Bra Entrepreneur using Coin to divert the gaze of the FCA?

In the latest crazy twist in Fintech, Bra millionaire and Baroness, is launching a new Start Up fund based on crypto currency. 

Michelle Mone and her business partner Barrowman, are about to launch an ICO - Equi. Their new coins will be part of their new fund for start ups. Why they have chosen to raise the money by issuing a new coin is a mystery to me apart from the rather too obvious media attention.

This deal is being set up in such a way that it circumnavigates the eye of the FCA. Its a very fine line they are drawing and I just wonder if this is the sort of monkey business that a Peer of the Realm should be involved in? They get around the FCA regulation because the coins are non transferable so are not considered within the FCA's remit. In fact this is probably the only reason they are even talking about using coin.

If it comes off, which seems unlikely and the FCA quite rightly bring it within their remit, one hopes that a Peer of the Realm will not find another smoosh to hide it under. After all, despite her success, it should be a one size fits all when it comes to financial regulations.

Working in Tandem to help their Seedrs investors by reducing their value by 96%?

Tandem, the online bank, is now offering its Seedrs shareholders, the right to purchase new shares at £0.60. When Tandem first raised money on Seedrs, the shares were worth over £13.

This is all part of a 'deal' cobbled together by the ever smiling, bearded founder of Tandem, Ricky Knox. Ricky is apologetic about the dilution. He is also apologetic about the share price. 

This all comes about because Ricky had lost Tandem's banking licence; which for a bank, is serious. In order to get it back, Ricky bought Harrods Bank and as part of that deal was required to raise £25m. £10m of this came from existing shareholders convertible loan notes. The other £15m was underwritten by a Middle Eastern fund. 

Ricky is careful to point out that despite the fact the company had already trodden all over investors by removing their pre-emption rights, he is now offering them a chance to limit their dilution by buying shares at the new £0.60 price. He goes on to explain that this is in no way an attempt by the company to get further investment from them. 

As one sanguine investor put it - a £500 investment in the original Seedrs campaign is now worth £20, so to get your money back the company would have to be worth £1.5bn. He also points out the crucial con - undrum that to not invest is going to mean you wont ever see your money back.

They should write a song for you Ricky - like the Ricky Baker number.  

Who ate all the Pies?? Crowdcube bond raiser Square Pie goes into administration

This is a first for the failing Crowdcube platform - their first bond issuer to go bust taking with it £665k of investors cash.

We warned you all about this happening when they were raising the money - when will you listen?

http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+square+pie

There are no details at CH but this article confirms the collapse - https://www.birminghammail.co.uk/whats-on/food-drink-news/square-pie-grand-central-closed-14260512

So days after we published a warning about the health of the other major bond raisers, what we thought and what Crowdcube told everyone wasnt possible, has happened. 

What a total shambles. This comes at a time when the PR mania coming out of the Crowdcube office has been geared up. That's embarrassing. Square Pie ran 6 units, 5 of them were loss making. Was that in the bond offer documents?

We will bring you more on this once the documents are filed at CH. Looks like the simply ran out of cash and had had cash issues for a while. Long enough maybe to make the Crowdcube bond a scam? KPMG are in charge of the mess - is that a good thing? 

Just how safe are Crowdcube Bond Holders?

Bonds sold on the Crowdcube platform were supposed to be a safer way to earn income than investing in equity. But recent results from 4 of the platform's bond campaigns beg the question - REALLY?

These bonds or mini bonds, are usually for 4 years and offer an annual return of between 7% and 11%. They have been offered by what the platform has described as more established and therefore lower risk companies. 

Well that may be so but results from both River Cottage and The Eden Project show they are way off the course the set with the bond sale documents. Two more recent examples, Daisy Green Foods and Grind and Co are even worse.

Daisy Green Foods had projected profits of £350k but brought in losses of £480,000. A difference of £830k.

Grind and Co had projected profits of £353k and reported losses of £1.4m. They have new growth plans so we will have to wait and see.

Both of these two had missed targets in previous years resulting in a cumulative gap far too wide to be put down to bad luck.

It looks like both will need to raise new cash to continue in 2018. To repay their bond in 2019, they will need a considerable change in fortune and to raise more cash yet again. Grind and Co had raised another £2.4m at the back end of 2017.

What is more alarming generally, is the wilful misrepresentation of projections by all 4 of these companies. To be so far out in terms of their plans suggests either crass management or some dodgy dealing. Take your pick - neither inspire much faith in their abilities to run a successful company.

Mr Sherick has finally been liquidised.

Mr Shreicks Shakes took £280k off Crowdcube investors in 2015. It is now in the hands of Il Liquidatore.

In a slightly odd twist, this Crowdcube failure had sent an email to its shareholders at the end of 2017, telling them that the end was nigh but that he, Andrew Sherick, hoped to resurrect the business once it had closed. The reasons for closure were numerous but none of them were down to him.

In this email he wrote - 

However, what I would ask is that it is important at this difficult time that I also ask that you keep this information entirely confidential.  Your support in this would be appreciated.  I put at risk our plan to carry our shareholders forward if I am not offering similar to our creditors this I cannot do. (His underlining and colour selection)

Had he achieved the above and knowingly left his creditors short, he would have being breaking the law. Luckily for him, he didnt.

The company goes down taking with it unpaid debts of over £600k, accrued in just 2 years. One key supplier, Tomlinson Dairies, were well thanked for their efforts by being left with a debt of over £200k. There appears to be no money in the company. Which is odd as the founder had claimed the IP and brand was a roaring success. In the SoA he puts its value at zero.

We really do need to either start educating people in some basic business sense or stop idiots like this from being able to set up companies. You dont allow people to drive a car without a license, so why do we allow anyone over the age of 16 to be a company director and start companies at the drop of a hat. 

As usual Crowdcube have been conspicuous by their absence in all of this. 

We wrote about this before but took the post down when the founder contacted us to give him a chance to sort things out. 

Easy Property follow merger with CPEA, with a capital raise and change in pricing strategy. Will it make any difference?

Easy Property helped themselves to £1.35m on Crowdcube in 2014. Having lost over £17m in the last two years, we find them refinancing and announcing a new (to them) pricing strategy. The big Q is, will this put them top of the pile? 

People we speak to say probably not - it will just extend their inevitable death. As you would expect the Crowdcube projections (does anyone read them?) showed the company making north of £10m in profits by the end of 2017. In reality they made a loss of £10m in the year to September 16. 

The new pricing strategy is more about PR than anything substantial or groundbreaking. They now take a 'marketing' fee of £295 up front and only claim the sales fee of £595 if the property sells. In the words of their CEO they didnt like charging if properties did not sell. Do they really think calling a £295 fee by another name will fool the public?

I suppose they had to do something with the losses mounting. 

The major player and the one everyone wants to beat is Purple Bricks. They reported losses for the YE Apr17 of £4.5m, under half the previous year and increased revenues by 151%. So Eprop have a long way to go and will need very deep pockets to overhaul the sector leader. The recent round at about £30m is a mere spit in the bucket. 

Whatever happens, Crowdcube investors have no control and must hope that the roller coaster is built on solid foundations. These latest developments suggest they are firefighting which is never a good sign. The for sale sign may well go up, for the company, next time.

Something remarkable has happened - a company associated with Crowdcube has made a large profit

White Label Crowdfunding has reported profits of £352k YE April 17. That's an increase on all previous years of £352k.

White Label are associated with Crowdcube because they 'bought' a Crowdcube failure, UP Investments. We wrote about this odd deal here. It has now gone through. 

What is odd is that prior to doing this deal, WL were doing nothing and UP were making heavy losses. So just how you can combine these two and create a £350k profit is a puzzle. 

But the profit is sitting there in black and white and is backed up by a healthy trade debtors entry of over £300k. 

Shareholders who gave their money to UP may be wondering what has happened to their value now that they own shares in WL (this was part of the deal). This again is odd as SH's in UP were advised by the founder that UP shares had no value when the sale went through. Clearly a company able to generate net profits of £350k from a standing start has some very considerable value. 

Lucky investors!

But wait......... UP are late (only just) filing their accounts. With no shareholders apart from the profit making WL, why is it still open? Well you may remember that it was making heavy losses - which is why it failed (sorry sold). So what happened to those losses. We will just have to wait and see but our guess is no one is in a hurry to file anything at UP.