What's your Grind?

Grind &Co, the coffee expert food chain, have done well on Crowdcube. They first raised a £1.3m, 4 year bond and then another £1.9m in equity funding, from 1200 Crowdcube investors. The bond is due for repayment this July. So far they have missed their aspirations by someway.

Grind currently have 9 outlets, one short of the number they'd hoped for. However that isnt the issue. It's what these units are producing which must be cause for concern. Substantial projected profits have been replaced with even larger losses - averaging over £1.3m per year for FY 2017 and 2018.

Clearly repayment of the bond in July might be an issue. Another cash injection at the end of 2018 may help but not if losses since April 18 have been at the same levels as 2016 and 2017. The accounts show some interesting debtor numbers. It will certainly tighten future grinds more than a little.

Just how safe are Crowdcube Bond Holders?

Bonds sold on the Crowdcube platform were supposed to be a safer way to earn income than investing in equity. But recent results from 4 of the platform's bond campaigns beg the question - REALLY?

These bonds or mini bonds, are usually for 4 years and offer an annual return of between 7% and 11%. They have been offered by what the platform has described as more established and therefore lower risk companies. 

Well that may be so but results from both River Cottage and The Eden Project show they are way off the course the set with the bond sale documents. Two more recent examples, Daisy Green Foods and Grind and Co are even worse.

Daisy Green Foods had projected profits of £350k but brought in losses of £480,000. A difference of £830k.

Grind and Co had projected profits of £353k and reported losses of £1.4m. They have new growth plans so we will have to wait and see.

Both of these two had missed targets in previous years resulting in a cumulative gap far too wide to be put down to bad luck.

It looks like both will need to raise new cash to continue in 2018. To repay their bond in 2019, they will need a considerable change in fortune and to raise more cash yet again. Grind and Co had raised another £2.4m at the back end of 2017.

What is more alarming generally, is the wilful misrepresentation of projections by all 4 of these companies. To be so far out in terms of their plans suggests either crass management or some dodgy dealing. Take your pick - neither inspire much faith in their abilities to run a successful company.

Hats off to Grind

Grind's £750k Crowdcube completes in a day and goes into overdrive.

Grind appeared on Crowdcube in 2015 with a successful £1.3m bond. Whilst the projections then have not quite come to fruition now, they have certainly made progress. And the signing this week of SSP, the transport hub specialists, to help role out their branded Coffe bars in railway stations and airports, puts them them in a good position for the next few years.

Here is hoping that this is one company we can look back on and see how it was helped by ECF and made investors some money. Still a very long to go and using a 3 month run rate to state the revenue instead of much poorer real figures, aint great. But hell, its better than most. Expect more raises along the way.