Recent comments we have published on the blog from anons, show that some people believe the story put about by Crowdcube, that the whole thing is the result of Crowdcube refusing to give me a job in 2012. Its time to find out if that is true.
Im certainly old - well almost 60 which back in 1982 when my career started, seemed ancient. Bitter, well maybe but I put that down to a healthy dose of good British cynicism. It can often be mistaken for bitterness in this world where if you can get away with it, it is ok.
My working background has been and still is in SME start ups. So when Crowdcube launched in 2011, I was there, eager to find out more. If I had had access to capital like this in the 1980s and 90s, it would have been an enormous help.
I joined the then small number of early adopters on CC. I invested in a small company, met other investors and thought to myself that this was a very worthwhile new sector. Then, through carrying out my own DD on the pitches on the platform and talking with other investors, I discovered what we all now know - Crowdcube is a sham. It uses fake information to promote investments - claiming whenever it is caught that it doesnt check. In 2012/13/14 I was rubbed off the platform numerous times for pointing these 'facts' out. They didnt like the truth. Im still banned from their Twitter and FB pages.
My first reaction to this in 2012 was one of - ' Well these guys have had a great idea but their lack of experience is showing - so maybe I can help.' I suggested to them that I run a remote DD service - free of charge - from my home in Scotland. Their response - 'We know what we are doing and do not need any meddling from the likes of you'. This later became ''Rob Murray Brown asked us for job and we turned him down - that's why he writes the blog''.
If you just take a moment to think about it, in 2012, we had two children well settled at private schools in Scotland, we had a lovely house we were slowly renovating and I had access to the best golf courses in the world. Would I really be applying for a job in Exeter - 12 hours away - to work for a bunch of 20 somethings in a brand new and as yet unproven sector?
The blog came about simply because I couldnt be bothered making up new names to join CC just to be rubbed off again. The blog reports the facts - just the facts. The way I write is just the way I think. ECF needs to be purged of the likes of Crowdcube, so it can really flourish to benefit companies, investors and lastly the platforms. Crowdcube's model benefits Crowdcube first, then minor criminals and ignorant so called entrepreneurs. It has had no real benefit for investors or companies if you take the results to date in the round Our records, 90% unpublished, show a massive collection of zombie companies, who only managed to get investors cash by lying about their potential on Crowdcube.
I genuinely care about this. When you run a few decent businesses from start up and have been permanently short of capital, with all your personal assets tied in, you understand the importance ECF could have for growing genuine SMEs in the UK. You can also see the charlatans. In my opinion the two greatest charlatans are Luke Lang and Darren Westlake.
The important thing is the blog exists to highlight the way funds are being raised and how investors then get treated, not the reason behind it. Just imagine if this new sector was not being analysed in depth the way it is, the FCA seem to be doing Sweet FA to ensure investors are treated fairly.
ReplyDeleteNo actually the reasons behind it are important. If it was the cae as some believe that I analyse and write all this up because Im driven by spite it would mean I need to be locked up - my wife agree here. So it matters that the blog is a reflection of what is really happening, not the discourse of some sad git. It is also interesting that this smear on my name has come directly from Luke and Darren at Crowdcube - or so I have been told by a reliable firsthand source. Not a very professional way to go about things but what would you expect. Thanks for reading
DeleteKeep up the great work Rob!
ReplyDeleteRob
ReplyDeleteA latecomer here, but an early registration on CrowdCube.
I run three very successful SMEs in the FMCG sector and, like you, was interested in CC back in '12 as a possible investor with a background in the sector. I never invested in anything on the site as I always thought the projections I was reading to be fantasy given my knowledge of how hard growth, eventual profitability and then exit can be.
As you say, its a shame because I think many great companies could utilise ECF but the whole sector is being tarnished by the charlatans.
Interesting to get some info on the background of this blog.
ReplyDeleteIt can be hard for the truth to come out and be believed from 1 or 2 voices when against a company with lots of money and lots of PR. See Theranos!!
Keep up the good work Rob.
It is very important to shed light on the wild west themed crowdfunding.
ReplyDeleteWhat I am missing is an overview on how status is for all funded companies - so as we move along how many companies are still in business and if some has exited how was value for investors. Crowdcube certainly does not provide that overview and it must be close to impossible to gain an overview as an outsider.
I am skeptical so for a start I invested in 10 companies in 2014. I expected 5 of them to survive and out of those 5 maybe 2-3 to be profitable.
My conclusion so far is the following:
- Not much information. I would expect information about progress/problems to be sent out quarterly or at least every 6 months. 2 out of those 10 I invested in fulfill this.
- No tie between business plan and current progress. None of those 10 investments tie their information sent out to the busniness plan. When I check none of them follow plan related to e.g. revenue, exit plan etc.
- What is the value of my shares. I know this is hard but it should be possible to at least indicate if value is going up or down and also compare this to share price at the initial offering(which I also do not see ever is informed so I have to calculate it myself).
Overall I understand why normal (rich) people want to have a major stake of a company when they invest in start ups. The idea behind Crowdcube and the like result in many smaller shareholders and no pressure at all can be put upon the owners. So the only purpose so far as I see it is a lottery with bad odds for a return that corresponds to the risk included by:
1. Binding money for a long and unknown period.
2. Going in early stage.
The basic idea about funding start-ups is very good. What I will change in the future is that I will invest in a larger group of investors thus being able to 'have a voice' towards the company.
Btw latest story to your timeline in the blog might be that I have just received mail that Enclothed is now also out of business - or as it has happened with 2 of those 3 of my investments that went out of businnes --- taken over to be continued by others even though homepage etc. is looking exactly the same as it did before the company went out of business :) The information however was not provided by Enclothed before I by mail contacted the company for information after 16 months of no information at all. I am not sure all the other investors have received notice of this.
Hi - would be very helpful if you can anon send me any info you have on Enclothed. Its one we have been expecting to close but I cant call it wihtout evidence and still open at CH. Thanks.
Deleteps you might not have seen this -http://fantasyequitycrowdfunding.blogspot.com/2017/03/seedrs-pitch-gives-shareholders-some_10.html which we wrote when Enclothed were on Seedrs.
Deletepps - checking back Enclothed was sold/given to The Chapar - another CC funded co. Not sure what happens to Enclothed SH??
DeleteI see you now have an article but below you find the mail I received.
DeleteI was surprised how it could go directly into closure without any information to shareholders. I have just as of today asked the contact persons that is referred to to send information about date of the company's closure and some further questions.
----
Dear Jonas,
It has been almost 5 years since Enclothed opened its doors, and it was your investment which allowed the company to go from a two-person idea pitching on Dragon’s Den to grow to a £1.2mil revenue business, with a fantastic team of 20 dedicated staff and a happy and well-dressed customer base.
It has been a great journey for us as founders and it has been incredible to see the retail industry change as it has over the years, whereby it is clear that the high street needs a change, and companies such as Enclothed provides that much needed level of convenience and personalisation.
Sadly however, the market as a whole has demanded suppliers to press for less favourable payment terms, a changing and expensive marketing landscape has developed and it has been a challenge to scale sufficiently quickly to the level needed to continue to grow towards profitability.
In this context, Enclothed has been unable to secure sufficient additional funding from its shareholders to continue in business and thus ultimately must sadly shut its doors. If you have not yet, you will shortly be receiving communication from our appointed administrators Kingston Smith regarding your investment. Their contact details are:
Chris Purkiss: CPurkiss@kingstonsmith.co.uk
Carly Blackburn: CBlackburn@kingstonsmith.co.uk
www.kspllp.co.uk
+44 0207 566 4020
Devonshire House
60 Goswell Road
London, EC1M 7AD
The assets of Enclothed have been acquired by The Chapar, and I believe some of the stylists have moved on to be employed by The Chapar.
As an EIS business, you are eligible to claim a capital loss on your investment, as well as income tax relief since your investment was made.
A great thank you to all of you who made this wonderful journey possible. Without you, we wouldn't have gone this far.
Kindest regards
Dana Zingher, Levi Young and the Enclothed Team
Thanks Jonas. I believe that by sharing this sort of information, we can make a good attempt at improving ECF for everyone. I could see that both os these girls were slightly naive rich kids who would bolt for cover at the first real problem. And so it proved. Sorry for your loss. Of course Crowdcube make no mention of this anywhere. Our source tells us that the deal with The Chapar is not finalised and even when (if) it is there will be no money for SHs as secured and unsecured debts are large. These girls should not have let out alone to rip off the public - that's Crowdcube's job to prevent this happening.
DeleteThis blog is how I've found out about some of my investments not quite being what I was sold by Crowdcube. I also have other investments through Seedrs and Syndicate Room but those don't seem to feature in this blog very much, especially Syndicate - a good sign about these platforms or just not covered? So far Crowdcube has been terrible, Seedrs so-so with quite a few gone bust but still a couple of very hopefulls and Syndicate Rooms one down the drain recently but the others all reporting and growing.
ReplyDelete
ReplyDelete... so when will you be launching the *crowdfunded!* remote DD service?
For those who have not been following you for some years the article archive provides a lot of credibility - which is why I and others think it is important to keep it open and searchable to the public.
However it does generally only deal with historic information (results in companies house / bankruptcies / exits etc)
What the archive does not provide (generally) is any commentary on current raises.
By the time you write about CAKE etc, it is usually too late for the investors.
Ha - already written a DD guide which you can get via Syndicate Room. It will be updated soon. Planing another much more comprehensive version. We dont comment (well in fcat we do but only if the pitch is so aweful) on live pitches for a number of reasons.IMO the information you get in a pitch is not enough to make a sensible judgement on any positive side - esy enough to spot the lies and fantasies. We wouldnt wish to damage a start up if in fact it had a chance but we didnt have the full info. We are also not FCA regulated so for us to issuing investment advice is a little contentious. Caveat emptor - if you do your own DD and bother to dig around a bit you can find out what we find out. Why would we give you that FOC? Finally, the research is mine and mine to do with as I like - its now some public information service. Re Cake - no one knew except the cake makers in advance so not sure why you selected this example. You will find numerous articles on companies that come back for a second round where we say stay clear. We foresaw Sugru, Enclothed, Front Up, Berrywhite, The Yorkshire Meatball Co and quite a few more.
Deleteps there is a service called Crowdrating that makes a stab at analysing live pitches. IMO its a bit of a joke and I wouldnt bother with it. But it's there for those who cant make up their own minds
DeleteI appreciate the time you take critiquing this space and running this blog. CrowdCube are a terrible company.
ReplyDeleteYour DD guide is v. good and it might be worth linking to it from this site - chances are only SR users will see your DD guide otherwise.
ReplyDeleteI have been doing DD for the last year+ - mostly following your guide (!).
What the guide does not provide is your detailed experience/insight. I have not worked in the SME sector and built up my own business from nothing and have not spent a lot of time looking at just about every raise on SR/CC/Seedrs for the last N years.
My time is taken up doing other much less exciting things.
You seem to want to monetise something and to me, your judgement and detailed experience on a forward looking basis is the thing that cannot be readily replicated from a few google searches.
There are indeed legalities / FCA regs. I am not a lawyer but suggest you have a look at the disclaimers provided in scsw.co.uk or shareprophets.com.
I mentioned CAKE as that was the last article I read before this one.
I looked at crowdrating when it was free, but could not see what intelligence it was really offering over what you can work out for yourself.
If they offer any services at all to companies - even completely unlinked to the rating they provide, I would consider that a difficult conflict of interest.
Thanks Andrew. Im meeting with SR soon so will see if a link is appropriate. The guide is to be updated as quite a lot has happened since it was written. Will look into legals - I am keen to put this onto a commercial footing as I do believe i have something worthwhile to offer. Getting the right shape for it is not easy.
Delete"Crowdcube is a scam".
ReplyDeleteYou should be careful with the defamatory stuff you write on here. It would be awful if any of the platforms sought legal advice on the basis of your inaccurate, unhelpful and bitter comments.
Typo - meant to say sham. Cant get the staff these days. Love that you care.
DeleteThe service and lessons provided on your blog are absolutely vital and quite honestly essential reading for anyone that is considering investing in ECF. I truly appreciate and sadly enjoy reading the trials and tribulations of some of these companies... it’s funny, frustrating but also a little sad as to lost capital and resources. Please don’t give it up anytime soon!!!
ReplyDelete