Looking across the swathe of businesses funded via equity crowdfunding since 2011, it is hard to get excited about the successes. Maybe a lesson can be learnt from the rise of Hyper Recruitment Solutions; a company set up in 2011, which is now making £1m plus net profits.
HRS was the brainchild of Richard Martin or Ricky as he became known in 2012 when he won Lord Sugur's Apprentice TV show. Im not a fan of the show, more comedy than anything else but you cannot deny the numbers.
Since 2012, when the company launched, it has made steady progress and now reports accounts for YE June18 showing £1m plus NP and dividends to £500k. It has two SHs, Ricky and Sugar. A simple 50/50 deal and very little investment - £250k in equity and no borrowing. It is now a cash generating super charged success. ECF investors would give their right arm to have any such success as part of their portfolio.
This is real success - it is not based on the last or the next round of desperation funding. It has been built from the base up - the old way. If you watch the Apprentice you will know that Sugar likes the old ways - he hates BS and wouldnt dream of selling equity based on some mythical future value.
There is a lesson here. We know the platforms are not interested in learning it but investors should be. Real value is built from the bottom up and it takes time. You cannot simply throw cash at an idea to make it work. Ricky is a highly driven business machine and has built this business up from the boot straps - you cannot buy that or replace it with cash. Sugar knows this.
It is time that investors in ECF thought long and hard about what they doing. ECF needs businesses to succeed in the real world. The latest Monzo cash grab is not a success - the company makes massive losses. It may become one but most of that value is already spent. We need to stop the hype and get back to the basics of what makes a successful company - a bank account filled to the top with cash.
