The Great Crowdcube Gamble.

This is Crowdcube's last chance. The hyperbole has now run out and a results driven flat valuation round confirms that their big backers are getting twitchy.

Below is a table of Crowdcube's funding history to date - all pre money valuations - 

2012 Valuation £3m

2013                 £6m

2014                 £14.5m

2015                 £45m VCs only

2016                 £65m 2500 plus investors put in over £6m

2018                 £73m

In 2016 the company raised over £6m at £65m making the post money value ~£71m.  The pitch that is about to be launched onto the public is at a pre money valuation of £73m. The obvious fact staring at investors is the steady decrease in the optimism behind the valuations. Start up funding valuations are based on what the company hopes to be able to achieve. A flat valuation is essentially saying help  - we have run out money before getting to where we told you we would be. Put in money now and you may save what you already have but will it ever increase?

Of course punters who got in early will, if they have been able to find buyers, have made a very good return. But what about those who invested in 2016. They were told then the company expected to be at BE by the end of 2018. But we are now at that date and we know that Crowdcube are at best £2m short of that achievement. Whilst losses maybe down on the last few years, they are still substantial and will mean that this raise will be largely spent filling holes rather than increasing the road network.

And what real value does Crowdcube have? A failing investment model, loss of first mover advantage, huge overheads of £8m plus pa. Undisclosed real membership - you can forget the PR figures. We only hear now from people shouting that they will never use them again. All the investment has been spent and they have ended up with a neat website and some ok branding. Worth? £5m as a shortcut for a newbie?

In their 2016 cash grab, Crowdcube had this in the prospectus -

Q. Will you need to raise further equity finance in the future?
A. Based on current market conditions and our estimates we do not anticipate at this stage having to raise any further equity finance.

And whilst all of this is going on, the competition is hotting up. Seedrs are about to receive a huge boost with the listing of Weswap on AIM next month. As any regular reader will know, we believe their model is far superior to Crowdcube's and always have done. The evidence for this is not there yet but the evidence for Crowdcube's model being flawed is. The failures are now regular and there are plenty waiting in the wings. The promised returns have vanished. Some of us might believe their new projections if they were able to admit that things have not gone to plan. But those are not words you will hear from these PR junkies.

When back in 2016, Luke and Darren where fending off Qs about achievements versus promises, they must have hoped that by the time the cash ran out, ie now, they would have seen at least two or three successful big time exits. Something to thump the table over. Something even we might have hailed as a success. 

Well it just has not happened. Now the same investors, who were asked to believe the hyperbole in 2016, are being asked to do the same again. We warned you.

This time they can see that the valuation hasnt gone up like before. The VCs behind this round couldnt seriously reinvest at a higher valuation, based on the facts. They dont wish to look like total idiots. The truth has been stretched to breaking point. They are being asked to put more money into what is clearly a failing business - by the founders' own admission. If they dont then it will surely go down the pan.  

So the big Q is, will they?