Innis and Gunn beers soured by losses

We were not expecting this. Innis and Gunn, an established and well regarded craft brewer, have gone back into loss for YE Dec17. It had told Crowdcube investors, who gave them more than £1m in 2016, that it hoped to be making a net profit of £1.18m for the year. The loss was more than £400k. 

Innis and Gunn saw higher than projected revenues of £22m but their GPM was well below the figure used in the Crowdcube pitch; 58%. It was in fact only 46%. A 12% drop that represents a heavy £2.64m taken off the GP number. That is a massive drop for a retail facing operation and is hard to put down to anything apart from the fact that the Crowdcube figure was a mistake - a very misleading one. The year gave the company an operating profit of just £80k as opposed to the Crowdcube version of £2.76m. The GM is the clue. 

Overall this just may have been a blip - the balance sheet looks healthy and was boosted in the year by another £4.5m equity investment. Exports make up 45% of revenues and are highlighted as a strong growth market for the beers, so there may well be some headwinds to tackle with the Brexit debacle unfolding. the USA , Canada and Sweden make up their three largest markets.

One important strand of the strategy might be questioned. They are opening bars and in the notes to the accounts, the company extols the virtues of this action. At the very end of this section there is an afterthought - brought about by the closure of their St Andrews unit just 2 years after opening. It was the most hopeless sight and as a local I bet back when they opened, that it would close withing 2 years. If they cant do better with their locations then they will be in serious trouble at some stage. Their excuse was that it was too small! 

The loss from this closure, which will be substantial, was not included in the accounts to Dec17. The building still stands empty, fully branded as a sad reminder of an I&G flop. 

Sorry - another Crowdcube funded company goes bust. So sorry.

Health Tech Innovation Labs took £117k off 139 Crowdcube punters 3 years ago; spent it and has just closed via a compulsory striking off.

The End. 

Oh, in case you come across him again, the highly successful serial entrepreneur (with multi exits) is Barry Shrier. By the time the company was dissolved (next Tuesday according to CH) by a compulsory strike off, it had failed to achieve anything. Investors lost the lot.

This information is not available on the Crowdcube website.

What an utter waste of time.

Kokoon guilty of a grossly misleading Facebook sales pitch

Kokoon, a technology design company that is trying to make sleeping headphones, are now claiming that their first shipment is 'almost sold out' on a FB sales pitch meant to persuade people to buy more headphones. 

UPDATE 24 Oct 2018- A few headphones have now arrived with the KS crowd so at least they do exist. More on their way so hopefully for Crowdcube backers the chances of the company closing have diminished.

https://kokoon.io/product-buy/?utm_source=facebook&utm_medium=cpc&utm_campaign=retargeting

In fact Kokoon sold this first shipment (just a few hundred sets) over 3 years ago on Kickstarter, when it took in more than $1.9m in pre sales from almost 8,500 backers. Since then they have raised £1.65m on Crowdcube to cover the costs of making these pre sold sets. However as I write only a handful of samples have been despatched. Money put into the company now, generated by this new sales push, will go backwards to make up for the shortfall of capital required to make the product they have already sold. It's kicking the can gone mad. Losses (£1.1m for 2017) are mounting as the company waits to clear the backlog of pre paid orders.

And the product hasnt even passed muster yet. Watching this shanbles unfold. It seems obvious that there will be large teething problems with the first second and third batches and that the backlog will not be cleared in 2019. So their shipping estimate on FB is a joke.

This is a clear breach of any rules there might be for promoting your sales - you simply cannot lie to people.

It makes you worried for those Crowdcube investors stupid enough to put money into this company - even if it was only to get a set of headphones to help them sleep. Headphones seem hard to come by, as the 3000 plus comments on KS, will confirm. Refunds are being issued but are not being received; or so it would appear. Who is paying for those?

Crowdcube's 56 real company statistics reveal a very different picture to the PR they promote. Isn't that misleading?

The evidence is now clear. The Crowdcube model doesnt work. You can find out why below. These are the facts that Crowdcube try to hide.

We mentioned facts - not PR management and spin. Simply impossible to get around, rock solid, stubborn old facts.

We have data for the Crowdcube businesses that have funded between 2011 and 2017 and have filed accounts to YE Dec2017 - ie they filed or were supposed to file by end of September 2018. 

This accumulation is for 56 companies - so a substantial data set in terms of Crowdcube funding to YE 2017. We must add here that ALL of our other data for other filing dates (another 400 plus companies) has the same footprint. Another 16 companies are late filing and given their history we are not expecting them to provide any data that is outside this overwhelmingly strong pattern. These 56 companies are the ones still in business and do not include the failures to date or the very few that have changed hands - normally at a substantial loss. Cocoon being the latest example.

St Vibes is included in this 56 and if you had read their post here you would know that they have excelled. We have not included them in this commentary apart from in one instance below. 

Of the 56, the year they funded breaks down as follows - 

2011 -   1

2012 -   3

2013 -   1

2014 - 10

2015 - 18

2016 - 21

2017 -   2

So the bulk of the data is for companies that have been trading since their funding took place. This is important as you could not expect a company that received funding in 2017 to necessarily achieve much by the end of that year.

Of the 56 companies, only 5 provided a net profit. In all cases this was a small NP and was not even close to the NP they had projected. But it was a profit. However of these 5, none look like they will make it much further. 

Investors put ~ £34m into these companies via Crowcube. 

Of the 56, only 3 companies have got close to their Crowdcube promoted projections in any year since they funded and this was a smaller loss, due to running out money and having to refund. 

The accumulated gap between the Crowdcube promoted projections and the real numbers is ~ minus £55m.

The total loss for the year to Dec 2017 for these 56 companies, including the profit for St Vibes (£0.5m), is ~ £20m.

So in conclusion, Crowdcube has facilitated £34m of investments into start ups filing accounts in September 2018, which has generated in YE Dec2017, a loss of £20m. This loss was supposed to be a NP of around £35m according to the projections promoted by the Crowdcube platform.

We think that beats their latest PR stunt of having 100 £1m raises. Cocoon is just the latest real example of what Crowdcube can achieve.  How many more examples do you need?

Cocoon fails and losses Crowdcube investors £1m plus

Cocoon raised £2.3m on Crowdcube, from over 1000 investors. Now the failed company, 'worth' £15m in 2017, is being given away leaving shareholders to rue their own poor judgement. 

Shareholders might exclaim that the management at Cocoon were full of it. And they would be right. They might also question Crowdcube's part in this. But as usual the debacle that is now unfolding will benefit the purchasing company, some of the management, the sales team and no one else. Well apart from Crowdcube who have already made their commission.

In the usual pathetic suicide note, shareholders are told - 

It is clear now, that the business required significantly more time and investment than that available to achieve success in this dynamic and competitive market. 

Who knew that - it was clear back in 1890. 

These guys were seasoned entrepreneurs (according to the glowing pitch on Crowdcube). So how does that make sense with this statement above, which could have been written by a year 4 student. 

Not sure what the next stage is when you leave farce - but Crowdcube are now in it. 

A genuine Crowdcube success - St Vibes'Clove Club goes from strength to strength

In what is going to be the worst September's results for Crowdcube funded businesses since the platform started, one shining light stands out. We look at why The Clove Club has been so successful. 

Since writing this the St Vibes has opened a third restaurant,  Two Lights. They also seem to have facilitated the sale back to the company of shares issued through Crowdcube. Figures are a little complicated and not to be relied upon but SHs paid £500 and have received £625 per share back. Most of the 50 SHs did not take up this option. That is very interesting. 

Amidst the carnage that is the YE end filing date of September, we can thankfully report that one company that funded with Crowdcube way back in 2012 is exceeding expectations.

The Clove Club is now a two venue restaurant set up with the backing of £250k of Crowdcube investors money, in 2014. Real chefs and real hard graft have brought this idea to a very successful and sustainable reality. Instead of gallivanting around opening new sites in poorly chosen locations, this crew have concentrated on one, then two units and have made the most of it. For the YE Dec17, they posted profits of over £500k - the second profitable year in a row. In a market where we are constantly told by failed Crowdcube chefs that the market is sooooo difficult, the team at The Clove Club have cracked it.

There has to be a question about the ROI when we are looking at a two unit business. Or maybe not? Given its current profitability and the fact that investors bought in at a valuation of £1m, you would have to say they are sitting on a substantial real return. One that makes a mockery of the recent Go Henry and other so called Crowdcube successes. At the end of the year, the accounts report that St Vibes bought back 92 of its own shares for £625 per share. We believe that Crowdcube investors paid £ per share but find it hard to believe that anyone would sell at the £625 level on the back of this success.

You might also wish to query the structure of the company. Seeing as the management run it via a third company, Saint Vibes LLC, which charges St Vibes a fee - over £700k for YE Dec17 - up from £300k. But it does seem to work.

Unfortunately that is where the good news ends. We will be reporting on the more usual catastrophes over the next week or so. It is a mess.

It just goes to show that a real business, with real drive and genuine expertise, can make money for both the company and its investors, without scaling itself into oblivion. Why cant we have more of these less of the trash. We called this one way back - just saying.

Many and I mean many important people have told me many times that our analysis here isnt relevant. All companies have to miss projections - it is what they are for - Im told. Well if you needed evidence of the nonsense of that concept - here it is. You can read what we said about them in 2015 here.

Three cheers for St Vibes.

Go Henry or Gone Potty? Crowdcube are at it again.

Kids love Fudge. But investors dont. Or so we thought. The new Go Henry Crowdcube blockbuster proves us wrong again. Paint a pretty picture, air brushing the facts  - that's all you need to do.  

This is bonkers. Go Henry is a neat idea and has a little traction. Although this traction is no where near to the traction if promoted just over a year ago. Now readers, who dont have their last projections, will not know this - but it is a fact. One that Go Henry do not mention in their latest fairy tale. 

Take for example the sales numbers for Apr 2017 to Mar 2018. Crowdcube allowed them to produce this forecast the last time  - it showed revenues of £15m. Now we are told that the revenue for CY 2017 was in fact £6m and that this was an increase of 115%. Nout about where it was supposed to be. Again the projections from the last time showed revenues for Apr 2018 to Mar 2019 as £37m. Now we are told the revenue projected for CY 2018 is just £8m. A fall of ~ 78% (!anon) on a 18 month old projection. Wow. 

On the back of these falling numbers, the share 'price' has risen from £1.50 in 2016 to £3 now - a price increase the company incorrectly identifies in a footnote as a 50% increase. Is it any wonder they cant get their sums right. Back to school boys and girls.

Children are even included in their metrics  - so their active members are stated as 550k - broken down into 226k parents and 330k children. Is that supposed to be some kind of joke? Of course the fact that this imaginary split (so obviously used to up the 500k figure) doesnt appear anywhere in the new fairy tale says it all. ALL. 

A neat idea that may get traction in the US - although is more likely to get copied - is worth £55m without traction. If traction fails to hit targets in the US, then kiss goodbye to this dream.