Faction Collective report losses in line with their Crowdcube numbers.

At last we can report that a Crowdcube funded company, the ski maker Faction Collective, has come in ahead of its projections.

Investors will be pleased to see that the losses projected to YE17 are higher than the losses recently filed by around 1m euros. I am told the company is carrying out its expansion as planned and sales are strong. The accounts do certainly show strong growth. 

So now we have Monzo and Faction as two companies that appear to be on the road to ROI - long way to go mind. 

The one thing these two have in common is that they were already semi established by the time they used Crowdcube. There is a message there. One that the Redemption Brewery will hear with joy.

However it doesnt answer the on going question of what to do about the real start ups and their grossly exaggerated numbers. It wont be long before 'crowdcube' is added to the national business lexicon. As in.........................

'Are we running crowdcube numbers or sensible ones for this projection?' or ..................

'Oh those - no ignore those, they were crowdcubed numbers; no one is going to believe those'

Faction Collective have not filed accounts since 2015 - Whats UP!

Faction Collective, a French registered ski maker with a UK registered off shoot, raised £775k on Crowdcube in 2015. Prior to this, the company had filed annual accounts. Nothing since.

I know the French have a different accounts system but for accounts to be left for over 2 years seems a little odd. No new filings have been made at CH since June 2016.

Does anyone know how they are doing? Website seems live and active, brand certainly still out there. 

Faction Collective yet another Crowdcube company that has off piste accounts

Faction Collective SA - designers and makers of snow skis, raised £775k on Crowdcube in 2015.

In their pitch for this money the company showed 'historic' financial data for YE June 2015 - the accounts for this period were not available during the pitch period.

In these figures - vetted closely by an intern in the Out to Lunch Crowdcube DD Dept - there were various figures given like turnover and losses for the year. The Crowdcube pitch completed in December 2015; so 6 months after the YE.

The figures given by Crowdcube are listed below on the left and put beside the real figures on the right, that were posted by the company with CH - all are in Euros. 

Revenue              2,124,574             1,455,327

Net Profit (loss) (2,821,272)          (2,396,384)

So the loss was considerably smaller than 'projected' (remember these figures were already historic when the pitch launched) due to a much reduced spend on marketing and personnel. But how do you explain a reduction in turnover of a third? It means that the leap to the 2016 revenue figures is one that not even Jon Olsson would attempt.

Dont Crowdcube investors deserve a more professional service? 

The solution is very simple and is one we have calling for for 2 years - make all companies using this funding channel produce full accounts up to the date before their pitch goes live - and make them and the platforms liable for any trickery they might choose to try out. 

Yet again Crowdcube fail on full disclosure

This is not a game and if platforms cannot be trusted to ensure that their pitches give investors ALL of the relevant information, then the FCA will have to step in.

Faction, a Crowdcube pitch we have mentioned before here, was due to launch an important new product this Autumn. This was a collaboration with Quicksilver in the USA. Quicksilver filed for bankruptcy in the USA a couple of months ago.

None of this information is in the Crowdcube pitch, which is rapidly heading to its completion target of £500k. Is it relevant?

Well yes of course it is - it says lots about the management team at Faction that they could hook up with an outfit that was by all accounts on the ropes and is now owned by its creditors. We understand that the deal included a development of Quicksilver's ski range, Roxy, in collaboration with Faction or put more simply Roxy were licensed to produce and brand Faction skis. Surely this information is to be considered important to potential investors in Faction.

The only reason that this has come to light is because a question was posted on the pitch forum. To be fair to Faction they have given a lengthy and considered response although we feel it errs on the side of over optimism. If no buyer is found for Quicksilver or the new buyer ditches the Faction deal then investors will most definitely be effected. The pitch is almost completed and 99.9% of those investing have not known about this.

It is just another example of investors being treated no better than cannon fodder. They need ALL the information to make a decision where caveat emptor is the rule.

A pitch that appears more fantasy than reality

Recently 92 major snowsports businesses, including K2, The North Face, Rossignol, and Clif Bar, wrote a joint letter to the US President. It was timed to coincide with his speech to UN Climate Change Convention in Paris. It was
a plea for help.

Yesterday a new pitch was published on Crowdcube - The Faction Collective.

FC make skis and some associated items. They are at the trend end of the industry - free formers who seem to have forgotten the real purpose of business - to make a profit. That's clearly far too naff.

Reading their accounts, from the HQ in Switzerland, you would be forgiven for confusing this company with another one; not the one portrayed on Crowdcube.

Selling in over 300 stores worldwide, the company has only managed sales of £600,000 and £800,000 in the last two years. You do the math. With costs of £1.55m and £2.15m respectively the losses are off piste. The 2013/14 costs included a handsome sum of £101,000 for 'exchange differences' - that's a whopping 12.5% of t/o. The Crowdcube pitch says they have an CFO but he must be out product testing.

It is worth checking out (always!) the Crowdcube version of the founders credentials. They have a habit of missing important details out. Mr Hoye is an entrepreneur. Entrepreneurs sometimes fail - it's in the nature of the business. We like them to own up to it. A failure leaving banks and creditors owing several tens of millions of pounds only a few years ago is pertinent information we feel. So do check out Hoye's Latitude Holdings Group Ltd followed by Latitude Digital Marketing Holdings Ltd. This is well worth a view - especially the comments bearing in mind LDM Ltd closed a year and half later! http://www.insiders-view.co.uk/latitude-seo-goes-bust/00683 

This is one the comments -

Alex(Hoye)

You clearly have been reading this Blog, care to comment on the text taken from Brand Republic?
“As reported in the August 2008 edition of New Media Agencies Financial Intelligence, Hoye co-founded Go-Industry in 1999 and, using €51 million raised from US venture capital sources, embarked on a massive acquisition spree that included the well-known UK industrial auctioneer Henry Butcher.
By 2004 Go-Industry was generating annual revenues of €50 million and on 5 January 2006 it was admitted to AIM by means of a reverse takeover. At that time Go-Industry had run up losses of €56 million and had borrowings approaching €10 million. Then, on 26 June that year, a brief announcement said that Hoye had resigned.
One week later the board signed off the accounts for 2005 showing a further loss of €11 million, of which over €4 million arose from stock write-downs and €4.6 million related to exceptional items including bad debts.”
http://community.brandrepublic.com/blogs/bobwillott/archive/2010/01/13/latitude-gone-west.aspx#comments

Recorded GPM for FC is 10% but in the Crowdcube version, this year it will be 19% and by 2018/19 this will have reached a very impressive 45%. This is
achieved through improved manufacturing costs and direct marketing - apparently.

Luckily the Swiss have better accounting procedures than we do, so it is possible to see just where Faction spend all their money. In a business model where there are more half pipes than chairs in the board room, it is hardly surprising that a vast chunk of the spend is on 'riders under contract' or what might be better described as staff outings. It certainly is not what you would call a tight ship.

On the plus side, the brand has established itself, albeit as a bit, niche player in the market. It has managed to raise £7.5m in capital and has some very chunky investors - all of whom ski Faction so maybe they are the 'riders under contract'!

Otherways, the market iis forecast to have miniscule growth over he next 4 years and with snow predictions dire, this could well end up being negative. There are already major players and a plethora of niche ones, both in the ski and accessories market.

As the Swiss Accountants point out, the company has made unsecured loans to its US and Canadian subsidies, for which no provision has been made and they are only a 'going concern' on the say so of the Directors. What's more they have a short term loan of £1.3m due to be repaid in 3 months time.

Given the obvious market conditions, this is one high risk investment. We are puzzled as to why so many big hitters have invested at what the pitch states are the same terms as you and me. More tea anyone?

ps - be aware that of the £366k currently invested (09/11/15) - two investors put in £100k and £150k. Sometimes this is a ruse to get pitches into over funding when these large amounts then are withdrawn  - allowing the pitch to still be over its original target and therefore complete. Just saying.