Some FREE advice for Left Shoe Co

A current pitch on Crowdcube has made a massive error - uncorrected it will not fund.

So here is some FREE advice for The Left Shoe Company from all of us at ECF Solutions

1. Don't talk vaguely about converting £500k of investor loans into equity - you need to either have done it or be more precise - what value, dilution to this round etc etc.

2. Don't talk vaguely about converting an outstanding creditor debt of £100k into equity  - see above.

3. Don't talk vaguely about renegotiating a bank loan but show it being paid back on the projections - it makes you look pretty foolish.

4. Why have you chosen to pitch only 2 months before your first accounts are due to be filed? With all the above and your claims, you really need to have filed these already - that isn't much to ask surely.

Of course this is all advice you should be getting from Crowdcube, if they bothered to employ people who knew what they were talking about. As they don't, you should have come to us first and we could have sorted this out for you. Your pitch is going nowhere unless you take our advice.

Harry Brompton's Crowdcube campaign is not such rich pickings

We wrote about Harry before http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+harry

Simply put the campaign is over valued. With just 1 day left and despite being a BAW (Branson Award Winner), they have raised under £100k of their £300k target. They have made so many mistakes it's hard to know where to begin.

They simply dont understand how this works. Of course we could have told them and we are pretty sure that had they taken our advice they would have raised their money - but they didnt ask.

That is why we set up ECF Solutions  - if you are thinking of using equity crowdfunding, don't follow Harry, talk to us first. It's free to chat..

Crowdcube must be held accountable for Rebus

The Rebus debacle just keeps going.

It turns out that Crowdcube published the pitch with one of the key members of the team listed as Richard Rhys.

He is described in the pitch  -

Working for the board helping the business launch to the market. Richard has been one of the driving forces behind Rebus. He started his career in the British Army as a mechanical engineer, before moving to the world of Financial Services where he applied his skills in a number of areas including complex products and structured debt solutions.

In 2012 Rhys was banned by the then FSA -  full prohibition ban for his part in the failure of MNFA. The FSA ruling included the following - 

On the basis of the facts and matters summarised below, and set out in more detail in section 4 of this notice, the FSA has concluded that the EBP Scheme was promoted in a way that risked it being mis-sold to the investors and Mr Rhys was directly responsible for this. In particular, the FSA has concluded that Mr Rhys:

(1) made statements in order to promote the EBP Scheme that obviously risked misleading investors (and did in fact mislead them), without applying his mind to that risk; 

(2) caused MNFA to promote the EBP Scheme without conducting proper due diligence and without complying with the regulatory standards, including the required statutory and regulatory promotional requirements for an unregulated collective investment scheme; Page 3 of 26 

(3) failed to inform himself of and understand the relevant UCIS requirements; and (4) failed to take any steps to ensure MNFA assessed the suitability of its advice to customers.

So you have to ask the Crowdcube out to lunch department what was on the menu the day they did their robust Due Diligence on Rebus - the DD that allowed a banned individual to be part of a front for the promotion of a £800k plus equity sale to the public. 

Quite simply why was this information missed out of the Rebus Prospectus?

We'd like to say we told you so but that wouldn't help. Crowdcube must be held to account.

Rebus Fails

Rebus raised just over £800k on Crowdcube only 8 months ago. The company and the Crowdcube experts valued Rebus at just a little over £12m pre investment.

The pitch on Crowdcube opens with  -

''Rebus seeks to bring hope to ordinary Investors who have been misled into buying flawed complex financial products & solutions.''

The company appointed administrators a few days ago - its not posted anything yet with CH.

So where does that leave us?

It is not the largest failure in UK Equity Crowdfunding history as the FT claimed a few hours ago. That honour remains with the Musical Waterbabies which sank without trace over a year ago, taking over £1m of Crowdcube investors money with it. It does come a close second.

Really you would hope that Crowdcube would come up with a better line than the one they gave the FT -

“Whilst the failure of any business is disappointing, not all businesses will succeed and therefore highlights the importance of spreading investment risk with a diversified portfolio,” said a spokesperson for Crowdcube.

“Investors on Crowdcube can be assured that we are committed to ensuring transparency and have rigorous due diligence processes in place, which are spearheaded by an experienced team of legal and compliance professionals.”

We think its time for everyone to WAKE UP. 

ECf is in danger of being dragged to the bottom by the failures of platforms. Very shabby.

Farmdrop secures a £3m investment

Farmdrop have secured a £3m investment in their on demand farm produce delivery business. CH shows a new allotment in 2015 for ~£2m but its unclear if this is part of the new announcement or a seperate issue.

We wrote about them after their £750k raise on Crowcube in 2014

http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+farmdrop

Hard to know what to make of this latest development. It has to be better than the business struggling along as it was before, but what of the dilution to CC investors?

We dont have a value for the new equity but considering where Farmdrop were - ie nowhere near to their projections - it seems likely that the VCs will have cleaned up at the expense of the early Crowdcube adopters.

Anyone out there who knows  - please tell.

Will be a very interesting watch for the next few years.

Flavourly continue to offer catastrophic customer service

Things just seem to be going from very bad to disastrous for Crowdcube and Angels Den funded Flavourly.

Just when it seemed like the reviews were as bad as they could get  - they got worse.

See https://uk.trustpilot.com/review/www.flavourly.com

How difficult can it be to offer a reasonable level of customer service? Plainly impossible for some people.

New Craftsmen back on Crowdbnk having missed Crowdcube projections.

The New Craftsmen has just launched a £1m to £1.5m ECF campaign on Crowdbnk. Valued today at around £3.75m.

What they dont tell you is that this company has failed with flying colours to get even close to its 2014 Crowdcube raise projections. It was value then at £2.7m. Now that does not mean that it wont make you many millions when it sells for an eye watering sum in the predicted 2020 exit. It may well be that there is a perfectly good reason - projections are after all just that  - projections of what we hope will happen. However simply ignoring this gap, which is a large one even by Crowdcube standards, is not really very helpful.

If we were investing we would want to know the figures used to sell equity in 2014. It seems to us to be a faily routine expectation that if you are investing in a management that made claims about their revenue only 2 years ago that you get to see how these projections turned out. Of course had the projections been met or exceeded we have little doubt the figures would be there for all to see.

Of course the hard working Crowdcube PR department will be fretting over whether to publish this news as good  - ie'' New Cratftsmen shareholders have seen a fantastic increase in their investment'' or bad ie '' New Craftsmen yet another ex Crowdcube success that misses targets and then chooses another platfrom to raise more money on''. It's a tough one for them.

Crowdbnk come into the bracket of 'more serious' ECf platforms and claim on their site that they give you full access to all the information you need to make an investment decision.

We would like to disagree.

Equity Crowdfunding was intended to democratise investment in companies and be good for both the companies and investors. The continual use of selective information means it has done anything but. It's why we need a central regsister so that easy access to comprehensive information is available to all.