Justpark's new shareholder 'request' illustrates the need for ECF.Buzz

Justpark have asked shareholders to click a box to allow them to raise loan finance. Which is fine apart from the total lack of information, the chance to ask questions in a forum and the information that is supplied being less than symmetrical.

Justpark are a regular on Crowdcube, having raised over £6m so far. Now they are telling shareholders that bank finance is a cheaper way of funding and it will have less impact vis a vis dilution. Eh? Well if you read the notice sent out to SHs, via Crowdcube, it goes on to explain that the bank in question will have rights to shares as well. So that isn't equity finance and wont that cause dilution? No mention of the price paid for these shares is given. Nor is there any mention of the amount being raised.

The company, who have struggled since 2014, are now making progress and certainly reviews have improved in the last year. However I'm sure investors will want to know why they chose to share the B2B revenue metric and not share the parking revenue metric? And guys using percentage increases is really pointless and can be misleading. A Year on Year increase from £10 to £20 is a 100% increase but it's not something to celebrate.

As a general rule, we always tell people that more often than not, it's what the company doesn't tell you that is important, especially if they start using odd metrics and percentage increases with no base figure. Just an observation we have come to from 8 years of looking at ECf pitches.

Losses to date have been large. But that has all been put down to gaining traction. That is the new normal.

We think your shareholders deserve better - they have after all put you where you are now.

ECf.Buzz will help investors get the real information so that they can make an informed decision rather than guessing.

Justpark look set to smash their Crowdcube target in latest round of funding.

Justpark raised over £3.5m on Crowdcube in 2015. Now they are back for another £1.5m, although we expect the real target is much higher. So how does it stack up?

If you listen to the company, then its all going swimmingly. So let's not do that.

In 2015, they only gave historic figures for the financials expect for that year. Now again they only give historic figures, so a comparison is difficult. However, we do have one and that is for 14/15.

Revenue figures are spot on but its the gross profit and COGS that send out a more worrying message. Not of course a message mentioned in the current pitch.

COGS were £263k but actual COGS for that year were £371k. So that's a 41% increase in COGS for the same value of revenue. Gross profit likewise were £828k but were in fact £626k again on the same revenue - a considerable shift in GPM. The overall expenditure was below the expected level and this seesm to be as a result of employing fewer staff. This might in turn explain the high number of complaints at that time that the company couldnt be reached if there was a problem.

Now we do know that the company has had issues with service levels and this could explain the changes - but this is not explained in the current pitch. When companies ignore the obvious in an attempt to disguise issues, you have be a little worried. 

Our main problem with Justpark, apart from the above is that they have no real control over the service they offer. The spaces are owned and controlled by the public - who are nothing if not unreliable. The issue of arriving at your space to find it either too tight, full or simply not there, with the owner unavailable, is one that appears too often in negative reviews. So if, for example, you cannot get parked you miss the wedding or funeral you planned to attend. To be fair the reviews have improved in the last year. But unlike Airbnb, the transaction value is very low so space owners do not really care. Justpark do compare themselves to Airbnb, which is a mistake. 

So you have to ask can the company resolve this issue - clearly no as they have no control over it. 

So can they live with it and increase their revenues by enough to make some money ie profit? Can they keep the GPM steady and stop the rise in COGS and operating costs above the level it currently sits at, against increases in revenues? That's the key balance and they have a long way to go to get to BE.  Deals with Local Authorities and major property owners such as hotel chains will help - but may come as a discount to GPM.

The rest is for you investors to decide. 

A response from the CEO of Justpark

Please find below a response (to our post) from the CEO of Justpark to the news about staff layoffs and other issues...........

Hi Rob,

Happy to share openly and honestly what has actually happened and not what has been sensationalised in the media.

I normally wouldn't respond to a post like this which has been taken out of context and misrepresented but feel a duty to the 2,900 people who backed us who may be reading this.

The company DID make some hiring mistakes but only in that we did not focus enough on what was driving real value to the business. We grew a few of our teams too fast but realised quickly enough and made the tough but necessary decision decisively.

The number of people we had to let go has been blown way out of proportion and the original article has since been amended.

We are not running out of money. We raised over £3.7m and still have over 24 months of runway. Revenues are strong as is growth of our key metrics. The decision we made is very good for shareholders. The only people that have suffered have been my former colleagues and friends.

If you have experience of advising or working with startups you will know that this is quite common and not always a bad thing.

I'm not going to comment on individual trustpilot reviews as they are all unique and each one is dealt with by our customer happiness team who continue to beat industry standards in terms of response and resolution time. We've had over 250,000 reviews on our website with over 95% 4*/5 or higher. Our trustpilot rating is also very high (over 9/10).

Unfortunately when operating a business like ours it is impossible to prevent certain situations. We do our best to prevent these issues from arising and also sort out any problems as quickly as possible.

We have a team dedicated to ensuring the quality of our listings and quickly demote and remove listings that offer drivers a poor experience.

Regarding your point about security, I answered your question at the time in the crowdcube forum regarding a terrorist potentially using JustPark to park in a car park.

With everything that has recently happened in Paris, I would rather not comment further but hope that anyone reading this would agree that someone using JustPark would only increase the security of the general public and the parking location rather than decrease it as we would know the identity of the driver.

I am happy answering any other questions you have about JustPark and hope that this clarifies a few things.

Anthony
 ......................................................................................................

A few points.

Firstly we never had a real response to the security issue and as you can see we still dont. There are a variety of central London spaces which can be booked for months on end which are hidden away. Using a false name and payment system would be very simple. We joined the list of space vendors with fake details with no problem.

Of course new businesses go through some trial error, stress testing etc but then they dont value themselves at around level Justpark did only months ago.

The Trustpilot reviews have two facets - the group of reviews which we wrote about before which were all within a few days (hundreds of them) and ALL 5 star and the more general reviews which if you removed the block mentioned above would be nowhere near to the 9.3 average they have today. The problem seems to be a consistent one - poor customer service and lack of control over their only suppy ie spaces. They can change the first but not the second.

For the sake of their investors we hope things improve. We do love the idea that 2,900 people might be reading this blog!

PS - The original number of layoffs has not been corrected as the CEO suggests here - so this is highly misleading and his fellow CEO Alex Stephany has just announced he is leaving. All sounds solid to us.

Justpark already laying off staff - eh??

It seems that Justpark have been laying off staff - rumour is that they have off loaded half of the team. Cant be cashflow surely? http://uk.businessinsider.com/london-startup-justpark-cutting-half-of-its-workforce-2015-11

With some terrible reviews and now the problems they face with their London sites and the threat from terrorists, its hardly surprising.

The concept has one very large and in our opinion fatal flaw. Justpark the company have very little if any quality control over what they are selling their customers - the spaces. Various complaints have emerged about unsafe spaces, spaces too small, people parking in the wrong space etc etc. We tried the system out. We promoted a fictitious space to see if they had any system of checks. They dont. You sign up on line and simple wait for a booking. So they will always have poor or dangerous spaces. People in a hurry to dump their car in a space they thought would be fine will not be customers for long.

When the pitch completed on CC, raising £3.5m at a valuation of £20m, we asked the company what checks they had for the private central London spaces vis a vis bombs etc. They had none. In light of recent very sad events, we think this was a little short sighted. Various spaces can be booked anonymously for long periods - in private locked garages. Perfect for anyone wanting to wreak havoc. 

Justpark anywhere

We had to share this with you.

On Trustpilot we found this plaintiff call for help from 4 days ago -

Someone has parked in our drive with a JustPark sticker in the windscreen. We are NOT a justpark space and need the car removing urgently. I cannot get my car out of the garage.
I have emailed & messaged on their facebook page
I have left my details and phone number but they haven't replied
How can I get this car removed quickly?

I may have to contact the Police to tow it
Beware if you are using Justpark because this may happen to you 

Hahahahahahahahahaa

UPDATE 09/11/15 - this review was referred by JustPark and is pending an enquiry by TP so is no longer visible.