Congatulations.....it's a very healthy valuation!

Cake (Spleat Ltd and or Cake Technologies Ltd) has just launched a bid to raise £800k on Crowdcube, valuing the company today at almost £11.5m.

Cake claims to be an easy way to pay restaurant bills. Its been tried before and failed but maybe they have something new to offer. To date Cake has been trialled in just twenty outlets in London and its plans state it will be in more than 100 sites by the end of 2015 and will be employing more than 50 people by 2017.

The company is run by two ex corporate financiers, both under 30. One had her own business for just over a year which is now being closed. For the other one this is a first solo flight.There is some undefined relationship between Spleat Ltd and Cake Technologies Ltd  - started by Aaron Ross. Mr Ross's record is not impressive and shows signs of a serial flopper. Cake T has traded for 2 years with cumulative losses of £730k.

Adding all this together the picture is not great. Zero experience starting and running a company. Zero experience working outside the blue chip bubble. A very short and honestly pathetically small trial period - itunes currently has 2 reviews of the app. And a valuation which makes most on Crowdcube look sensible. Take all of this and add the most important ingredient - it didnt work before and now Paypal offer a far more rounded service - and the mix is up the Suwannee. If you need further proof read the comments here about the launch of Cake - http://www.thisismoney.co.uk/money/smallbusiness/article-2888679/App-won-t-make-meal-splitting-bill.html. Their naivety is highlighted by the claim that their USP is the targeting of top end restaurants - places where the rich and famous spend hours splitting their bills!! 


PS - one additional feature to increase confidence in the management is that the site for Cake http://www.thecakeapp.com/policies/terms-of-use/ has the site owned and managed by Cake Ltd Reg 08292050. This is a legal requirement. In fact the company registered at CH under that number is Spleat Ltd not Cake Ltd - so they are technically in breach of UK law. Cake Ltd is (was) a Manchester based company that is completing its liquidation - maybe a Freudian slip.

Having your Cake but not able to eat it? Crowdcube land another dud.

Cake has now agreed sales terms with a US organisation, returning shareholders $1.40 per share. This price, which is not yet guaranteed as it is subject to the buyers future approval, represents a substantial loss for Crowdcube shareholders.

Cake took £1m off Crowdcube investors in 2015. Now the founders, Charlotte and Michelle, have agreed a deal where they get a substantial return but investors are losers. But at least they can laugh about it.

This is a deal that gave shareholders no choice - they were not even asked; just told to sign away their shares. So much for the rights of A, B, C or any minor shareholder when founders decide it's time to cash in. And of course the poor old shareholders have to take another big hit as their EIS relief is now invalid and will have to be repaid. Thanks girls.

The US purchaser is unnamed. But the price agreed is around £9.7m or $13.2m. Back in the summer of 17 Crowdcube and the founders backed a valuation of £11.5m. The £9.7m has also to cover some outstanding debts. We had something to say about that then - here 

I know people who used Cake and loved it.

The founders are smiling as the investors, who allowed them to make their profits, sit with large losses. Oh well, caveat emptor or you could take our advice in future. Worth remembering these two as we think they will be back for more!

Cake - Give Me CAKE!

Cake Technologies raised £1m on Crowdcube in 2015. Accounts to YE Dec 16 show losses of £2.4m and a large deficit on the BS. 

This is odd as friends of mine in the City swear by it. So whats happened to the plans?

Well firstly they have failed to raise the £5m projected equity funds since the £1m on CC. The losses are only £100k higher than projected, which is probably a result of the funding issue. Since the 2016 YE they have only managed to raised another £100k or so which in no way covers their £600k plus deficit. The CA position is horrible.  

Maybe a lack of traction and lack of venues who accept it, have slowed things down. The patient doesnt look well though. You could say that the Directors have stretched the explanation of their Going Concern clause to the limit. 

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. 

Why the sale of Cake to AMEX has been played down by Crowdcube.

With Crowdcube's PR you would expect the sale of one of their funded companies to American Express in late 2017, to be headline news. Well as Crowdcube shareholders lost money on the deal, of course they have swept it into their large bin of failures.

We brought this story to you last year - here. But more details have now emerged. The buyer was American Express.

Cake got itself into financial difficulty and had no choice but to close or accept the AMEX deal, which valued the company at around £9m. Crowdcube investors had accepted a valuation of £11m when put in £1m in 2015. Large debts meant that most of the sale proceeds went west. Sugru style. 

We think that if Crowdcube had an ounce of honesty they would put both of these two companies up as examples of exits that left their investors out of pocket. After all they claim to be open and honest.

And Beauhurst where does this one appear in your infographics  - exit? dead? zombie?

And of course we shouldnt forget that this is another UK gov subsidised deal that has left the good bits drift overseas for a snitch of the real value - cf Sugru.  

We are offering entrepreneurs a free equity crowdfunding capital raising advice service.

Over 60% of pitches that try to raise crucial funding on sites like Crowdcube fail. This effects personal morale, the business and wastes a lot of valuable time and effort. We believe we can help.

We have intimate experience in the UK equity crowdfunding market since its inception in 2011. We have invested in, studied and followed over 200 businesses that have pitched on Crowdcube and other platforms  - some successful and some not. We know how to create a successful pitch and more importantly we know how to create a successful and honest pitch. We don't use gizmos and slight of hand - we just present the case in the best possible way for the Crowd to want to be enthused and for the investment to be a success for both entrepreneur and investors.

Equity Crowdfunding will only work long term if both entrepreneurs and investors win. The current wisdom as expounded by the likes of Crowdcube, is that the entrepreneurs should do all they can to con the Crowd into investing - read the blogs to find out how. We dont believe this is sustainable and it will eventually lead to ECF's demise. Its obvious why this has come about - the platforms only make money out of successful pitches, irrelevant of the likely success of the businesses. So help us change it.

Our experience covers successfully founding a retail chain in 1980s and 90's, running a national events company in the trade and consumer markets and consulting for a variety of SMEs and start ups. A Cranfield MBA completes the icing on the cake.

So any would-be entrepreneurs wishing to raise money via equity crowdfunding should contact us for a free discussion and if you wish, free review of your business. From this we can assess if you are ready to ECF ie will it have a good chance of success. If we help with the creation of the ECF campaign and it is successful, only then do we take a small % of the money raised.

Simply go to the contact us page and let us know that you are thinking of using this route for funding and we will be able to help you. 

Brewdog struggle to complete their £22m on Crowdcube despite much fudging of figures.

We all like a nice fudge cake. But there really isnt any room for one in financial reporting. 

The current Brewdog raise now live on Crowdcube is highly misleading when it comes to the money that is actually being raised by the platform; as opposed to Brewdog's own pitch platform.

With only 15 days to go, the target has not yet been reached and by our calculations, using, it has to be said, the dodgy information supplied by Crowdcube, they have only raised ~£392k on the platform. There is another ~ £150k to go.  For Brewdog on Crowdcube that is astonishing. Maybe the lights have finally been switched on and people can see that this is a rich valuation at £1.8bn, from which its hard to see a good return.

It would have been so much more honest and upfront if the brewer had opted for a simple £500k or £1m raise on Crowdcube - no fudging just a straight number. Instead they have stated a target of £22m of which the company has on its own, raised a figure that changes each day as the brewer has kept its own raise running. So it is almost impossible to see what they are doing on Crowdcube.

The forum is full of queries about how this is laid out and how that valuation is justified. It just smacks of dishonesty and if this fails to reach £22m (which is unlikely as this is BD) it will serve them right. Whatever happened to the real punks of brewing?

Busy month for Crowdcube funded companies - will they show any improvement on their dismal performances?

September is a busy month for company filings. We have a whole host of Crowdcube funded companies lined up to reveal their accounts for YE Nov and Dec 17. 

UPDATE - we notice that recent lack of progress in completions has pushed Crowdcube into sheer madness with the new launch of an old Brewdog campaign - just to make things even less/more 'misleading'. Ridiculous boys.  Doesn't mention the disaster with your bottles anywhere does it? 

Of course not all of them are in yet and some will no doubt not get round to it until the New Year but here are some of them - there isn't any good news.

Lovespace                    -    Projected £7m profit is in fact a loss of £1.5m - another one.

London Doctors Clinic -   Projected loss of £620k is in fact a loss of £1.1m

Gripit                            -    Projected loss of £240k is in fact a loss of £1.78m

Gamesgrb                     -    Projected profit of £2.57m is in fact a loss of £100k

Emoneyhub (Justus)    -    Projected profit of £2.3m is in fact a loss £280k

Cupris                          -    Projected loss of £464k is in fact a loss of £323k failed to raise extra £1m

Cornerstone Brands     -    Projected profit of £650k is in fact a loss of £3.5m

Clear Water Revival    -    Projected profit of £550k is in fact a profit of £46k

Chargebox                   -    Projected profit of ~£1m is in fact profit of £100k

Cake Tech -------------------Sold out with no money for CC shareholders------------

1854 Media                 -   Projected profit of £210k is in fact loss of £113k

Big Sofa ---------------------Sold out with little or no money for CC shareholders-----------

Bellfield Brewery       -   Projected profit od £550k is in fact loss of £209k

Affresol---------------------Liquidated----------------------------------------------------------------

Berrywhite------------------Liquidated----------------------------------------------------------------

Workabode-----------------Due £7.5m profit 2018 and no idea how they will get to this------

Vakay-----------------------Site down and didnt raise £500k extra funding. 

Estatesdirect.com----------Sold to Pels Family Office. CC Shareholders get 70p/£100.

Earwig                        -    Projected profit of £429k is in fact a loss of £100k

7 Bros Brewery          -    Projected profit of £267k is in fact a loss of £70k

Righteous                   -    Projected profit of £300k is in fact a loss of £60k

And so it goes on and on and will keep doing so, unless Crowdcube make a better attempt at promoting serious businesses run by people with some hope of getting there. EIS and SEIS could be used to help with this - but then the FCA and UK Gov have no real interest in promoting meaningful SME growth long term. Short term numbers are key and they show a rise in SME start ups. Yipee. 

More to follow as they file but Im not expecting any of them to get even close to their ridiculous Crowdcube figures.