Syndicate Room's Soshi Games mystery

Syndicate Room have made a big thing about their openness and honesty, especially when compared to other ECf platforms. It is certainly something ECf badly needs.

When Soshi Games went bust recently, SR's CEO, Goncalo de Vasconcelos, had the CEO perform in front of a camera to explain what had gone wrong. All in the spirit of openness you understand.

The video actually told us very little apart from the fact that the CEO didnt seem to understand some basic facts about how his market functioned. We thought at the time that if you wanted to cover something up, this would certainly be a good smoke screen.

As we pointed out elsewhere here, there is something rather odd about this company. All Syndicate Room pitches have Lead Investors. This one was no exception. The Early Advantage fund, run by Midven, were according to SR the Lead here.

Certainly if you check the ARs for the company, they are a substantial shareholder. That is until just before the business' collapse. In the final AR their holding has vanished - it's simply not there on the list of shareholders. So whilst all the other investors and creditors are sitting licking their wounds, it would appear that Midven got out in the nick of time. That's what you call leading from the front. Of course it could be an error with the AR.

So we asked both Midven and SR what had happened. Midven never replied but Goncalo has. SR do not see anything amiss with what has happened and it seems likely that the information is privileged. Door shuts.

Ours wasnt a difficult query - what has happened to the large shareholding that SR's the Lead investor had in this company?

Given that the holding disappeared just before the company went bust, owing investors and creditors well over £1m, it seems a fair ask. Of course it is possible to hide behind client confidentiality - it always is. However it says a lot for SR's openness claim that they would even consider trying that one.

We'll keep digging, it may all be perfectly innocent and above board. Only the facts will tell us that. At the moment, the facts show the Lead investor had left the building before it fell on everyone else.

Soshi Games update

Soshi Games raised £285k on Syndicate Room in April 2014.

The company went into liquidation this October.

We commented before here about the SR's video they had asked the CEO to produce, which tried to explain the business' failure. It was a refreshing approach for an ECf platform to show some concern for its investors.

As part of this crowdfunding, as with all SR pitches, Soshi had a Lead investor - the Early Advantage Partnership, part of Midven.

So when the last AR was filed, it was strange to find that the Early Advantage shareholding was no longer listed. It had been in the previous years' ARs.

Shortly after this last AR, the company folded. In the liquidators initial report Midven is listed as a creditor owed £10k. When you consider that the company had raised £1.4m in capital, £10k is not taking much of lead. The report also shows that £85k of share capital remained unpaid.

We have asked both Syndicate Room and Midven if they can caste some light on what happened to this shareholding. And also to comment on the fact that whilst the Lead investor seems to have off loaded their holding in the company, the likes of Creative England have lost all of their £150k investment, along with a large number of creditors. Not forgetting of course all the crowd investors.

We havent had any answers yet. As SR pride themselves on their open approach we assume one will be coming shortly.

Jury still out on Synidcate Room's Soshi Games collapse

Liquidators for Soshi Games have just filed a first report. Soshi was highlighted when Syndicate Room, though which it had raised ECF, published a video of the founder telling us why it failed. It was a first in transparency but the jury is still out on what exactly went wrong. His explanation was full of contradictions.

The report shows a secured debt owed to Creative England for £150k and an estimated total o/s balance owing of £334k; none of it recoverable. Overall the company has used about £1.5m to get to here. There was only one current asset of any note which was an amount due of £84k for uncalled share capital  - there is no indication as to who might be liable for this.

The very odd declaration that this report confirms from the filed accounts, is that this company had absolutely no fixed assets. For an operation that was creating a brand and had already established at least one blockbuster app (their description not ours), this strikes us as very odd. If they dont own the Queen game, who does? It must surely have some value or what was the point? Not inconsiderable amounts of money have been used to develop something which now appears not to exist.   

Synidcate Room's Soshi Games goes into liquidation

Cliff Dennett of Soshi Games tells us here what went wrong - https://www.youtube.com/watch?v=kESsIMYuCwE&feature=youtu.be&utm_source=All+users+regardless+of+certification&utm_campaign=8606123b3c-The+lessons+of+failure%2C+and+coming+back+stronger&utm_medium=email&utm_term=0_a9f559f533-8606123b3c-121775249

This was sponsored by Syndicate Room who helped them raise £286k in 2014. All in all we believe they have lost investors over £1m. The liquidators report will be out next week so we'll let you all know what the damage was.

Interestingly Cliff opened a new business last week. In the video he states he hasnt decided what to do next. The video was published yesterday.

The video suggests that the collapse was a result of rapidly changing circumstances. They didnt see the landscape changing - ? Surely free apps have been here since 2013 at least - probably earlier, so why he didnt know this was a factor before raising money with SR is a mystery. The video is full of contradictions - 'we had a very low advertising budget' he says but then goes to explain that the costs of customer acquisition went up five fold. This Cliff, is the advertising spend.

He didnt anticipate a lot of things that have now sunk the business. His explanation is the business was far more complex than he anticipated, the raw materials were far more expensive than he anticipated, the purchasers would not part with money as he anticipated. Yet he manged to get at least two VCs to fund it. So do VC's really know what they are doing?

We feel that SR have been bold to come out and promote the failure - we got an email from SR's CEO telling us about it. Its all a little too apologist but until we see what the liquidators say we will hold judgement. Maybe he was just unlucky or maybe he's just not that good.

One aspect of this which seems strange is that the filed accounts for the company have no fixed assets - none at all. So the money being piled into building their apps like the Queen game, which under normal conditions would have appeared either as tangible or untangible FA, must have gone through a third party who still owns the rights. It is not possible that this would have been written down to zero. Maybe this will come out in the Liquidators report. Where are they now?