Crowdcube Due Diligence - Caught alseep on the job.

If you needed any more evidence that Crowdcube don't bother with due diligence -  here it is.

A new pitch on the site  - Rocksolid Life - claims in its opening remarks to be a company that has been going since 2013. If you then go to the Company page of the pitch it states that Rocksolid Life Ltd, reg # NI630400, was incorporated on 1st January 1970.

If you bother to check the contradictory information Crowdcube supply with Companies House, you will find that it is all wrong. Rocksolid Life Ltd - the company you are being asked to invest in, was incorporated in 2015. There is another Rocksolid Life (Eur) Ltd which was incorporated on 13 March 2012 and is owned by the same person as the owner of the Crowdcube pitch company - but this date doesn't feature in the Crowdcube shambles. In turn, this company is wholly owned by Aj Locum Solutions Ltd, founded in 2009.

So what we have here is a Government backed platform, who spend enormous sums on their own promotion claiming that they carry out thorough due diligence on the pitches they offer to punters - providing information that is total rubbish and has not a shred of truth about it. Can you trust Crowdcube  - simple answer is no.

The pitch business itself has little to recommend it and as it's almost impossible to know who you are investing in, will almost certainly complete its funding round as so many others have before it. When will people wake up.

The Bullgdog spirit is getting in the way of Brewdogs fundraising

We made the point when the Brewdog pitch opened - it is way overvalued for equity investment.

Now someway into its pitch period, the uptake is very very slow considering the final target is £17m.

We are not alone - punters on the platform and as we reported commentators, have all made the same point - this is not a sensible investment at this level.

Over valuations are the latest trend on Crowdcube and will not help them in their task of making the platform profitable. Sure there will always be the punters who just want some free beer but you need a lot of them to get to £17m.

It must be worrying for both existing Brewdog shareholders and Crowdcube shareholders that common sense is not being applied here. Using the wrong metrics to calculate your valuation is pretty well guaranteed to come out with the wrong answer boys, even if you deny it until you are blue in the face. But then that is the bulldog spirit.

When is a Crowd really only a small group of friends?

Sqaureknot take the crowd out of Crowdfunding.

The Glasgow based site has been going for almost 3 years and yet the pitches on the site have very little resemblance to anything we know as equity crowdfunding. The few pitches that have completed, have between 7 and 3 investors each, putting in amounts from £60k to £100k. That is barely a group let alone a crowd and is almost certainly just friends or even the company's own directors investing. Pitches have been known to last over a year here - who knows, maybe longer.

All this is carried out with the sanction of the FCA via a third party called Kession Capital Ltd. There is clearly something wrong with the FCA, their system of verifying the quasi licenses these third parties hand out or both.

Hab Housing's first major project has a few problems.

Hab Housing Ltd broke the record books when they raised almost £2m on Crowdcube on 2013.

The brainchild of TV presenter and architect Kevin McCloud, the firm has suffered some very poor PR recently -


http://www.telegraph.co.uk/news/earth/environment/conservation/11773530/Grand-Designs-presenter-Kevin-McClouds-eco-development-riddled-with-building-errors.html

Lets hope they manage to sort out their operation before the Crowdcube investors are left homeless.

This time, you cannot be serious!

GF Foods (York) are back - hard to believe but they are. This business, whose first incarnation was eventually dissolved in 2011, 2 years after going into administration with creditor debts of £350,000, has used Crowdcube before.

It now values itself at £2.5m having only shown losses to date in its two years of trading. It seems impossible that people will be stupid enough to give them money but then you would think that Crowdcube would have been sensible enough to have declined their approach. The mess the last GF Foods left behind has cost £80,000 in fees to sort out and left a lot of very angry creditors. Whats more the two directors now asking for our money on Crowdcube, had taken out loans from the old GF which despite legal attempts by the administrators to reclaim, were never repaid.

You have to ask given the history of this company and its directors, why this is being allowed 3 months before their next set of accounts are due to be filed for YE 03/15 - why are they not told to file them now? Even Mac could be forgiven for blowing up over this one!

Crowdcube PR hides the truth

Scanning the internet for stories on E-Car Club's sale to Europcar we came across this piece in City AM - http://www.cityam.com/222021/ignore-snobs-why-crowdfunding-bringing-diversity-back-business

Reading it, it began to feel like it was written with a slightly one sided view. Guess what, it was. The author works for a major Crowdcube backer and although the piece acknowledges this, it is still just a piece of very obvious and not very intelligent PR.

Quite apart from anything else, the sale of a major stake in their company by the directors of E-Car Club to Europcar was not all that Crowdcube have made it out to be. The 65 Crowdcube investors - most of them B shareholders - were forced to sell their stakes in line with Crowdcube's standard drag along clause. E-Car Club had up to now made almost £500k of losses and had failed to gain a foothold in its target South East market. In desperation it had started opening bizarre hubs in the north like the one on the outskirts of rural St Andrews, Scotland.

Why would shareholders sell their holdings when Europcar had given the company instant access to pan European hubs - something it would never have achieved flying solo. The company will now go on to make its founders rich, whilst shareholders can only imagine the returns they might have made.

The article of course ignores the many total failures that Crowdcube have helped promote, the loss of all the investment and the large numbers of creditors hung out to dry. Still he has to look after his company's interests and wouldnt want the truth to get in the way. 

Wool and the Gang are here.

Wool and the Gang value themselves at around £8m. Not bad for a company that has never made a profit and showed a loss of almost £1m in 2014. All but one of the original directors have resigned, as has another who joined a year after the start.

Now you wouldnt know this from the Crowdcube headline introduction to this outfit.

The headline names Jade Harwood, one of the founders, as still being a driving force - yet she resigned in 2013.

The 2014 performance was in fact a spectacular success - turnover up by 35% etc etc. No mention of any losses. Of course having Index Ventures as your dad helps, its a bit like having Oxbridge on your CV. I suppose they used DCF to get to £8m despite having no history of the company's cash flow to work off.

This is not the first time that Index Ventures have used Crowdcube to promote one of their fledglings and it wont be the last. But just remember who you are dealing with and do some serious DD before jumping onto this one. I never like it when more than 50% of the management jump ship.