Love making up projections as Crowdcube's Lovespace yet again disappoints

Space  - the final frontier. Etc etc. Love it or loathe it, it helps if the facts can be the facts. Lovespace's Crowdcube projections are now on their second iteration and they are still way off, somewhere in a Galaxy far far away. 

If they could hear shareholders screaming in space, it would go something like - FFS why cant you just be honest with us. Ok so it takes longer to grow a new business - who knew that? But why set out completely unobtainable goals, spend the cash to get there and then turnaround when it is obvious you are way off line and ask for more money. 

So here are the facts. Lovespace have used Crowdcube twice. Total raised of around £2.35m - so a large enough number to care about. In their first raise in 2014 they predicted net profits for 2017 of over £7m. Ok so they were young and ambitious. Needless to say they didnt get close. 

Short on cash they came back in 2016 - no one seems to have asked about the 14 numbers except us - here. In these projections, the accounts they just filed for YE Dec18, showed a handsome net profit of over £3m. When you read the accounts you will be surprised, like we were, to see that the real number is a loss just shy of £1m. In fact despite projections, this is their best result to date. Losses are now £7.5m.

The company has raised another ~£534k this year so far. It was at a lower share price than in 2017 which is never a good sign. 

Our new Buzz Rating - available to members of ECF.Buzz, has given Lovespace a 9 point drop since last year. 

I dont think you would get this situation in any other financing channel - without something being done about it. Isn't it time we did something?

Is Crowdfunder struggling?

Crowdfunder were due to make very large profits for YE December 2018. The last filed accounts for the 3 months to December 2017 show a loss of £360k - for just 3 months or did we mention that  already.

Crowdfunder operates in a crowded space with several major players  - Kickstarter and Indiegogo being two of them. They have so far failed to live up to their own projections. But if you knew that Darren Westlake was a director of Crowdfunder, you might not find that so surprising. It's the reason we chose Indiegogo for our recent successful ECf.Buzz campaign.

Crowdfunder has so far raised £2.92m on Crowdcube in three rounds in 2014/15 and 17. Do you think they pay the full 8% commission? The company has accumulated losses to YE Dec17 of £2.357m. Seems that the business model is similar to Crowdcube's.

We wait to see what YE Dec18 delivers.

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.

Much like Father Brexit, Father Crowdcube has been telling some whopping big fibs.

So here we are December 2018, 7 years after Crowdcube started. And there is little change. Companies that have filed accounts this month are all, bar one,  in the missed our projections box. Plenty more to go. 

Here are a few we have unwrapped - what did they want for Christmas? 

The Eden Project   wanted £364k profit but only delivered £80k - complicated story.

Evogro                    wanted £625k profit but lost £141k

Rough Runner       wanted over £2m profit but lost £237k and is sad.

Solely Original       wanted £8260 profit but lost £50k  - not bad!

Sticky Board           wanted £193k but delivered £10k - close. 

Tap2tag                    wanted £500k but lost £31k

Harry Bromptons   wanted 423k but lost £19k

Verto Homes           wanted £2.3m but delivered £450k  - still it is a profit. 

Walljam                   wanted £775k but lost £80k. 

Loads more to follow!

The one shining light was .............

Sandows London     wanted -£200k and got a loss of £200k.  Hats off. 

91 active Crowdcube businesses filing accounts in the last 2 months show total losses for the 12 month period of over £47.5m.

Evidence does suggest that Crowdcube funded businesses dont do very well. All of these 91 and these exclude the 80 plus failures, were funded before the start of 2017. So they have had the money for 2 years.

This is not us trying to depress you - it is a fact. Of the 91, a handful have produced small profits  - in the low tens of thousands. Most have produced eye watering losses. All but one of the 91 have missed their projections by miles.

The one and only good news story is a company we have backed for a while - a London based restaurant that has not scaled. It remains a one unit business and it now makes an annual net profit of £500k. The Clove Club is a real business success. Why cant Crowdcube manage to get more of this type of success on board?

Of course there are a number of companies that are late or very late with their filings so there is still ahem........hope - ??

As we dont like others who choose to screw stats to make their point, we didnt include Monzo in this analysis. Their recently filed accounts for YE Feb18 showed losses of £30m. I'm pretty sure that had the analysis been 100% reversed and CC were PRinging it, they would have included this figure taking the total profit (in their fantasy world) to over £77m. They cant help themselves - but it really doesnt help anyone else.

Will Emoov's amalgamation solve anything?

We'd say the merger of Emoov, Tepilo and Urban is a positive move. But as the Irishman said when asked the way,  where are you coming from?

All three of these online estate agents have one thing in common, they burn large amounts of capital to make increasing losses.

The last year of filed accounts shows an accumulated loss of around £8m. So maybe there will be economies of scale with one administration cost instead of three? Will this scaling up of the brand (whatever the new one is) have an impact on the Purple Bricks market leadership? Probably not. 

Amusingly, according to the ex Dragon James Caan, who is a major backer of Emoov, this was not a merger. His story is that it was a takeover by Emoov of the other two. If this is true and no one but Caan is claiming it is, then that could be good news for 765 investors who put £2.62m into the company via Crowdcube in 2015.

The 2015 Crowdcube pitch had the usual grotesquely inflated projections and showed the company making losses for YE April 2017 of ~£1.6m, when in fact the loss was £3.1m. But who cares, eh? According to Crowdcube the event was a merger.

Now the 765 have a smaller share in larger pie. Lets hope that it doesnt fall to bits when its cooked. 

More losses for Escape the City.

Escape the City raised £600k on Crowdcube in 2012, valuing themselves at £2.4m. Since then they have reported accumulated losses of £216k over the two years trading to Dec 2014. At this rate they will be refunding early in 2016.

We thought these guys had an ok business so here's hoping they can turn the corner and make a return for the 400 crowd investors who backed them. It doesnt look likely that it will follow the Crowdcube version of events with an exit predicted 2016/17. We'd love to be wrong.