St Vibes buys back Crowdcube investor shares

St Vibes - an unheralded Crowdcube success which makes a profit of around £500k pa, has bought back some of its Crowdcube SHs shares at £625 each share. Investors paid £500 per share in 2013.

We have written a lot about the guys at St Vibes - we like them. However this move is an odd one. Sure it offers liquidity to SHs with no open market but to take a 25% return over 5 years on your investment or very simply 5% pa, seems pretty hopeless form an investment standpoint. The company is making serious profits so why would you want to bail out now?

Of course with SEIS this gain will be considerably more but we still ask why get out now?

We love these guys for showing the rest of the ECF sector that scaling is not always the holy grail and for being a very rare example of a company that has exceeded its forecasts.

Crowdcube's 56 real company statistics reveal a very different picture to the PR they promote. Isn't that misleading?

The evidence is now clear. The Crowdcube model doesnt work. You can find out why below. These are the facts that Crowdcube try to hide.

We mentioned facts - not PR management and spin. Simply impossible to get around, rock solid, stubborn old facts.

We have data for the Crowdcube businesses that have funded between 2011 and 2017 and have filed accounts to YE Dec2017 - ie they filed or were supposed to file by end of September 2018. 

This accumulation is for 56 companies - so a substantial data set in terms of Crowdcube funding to YE 2017. We must add here that ALL of our other data for other filing dates (another 400 plus companies) has the same footprint. Another 16 companies are late filing and given their history we are not expecting them to provide any data that is outside this overwhelmingly strong pattern. These 56 companies are the ones still in business and do not include the failures to date or the very few that have changed hands - normally at a substantial loss. Cocoon being the latest example.

St Vibes is included in this 56 and if you had read their post here you would know that they have excelled. We have not included them in this commentary apart from in one instance below. 

Of the 56, the year they funded breaks down as follows - 

2011 -   1

2012 -   3

2013 -   1

2014 - 10

2015 - 18

2016 - 21

2017 -   2

So the bulk of the data is for companies that have been trading since their funding took place. This is important as you could not expect a company that received funding in 2017 to necessarily achieve much by the end of that year.

Of the 56 companies, only 5 provided a net profit. In all cases this was a small NP and was not even close to the NP they had projected. But it was a profit. However of these 5, none look like they will make it much further. 

Investors put ~ £34m into these companies via Crowcube. 

Of the 56, only 3 companies have got close to their Crowdcube promoted projections in any year since they funded and this was a smaller loss, due to running out money and having to refund. 

The accumulated gap between the Crowdcube promoted projections and the real numbers is ~ minus £55m.

The total loss for the year to Dec 2017 for these 56 companies, including the profit for St Vibes (£0.5m), is ~ £20m.

So in conclusion, Crowdcube has facilitated £34m of investments into start ups filing accounts in September 2018, which has generated in YE Dec2017, a loss of £20m. This loss was supposed to be a NP of around £35m according to the projections promoted by the Crowdcube platform.

We think that beats their latest PR stunt of having 100 £1m raises. Cocoon is just the latest real example of what Crowdcube can achieve.  How many more examples do you need?

A genuine Crowdcube success - St Vibes'Clove Club goes from strength to strength

In what is going to be the worst September's results for Crowdcube funded businesses since the platform started, one shining light stands out. We look at why The Clove Club has been so successful. 

Since writing this the St Vibes has opened a third restaurant,  Two Lights. They also seem to have facilitated the sale back to the company of shares issued through Crowdcube. Figures are a little complicated and not to be relied upon but SHs paid £500 and have received £625 per share back. Most of the 50 SHs did not take up this option. That is very interesting. 

Amidst the carnage that is the YE end filing date of September, we can thankfully report that one company that funded with Crowdcube way back in 2012 is exceeding expectations.

The Clove Club is now a two venue restaurant set up with the backing of £250k of Crowdcube investors money, in 2014. Real chefs and real hard graft have brought this idea to a very successful and sustainable reality. Instead of gallivanting around opening new sites in poorly chosen locations, this crew have concentrated on one, then two units and have made the most of it. For the YE Dec17, they posted profits of over £500k - the second profitable year in a row. In a market where we are constantly told by failed Crowdcube chefs that the market is sooooo difficult, the team at The Clove Club have cracked it.

There has to be a question about the ROI when we are looking at a two unit business. Or maybe not? Given its current profitability and the fact that investors bought in at a valuation of £1m, you would have to say they are sitting on a substantial real return. One that makes a mockery of the recent Go Henry and other so called Crowdcube successes. At the end of the year, the accounts report that St Vibes bought back 92 of its own shares for £625 per share. We believe that Crowdcube investors paid £ per share but find it hard to believe that anyone would sell at the £625 level on the back of this success.

You might also wish to query the structure of the company. Seeing as the management run it via a third company, Saint Vibes LLC, which charges St Vibes a fee - over £700k for YE Dec17 - up from £300k. But it does seem to work.

Unfortunately that is where the good news ends. We will be reporting on the more usual catastrophes over the next week or so. It is a mess.

It just goes to show that a real business, with real drive and genuine expertise, can make money for both the company and its investors, without scaling itself into oblivion. Why cant we have more of these less of the trash. We called this one way back - just saying.

Many and I mean many important people have told me many times that our analysis here isnt relevant. All companies have to miss projections - it is what they are for - Im told. Well if you needed evidence of the nonsense of that concept - here it is. You can read what we said about them in 2015 here.

Three cheers for St Vibes.

St Vibes - the only Crowdcube business running on projections, slips a little.

Up until now, St Vibes, a new restaurant in Shoreditch London, had been the only Crowdcube funded business that had met its projections - the ones used to sell the crowd equity.

Latest accounts show a small slip from the sensible targets they had set themselves. Nothing to worry about  - reviews are still excellent and although the business is not going to make anyone a millionaire on current execution, it is at the least steady and doing what it stated it would do. Bravo.

Some cold hard facts

If you read the PR put out by the likes of Crowdcube, you would think that ECF is saving our nation.

Since 2011, when this all began, we have kept records on the companies that have successfully raised money on various ECF platforms. Later, when they have filed accounts, we compare their projections, the ones used to sell the equity, with the actual sales and profit/loss figure.

Here is a list of the results. The companies on the Mind the Gap List have missed their projections by at least 30% and in most cases somewhere between 100% and 1000%. The record to date is for a YR1 sales projection for £860k which became a real £86k. Many have tried to raise more cash, some successfully, quite a few have closed and the rest are just trundling along, nowhere near to the place they said they would be by now. We have also for sake of balance published a list of the companies that our records show have achieved their stated goals

MIND THE GAP LIST

Dr Jackson Ltd
Righteous
Purple Harry
i-comply
Seek and Adore - closed
Lawbit
The Printers Inc
Financial Fairy Tales
ineed
Marine & Auto Security - closed
Brupond - closed
Oriental Rugs
Kammerlings
Green and Pleasant (28 Broadwick St Ltd) - closing
Red Advertising
SDL
Crowdcube - !
London Distillery Co
7 Billion Ideas
Front Up Rugby - closed
Waterbabies - closed
Big Barn CiC
Stakis Daycare nurseries
Inspiral Visionary Products
Thoughtful Bread Co (Think thoughtful Ltd)
Carbon Lights Solutions
Pizza Rossa
Wild Trail Ltd
Quantock Brewery
PDB
IQden  - closed
IMD Europe - inactive
FabFob
Sweatly Stevia Ltd
Kinopto
Get Site Tracked (Sole Trader Ltd)
Glassfit Inc Ltd - inactive
Affresol
Bubble and Balm - closed
Ovivo - closed
Pixelpin
GF Foods York
Landbay Capital (now LB Partners and refunded)
Hopstuff
Zero Carbon Food
Farmdrop
Bnktothefuture.com  - inactive and under investigation by FCA.
ECarclub Ltd

THOSE WHO HIT THEIR TARGETS

St Vibes Ltd


That's it for now. As most of the activity on these sites has been post summer 2013, we can expect the Mind the Gap list to grow exponentially in the next year.

It does make a bit of mockery of the claims made by the people from Crowdcube. PR is king, long live PR.