Pact Coffee lay off 20% of their staff

Pact Coffee, which only days ago so spectacularly withdrew its failed Crowdcube campaign has now sacked over 20% of its 74 staff.

According to the company the lay off's had nothing to do with the failed campaign. Pure coincidence.

Rapoport, the founder, commented -

'These redundancies are unrelated to our decision to delay fundraising, and will not affect the quality of our coffee, customer service or our rate of growth.” 

So what exactly was the point of them?

So now we can see the real affect of getting an ECF campaign so terribly wrong. Should have sought advice, we could have helped avoid 17 people losing their jobs and raised your money.

All packed and gone away. Oh Latte.

The company due to take over the world of coffee has closed its Crowdcube pitch; early and well short of its target..

We wrote about them before - http://fantasyequitycrowdfunding.blogspot.co.uk/2016/03/what-can-you-make-of-pact.html

Pact claimed it was on course to raise £30m in the next 3 years only to spend it all plus some on customer acquisition.

We dont get any explanation from the guys at Crowdcube as to why just a few days before this campaign was due to run out of time, they just disappear. A good guess would be that the plans are pretty good nonsense as is the Crowdcube pitch  - no one was really very keen to invest. Of their £1m target they had received around £200k.

Maybe investors are eventually waking up to the facts that we keep posting here?

It is good to see that the Crowdcube OTL department were out to coffee with Pact recently - http://blog.crowdcube.com/2016/03/08/pactcoffee/

We'd love to hear from anyone who has the inside story.

Thanks to our skinny friend for the tip off.

Again thanks for this tip off - https://vimeo.com/159219013 - this is an explanation (of sorts) as to why they have pulled the campaign. Its a little sad to watch and in the end just emphasises that The Plan was total caque.

Looking forward to seeing him in six months time.

What can you make of Pact?

Pact is aiming high - it's plan is to be supplying 1% of the world's coffee.

In order to achieve this, it has to raise £30m over 3 years, which it then loses on customer acquisition. Then we dont know what happens. Brave or plain daft, it's hard to know.

The Crowdcube pitch for the first £1m has been slow - only raising £165k so far from over 750 investors. They had a meet the founder day today and this coming Saturday (clearly not Rugby fans) but only 10 out of 24 slots were taken up.

The company is up and running, has an excellent team and its turnover for last month was £450k. This is impressive until you realise that the turnover for this year is projected at £11m rising to £95m in 2018. They call the plans ambitious.

It is possible that the style is that of the ubiquitous Unicorn - where ever increasing valuations on new funding rounds drive up company value like a game of hot potato. The companies never make profits and eventually the game ends and the one holding the spud is the loser.

We really havent got a clue if they can do what they say they will and it's clear from the reaction on Crowdcube that many people feel the same way.

In our opinion it would have been wiser to raise at least a good slug of the rest of this year's £8m before offering this to the Crowd. One thing that ECf investors should have learnt by now,  is that plans that show future funding rounds are wholly unreliable. For whatever reasons, there are numerous examples of companies stating that they will raise X after their ECF campaign and this never happens.

Mix into this, the sort of unpredictable factors that a natural product based company faces and maybe this doesnt amount to whole hill of beans. As an example how many investors or indeed members of the company, expected winter cauliflowers to hate the Cauli Rice process - none. So when they found that winter caulis reacted to being packaged as rice, they had to close down production for two months. Luckily they have found a solution, but it could have been curtains. It has certainly been a costly setback.

The valuation doesnt seem to acknowledge any of these possibilities - which it should.