against their sensational Crowdcube success only a year or so ago.

Well if you believe what Envestors tell you; brilliantly.

However if you check the figures as we have, the answer is not quite so good. YE Dec 2015, which we were sent in an anon tip off as they failed to file them early to be helpful, shows that they have missed their Crowdcube targets by over £1m in revenue or a shortfall of over 25%. Obviously they also missed their loss target for the year. Further, all  the future years projections have now been tightly cut back.

What's also clear from these figures is that, yet again, we find the actuals, published by Crowdcube only after their OTL Dept had scrutinised them, are wrong. As we have said before here, when we find these actuals to be wrong, its always on the side that helps the pitch sell its equity.

We do think that Sugru is a good product and the team they have is credible. Clearly though the ideas behind the Crowdcube raise have not all come to fruition - a £1m shortfall in revenues is large. So why would you believe their figures now?

As ever, none of this is mentioned in Envestors glowing pitch. The only glimpse of past raises is given in Envestors' Sugru document claiming that previous investors have seen a 9X growth  - which, as we all know, is total nonsense in reality.

Early Bird's worm gets caught in late frost

We have written quite a few posts on Early Bird. They have raised around £500k on Crowdcube in two seperate tranches.

The second Crowdcube raise at the end of 2015 was a memorable one. They had to change the offer several times to get over the £300k line, including moving the line closer (use our search facility to see other posts). This was mainly as a result of missing their original Crowdcube targets by many miles. At the same time they were punting their wares on Angels Den. They are one of flightier tarts on the circuit.

In this last Crowdcube pitch - projections to YE May 2016 showed an annual revenue of over £1m. Now a little birdy tells us that revenues for April this year were under £20k for the month. Yes a total of under £20k for the month.

Do the math.

The company claim that all their KPI's are tracking towards or are on target - eh? Someone must have stolen the original goal posts.  

The same birdy tells us that these guys are now moving on from Crowdcube and Angels Den and will be launching a funding round on the not quite crowdfunding platform Envestors....... soon. This new £500k capital raise was never mentioned in the last Crowdcube raise only a few months ago.

All we can say is good luck!