Interesting results for Crowdcube's Just Park.

Just Park has had £6.2m invested via Crowdcube over two rounds. The company's original projections were a joke, as were their second round ones. They lost over £1m in the 9 months to Mar18, meaning their losses are rocketing again. 

They have enough cash to last till March 19, at this rate.

Whilst the accounts appear stable, a figure in the creditors account (current) listed as 'other' for £1.4m would worry me. 

Good news is reviews have improved. 

How much more money people are going to throw at this company will be interesting to see. Clearly the total invested so far of £6.9m is not enough. Just shows how naive they and Crowdcube were when they set out on this journey. 

As we said consistently, a major flaw in the model is that the company has little control over the end service offered to their clients - the parking spaces are controlled by their owners not Just Park. Unhappy clients do not tend to make for a successful business.

We will see.  

2nd July marks a whole year since Ethos Global was forced into liquidation. Yet the liquidators have produced nothing. What is going on?

For our system to work, people who abuse it need to be made to pay. Ethos Global took £709k from 388 Crowdcube investors in  2016. Then they went into liquidation, having opened up a London studio with these funds, which they transferred to their newco. Leaving investors and creditors out of pocket.

Under what system would that be legal?

So why has it taken a whole year to get nowhere?

We have contacted the liquidators many times on behalf of shareholders who asked us to help but they never respond. FYI Adam Harris of Mazars is a complete waste of space.

It cannot be that complicated  - it was not a large turnover business. There are no offshore accounts - there are barely any accounts. The trail from their Cambridge studio, to the new London one, is very clear and obvious. 

Wake the F up will you Mazars. 

Some more disappointing news from Crowdcube funded companies.

Well one thing you can say for Crowdcube, is they are consistent. Here are a few more of the platform's chronic results for YE Sept17.

Eight point Nine - No website, FB two dormant for 2 years and Tw for 12 months. Losses of £144k against projected profits of £220k

Floodkit - losses of £50k against projected profits of £590k

Fourex - losses of £1.4m against projected profits of £23m. But have raised another £3m so maybe there is a plan. 

Good Egg Restaurants - losses of £70k against projected profits of £209k. Supposedly doing well. 

Property Moose - no idea from minimal accounts but Trust Pilot 2 star rating suggests curtains.

So when the next fantasist on Crowdcube explains why his company is worth £8m now, by extrapolating the projected EBITDA two years hence, blow him or her a large raspberry. 

Doisy and Dam fail to impress after using Crowdcube to raise £300k

Doisy and Dam should now be in profit  - £136k for year ending Sep17. But the Sep17 accounts just filed show yet more losses totalling £230,000 for the year. This year they are supposed to be making profits of £500k. 

If and when we come across a Crowdcube funded company that actually gets close to its projections, we will let you know. It seems to be a pipe dream at the moment. 

So if ALL Crowdcube funded companies fail to get close to the figures used to sell their equity, when is the FCA going to step in and say - ''Yes, this is all clearly misleading'? Because, clearly it is. We are talking about an almost 100% record for misleading projections. The normal distribution one might expect, would be for 40% missing, another 50% being there or there abouts and say 10% showing better results. Not figures showing 95% missing by a country mile and 5% max being there or there abouts. And this 5% is shrinking. 

We hear ECF evangelists say that this fact is not important - you expect all start ups to miss all of their projections. We think this is nonsense. They say this simply because to say anything else would cause harm to the worst offender, Crowdcube. They prefer to trumpet the now defunct option that an upward valuation in a follow up funding round indicates a ROI for investors. Come on.

We need change.  

A breakthrough - Crowdcube funded Beara Beara makes a profit.

Credit where credit is due. Whilst the £100k profit reported in the accounts for YE Sept17 is not quite the £1m they projected on their Crowdcube pitch, it is nonetheless a profit rather than the usual loss. 

So is it possible to take a company that makes £100k profit and scale it so that Crowdcube investors, who bought in at almost £1.4m back in 2015, see a decent return for their efforts. Maybe?

At least these guys are now heading in the right direction. Clearly a shop in Shanghai has been a smart move. It maybe sometime before we are raising a glass to their success but here's hoping. 

Crowdcube's Berrywhite finally calls it a day - or has it??

As we reported before, Berrywhite just refuses to lie down. In liquidation, the directors have now invented the Berrywhite Group and have arranged a share swop from one to the other. 

All the usual excuses are trotted out for the failure of Berryone. How many businesses were put to the sword by the 17.4 million in 2016 is yet to be revealed but it is excuse number one for the moment. Andrew Jennings, the founder, is funding the newco with a £7k loan to buy the assets of Berryone off the liquidator. £7k ?????

There are a number of posts on them here

We really didnt like these guys - they tried tricks to get investment. That's fine in a circus but it shouldnt be allowed in business finance. 

Anyway Crowdcube SHs, have a year to wait and see if Berrytwo can make a few bucks and give it back to them. I wouldnt hold your breath. 

Cant get enough of you - well some of us can, Barry. 

Hummus Bros failure illustrates a real issue with Equity Crowdfunding.

We have been saying this for 7 years - taking a nice little business and scaling it is not always a good idea. Equity Crowdfunding demands scale. QED ECF is not always a good idea.

Hummus Bros was a small business, running for 7 years before it started to use equity crowdfunding. It took £600k off Seedrs investors to grow large. Now it has collapsed - blaming all sorts of reasons but the one that did it in. 

For example, in the letter to SHs, the company blames the fall in the pound after the Brexit vote. However the second Seedrs round was in 2017, so after that vote and collapse. Did they mention this then - NO. 

To put it simply for you, this was a business that might have made the owners a living and paid its staff and dues. It was not a business to scale and in the old days a bank manager, whose job was on the line if he got it wrong, would have said so. They wouldnt have scaled as they wouldnt have been funded. They would have continued for many years happily running their 2 or 3 outlets. Since the funding started coming in in 2015, the only consistent rise for the business has been the magnitude of its losses.

ECF platforms are not in the habit of turning away businesses with a little sex appeal and the restaurant trade has always been considered that - despite the failure of so many.   

So who is really to blame. Its a mix between the actions and reactions induced by ECF - need to scale and need to exit. The lack of business sense of most of the investors on these platforms. The lack of the management team to do scaling and in the end the false idea that this was ever achievable. 

At some stage more people will wake up to these facts and ECF will alter direction for the better. It's not happening yet though. So you can expect this example to be repeated many times more.