Seedrs Macrebur forum illustrates a fundamental problem with their equity crowdfunding model.

Macrebur are about to close a £1.9m funding round on Seedrs. Yet if you read the forum and the latest updates by the company, you would think this company has plenty of serious questions to answer before it closes on such a large sum of the public's cash.

UPDATE - this one really needs a live feed! Macrebur have now announced, just days before they close a £2m round, that the investment from Pontaq of £500k has been rejected by the Macrebur board. This investment has been a key element of their campaign, so why now at the very end is it being rejected. Surely these terms must have been sorted long ago - or it WASNT a definite investment. The CEO told investors on the Seedrs forum that '' Pontaq have already invested'' and claimed that Macrebur were, via Pontaq, talking to The Minister for Transport for Tamil Nadu. Now the CEO states that India was never their focus. What's next?

Most of the outstanding Qs revolve around a £1.8m investment by a potential strategic partner (although much more established)firm, Instarmac.

This has been ongoing for a while - we wrote about it before on here.

Two days ago the company posted an update on Seedrs stating - ''We have been offered a £1.8 million investment by a UK manufacturing and distribution company. The company operates in the same market as MacRebur and, subject to the investment completing, the investor will help us develop our business using their experience and connections. The investment would be made in the form of convertible loan notes and these notes would convert automatically into shares at the same subscription price as the Seedrs’ investment round if MacRebur meets certain financial targets.

'This investment is of course subject to us agreeing final terms and conditions with the investor.'

Since then the forum has been filled with investors claiming that this £1.8m, which the company has said is from Instarmac, is a concluded investment. Whats more they have declared enthusiastic support for the company based on the fact that Instarmac's due diligence has concluded in their investment. That is simply incorrect. It has also been pointed out that a convertible loan is not an investment as such, until it is converted - ignoring the fact that in this instance the company has told everyone that the 'investment' terms have NOT been agreed yet  - ''subject to us agreeing etc etc''. Prior to this conversion, which maybe be a few years down the road , it is a loan. A loan is not an investment - even if the liability of the conversion may make this such in the accounts. Anyone asking about the terms of the deal or the date it might be signed, is ridiculed as some sort of troll.

All of this confusion is continually increased by investors comments which make it plain they could not tell a convertible loan from a pancake. Then this is added to by the statements from the company in answer to requests for clarification that this is indeed an investment in the company. For example, the CEO states on 7 Nov '' Fabio - it's Instarmac who have invested.'' But there has been no update on the 'invetsment' terms being agreed. 

I have to say it is the most ridiculous mess and does nothing for Seedrs attempts to make ECF open and informative. 

We are not making a judgement on whether this is a good investment or not. We are just shining a torch on the bleeding obvious - there are some very contradictory statements lying almost side by side. If it were my money I would want clarity. Im sure the CEO would as well.

What if the terms of the Instarmac deal cannot be agreed? For example they want a conversion rate that puts them in a better position than current Seedrs investors - something Macrebur has said they wouldnt allow. How many ECF funded companies have we seen talk about large investments from strategic partners or VCs, for these to suddenly disappear months after investors have handed over their cash. Too many is the answer. 

Readers might also be amused to read what the CEO has to say about us or rather me on the Seedrs forum. First of all I am a scam solicitor working for Bird and Bird who cons people into handing over cash by writing rude stuff about them. Then he recants on this and declares he has done some looking into me and has found that my company has filed no accounts. We have filed 2 years of accounts. He also accuses me of planting comments on the Seedrs forum - which is wholly untrue and really just makes him look rather foolish. We do not make comments on the Seedrs forums. All of this was done late at night which might suggest something. He also makes another false statement that we have no relationship with Seedrs - untrue as Jeff Lynn would confirm. I would be very wary of slagging off Bird and Bird my man! It speaks volumes for the sort sales pitch he has presented on Seedrs. And unfortunately the sort of investor who has backed it.  

For the record Qs still not answered by Macreburs - 

1. Patents - especially for MR7 which is their main revenue driver. 
2. What are the full terms of deal with Instarmac. Why was a VC deal talked about  - Instarmac are not VCs. 
3. How will they get from £2m to £8m revenue by end of 2019? 
4. Conversion of loan to equity target dates - Seedrs state May 19 and CEO states October 19. Big difference in projections.