We did warn you!

So here we are at the start of another year - this one is labelled 2018. What have we learned about equity crowdfunding? 

I suppose the easiest way to put this is to show you a Q&A I had with a reader in the summer of 2015 - so two and half years ago. Things have improved marginally since in that we have seen 2 exits but both for tiny uplifts and there are now at least 4 companies that have funded on Crowdcube that may make it. Whether at the valuation they were sold at and the dilution since, this gives investors a real ROI is another matter  - 

Anonymous21 June 2015 at 06:19

Rob, do you see any winners out of the crowdcube platform to the benefit of investors?

Some of the management teams I am seeing look shocking, but there are one or two I was going to back until I found you :)!!!

Delete

Rob Murray Brown21 June 2015 at 07:58

Not really. If you look at it logically why would there be? Maybe one out of the first 1000 CC pitches to fund will make money for investors - maybe. So that's in another 2 years time or so that it pitches and another 5 years before it sells for £££££. If like me you joined and invested in 2011, that means you have waited till well after 2020 for a single result. That is a very patient position to hold for more than 10 years, checking pitches every month etc. As of today not one of the 250 CC funded pitches has returned anything, 10 or so have gone have gone bust and many of the ones we have research on from 2011 to 2014 are nowhere near the projections used to sell the equity. Its not a sensible way to build sustainable businesses and without subsidy (SEIS and EIS) it would have died an early death. Really its just a play thing for bored overpaid city dwellers!!

Wisealpha - a total mystery

We have no idea what to make of Wisealpha - the Crowdcube success that raised £579k from 376 investors.

Its platform is FCA regulated. It reports full accounts as if it was some multinational - but turnover has gone from zero to just £9k for YE June 17. It makes enormous losses - to generate sales of £9k it spent just short of £500k. 

Ok so maybe its one of those internet companies which collects followers to enhance value. Who needs revenues and profit if you have 250k followers on Twitter? Well no, it is not one of those - its following on Twitter is 900. 

It was technically insolvent in June 17 but has raised £900k since.

What is it? 

Redchurch Brewery post large losses despite selling large profits

Redchurch Brewery has raised £895k on Crowdcube since 2016. Projected profits for YE June 17 have turned into large losses.

It's a story you will all be familiar with. Expectation management gone missing in action. But it keeps on and on and on happening. Promises of deals with Tom Dick and Harry have not resulted in the revenue numbers being catapulted into the stratosphere. Maybe the tunnels all proved to be dead ends. The company was flushed at the year end with NCLs sitting at minus £400k. It will need more cash. Heard it all before?

It is really very disappointing. 

POD Point plug in with misleading figures.

Pod Point have raised money on Crowdcube 3 times - each time missing all projections by miles. Each raise has seen an ever increasing valuation based on the the next set of figures. They will surely be back.

In the last raise in March 17, they stated losses for YE June 17 (so 3 months later) would be £2.1m. Filed accounts for YE June 17 show losses of over £4.6m for the year. Staggering incompetence. Especially if you consider what they were promising in the previous 2 rounds.

New deals at the end of 2017 with Tesco and Lidl may alleviate losses, although we are not sure they are due to make any money out of them. No doubt that more charging points for EVs will be required in increasing numbers but it seems these guys have an issue counting. 

Backed by some big hitters including Barclays and Draper Esprit, we feel we must have missed something?

Chilango pivot leads to losses of more than £12m.

Chilango raised over £4m on Crowdcube via equity and bonds. Now 4 years on, it has decided to change its emphasis. A change the management blame for their large and inceasing losses

Crowdcube projections - you remember those financial fairy tales - had Chilango with a revenue of around £14m (dates are different so hard to be exact). Actual revenues are £9.7m. Money raised in 2017 was at a flat value with the Crowdcube 2015 raise. So dilution cometh. Accrued losses at now north of £12m. £3m of that came from the last year.

The FD recently left.

The latest accounts indicate that their Camden unit under performed and has been closed along with the Limehouse delivery kitchen - another idea that seems to have bombed.

Not sure how many chances you get, but these guys must be at their limit. Very tight on cash, the predicted new unit in Birmingham has not opened. They predict that EBITDA for the current year will be positive - we will wait to see that.

Investors will just be happy for the moment that Chilango has avoided the Day of the Dead.

Cake take a break and are closed for now. So sorry!

Cake Technologies raised over £1m on Crowdcube in 2015; valuing the company at more than £10m. Now their website states they have completed that phase and are moving on with partners to the next phase. We have no idea what that means except that Cake is no longer functioning. 

This may of course be good news, as the company we wrote about here was heading west rapidly and had failed to raise any significant new cash in 2017. They certainly sound as if this is good news in their unapologetic stream of PRing that now greets Cakers on their home page - here. Id be smiling too if I had got away with burning around £2m in 24 months. 

So the company appears to be in mothballs - which if I remember correctly is not a flavour best suited to desserts. What actually happens next is anyone's guess. They are certainly not giving any clues. There does seem to be some connection between the new (Oct 17) directors and American Express but nothing confirmed. In terms of the market, new players since 2015 include Revolut, who now offer a similar service via their card. 

Thanks to the anon heads up on this one. 

Could 2018 be an exiting one for Crowdcube and Silkfred?

Rumours are ago-go that Silkfred will IPO for £100m in 2018. They are certainly crunching the revenue numbers and god knows ECF needs an exit. Current rumours all seem to be coming from one direction. 

Accounts for the company are now due but we will have to wait until they are filed. We mentioned them as good bet a year ago. Other December accounts make less than happy reading for the new year - we aim to produce a runners and riders list in early January.

We suspect that many will be reporting to the knackers yard before their next accounting date.

Happy New Year to Y'All.