Either Equity Crowdfunding is Crazy or the world has gone mad.

Peanut Chutney is currently well into its £100k Seedrs campaign. It has valued itself at £950k (PM) on the basis that it has not filed accounts yet and has sold around 800 jars at £3.50. It is 'listed' in a few shops.

We have little the doubt the product is fantastic - who doesnt love a hot spicy peanut sauce and it has a great back story. But it's made 'at home' and has not been scaled. For investors to see a 10X return the business needs to be valued at £9.5m (excluding tax reliefs). So how can it now be valued at £950k?

We talk about overtrading a lot on here. Small companies trying to grow large too quickly get overstretched and their cash dwindles until they cant pay their bills - even though they are making some money. Given time a good product can trade out of this situation but a cash crisis doesnt afford that luxury. Bang.

The team have little or no experience of scaling this type of product.

Small, one (with little stress testing) product companies do not belong in Equity Crowdfunding. They are not an investment for investors and the company needs to grind out its viable product stage over a longer time frame to avoid a crash. You have to ask why Seedrs agreed to this pitch. Or maybe this is exactly what ECF should be helping? In which case it needs to be valued sensibly at around £200k. At the moment it has a serious valuation, for a homespun outfit and the two do not sit comfortably together.

Everyone knows, or everyone should know, that scaling up a kitchen recipe is incredibly difficult and can take a long time and cost lots. Numbers on a sheet of paper wont tell you that bit.

We did try to buy a jar for £3.50 on line but the end price was £6 with shipping. No way is it worth £6 and it was annoying that they didnt indicate the shipping of £2.50 (or an increase in the price of 70%) before the check out arrived. Im used to buying inclusive nowadays. It costs me £6 not £3.50 as claimed - I cant eat it until it arrives.

Now once ECf.Buzz is up and running this July - you can find out how to value start ups and how to see why valuations at the current levels being offered are crazy.