Seedrs' success Vini Italiani crashes out with a pre pack and debts to its traders of £650k.

Vini funded 3 times on Seedrs  - a total of £670k invested. At the end of last year they gave up and called in the Admin Boys. But not before one of them had set up a newco, B Wines, to phoenix the company's assets whilst off loading its tiresome creditors. 

You cant really blame the system - those are the rules. Under normal conditions and with a working moral compass, these pre packs can work out to the benefit of creditors. But when you leave trade creditors with outstanding debts of around £700k, one has to question the logic, let alone the morality. The current rules cannot cope with the 21stC. 

The story of the collapse is typical of ECF and is one we have repeated many times on here. Overtrading and very poor management. Chronic cash shortages and no one (stupid enough) to refinance at the last minute. The company and its assets were sold for £150k, which along with the cash, paid out the only secured creditor. 

But the CEO was looking to do this before it happened and was told by the administrators that they had to market the company first! Instead of closing the loss making, most recent unit, he just shoved the whole thing, its creditors and investors, in the bin. Waited a few weeks for his offer to be the only one available and hey presto Sig. Cernecca is now the proud owner of a debt free company. Meanwhile pages worth of creditors, large and small, are scratching their heads wondering why they have lay off staff. 

In the end all of this was facilitated by Seedrs, an FCA regulated ECF platform. Three times. In fact the administrators report identifies the exact action which put Vini in real trouble. In 2017, just after the final raise on Seedrs, they opened another unit in Greenwich. What was projected as a quick profit turning unit, was a disaster. People in Greenwich, it turned out,  had a lower average spend than in Covent Garden and South Ken. Who knew that? Before this, the company was starting to make some progress, albeit slow. The capex and losses in Greenwich sank the lot. 

The lesson has to be that investors must be more savvy, they need to know that they doing. And platforms have to be willing to say no to a company like Vini, which had already been twice, when the company situation at the start of 2017 was obviously highly precarious. That means they have to be willing to give up their commission for the greater good. Is that ever likely under the current rules? No. It sure does make a joke out their claims to be diligent. 

Ikee file more incorrect accounts. Is this a joke?

Ikee raised £72k from Crowdcube investors in 2015. The last update we have seen was for Q1 2017, telling the unfortunate SHs that they had had to start again. Their gadget didnt work.

The have just filed accounts for YE 18. They have no shareholder funds -  or no record of the money invested by Crowdcube investors. If you look back there is a filing detailing the investment in 2015 but it has been incorrectly filled out. If investors' money is in these accounts it has been filed under Creditors, where a similar sum is noted as simply 'other creditors'. Of course these are not creditors at all; they are shareholders.

We were contacted by a shareholder - who had paid for shares. He wanted to know what was going on, so he asked us. It appears that the company has on issue over 1m shares, of which Crowdcube, who always purchase £10 worth, own 11, according to filings. So they own 11/1000000 of the company. Having paid £10 for the 11 shares, that would now value the company at £1m. Unless of course the dilution meant it was exactly the opposite. Of course the company is not worth £1m. So each share must be worth a fraction of the £1 it was bought for. You might be surprised to hear that the founder owns 9,600,000 of these shares. We suspect that this is a catastrophic filing error - that would at least be consistent with the accounts.

On checking - which took sometime - the company issued by special resolution in August 2015, a share subdivision for their £1 ords - making them £0.001 shares. This wasnt then filed until November 2015, so after the Crowdcube raise. So shares issued to Crowdcube investors were falsely filed as being worth £0.001 each - Crowdcube's £10 buying them a value of 1p. This would explain things. It does not explain however, how we have company directors who appear not understand how to carry out their legal duties. And Crowdcube!!! Somehting we have been banging on about for 5 years or more. This is certainly not the first case we have found.

As to its product?

Enough said. We have mentioned these guys before here

ECf needs to do better than this. Where was the Crowdcube DD on this one? Certainly the 2017 update suggests that nothing had been trialled.

The founder has been involved in a plethora of companies - many of them now closed or dormant. We found it hard to find one that looked like it was successful but to be fair it can be hard to tell. Prolific certainly. His FB and Instagram page paint a picture of the high lifestyle to which successful entrepreneurs are entitled.

In this case, Crowdcube put this company through its incubator 'service'. Well done guys.

Monzo and Crowdcube try to change investors rights. Are they being totally open about the consequences?

 In a request we have seen from Crowdcube, concerning Crowdcube's Monzo Nominee SHs, investors are being asked to agree to a series of fundamental changes to the their original shareholder terms. These changes, it is declared, are in the best interests of SHs.

We dont wish to go into what is a private matter between SHs and Crowdcube/Monzo on here but if this clause or something pertaining to it, was to be found, for example, in the new terms, would it worry you? The nominee would in this case be Crowdcube - if this was in fact a real clause from the changes - 

Save in respect of the Nominee’s fraud, negligence or default, the Nominee shall have no liability whatsoever to the Investor and may use any assets it holds on trust to cover any loss, liability, damages, costs and expenses incurred or suffered by the Nominee in the due performance of its rights and obligations under this Declaration of Trust.

The Monzo forum for these things is buzzing with investors asking what these changes mean, many of them declaring that they don't have time to read through them or indeed if they have, that they simply don't understand them. Apparently Monzo did not see fit to include an email of their own. You can see the forum here. 

It looks to us as if Crowdcube have handled this very poorly.  And as if by magic, CC have now posted a long explanation (their idea of one) which includes this - 

Can Crowdcube use the value of our shares held in their trust to cover any losses they might incur for fraud, negligence or breach of the terms?
This term has not changed and was included in the existing Declaration of Trust.

Do Investors ever read the DofT? 'Any losses'  - so for example if they lost a case against them from SHs in Emoov or Sugru? This strikes me as crazy. Plus there is the new issue of CC being able to slap expenses on without aksing - even though they say they wont. If they wont why do they need the permission? Is there a lawyer in the house? 

Richard Branson lends his face to a crazy world

Branson referrals are two a penny or so it seems. Having his mugshot on your website telling everyone that he applauds what you are doing, must be a positive driver. Even if he was referring to a now dormant company back in 2012. 

The company in question was Bnktothefuture; now registered as a non trading, dormant company at CH. It was this company back in 2012 that the great man was talking about. The director Simon Dixon has long since legged it to Hong Kong where his Caymen Islands version of Bnktothefuture, seems to be doing very well. 

So you have to ask why he is using the Branson quote and a large smiling dicky pic on his current Caymen Islands owned website? And you have to ask why he has a source button for it that refers you back to the slightly embarrassing article by a certain young financial journalist, who has fortunately moved on and is now a very highly regarded part of the financial journalists elite. Clearly the article dated 2012 has no reference to what Dixon is doing in Hong Kong or to the vehilcle(s) he is using to do it. It is simply untrue. 

On the same current site, Dixon has a BBC (London local) news item interview with him on Bitcoin. The eatery that is used in the clip as a place that takes bitcoin has now closed down. Oh well, why let some facts get in the way of fantasy.

Isnt it about time someone started cleaning up the internet. There is so much fake news and down right lies out there. Dicky could start by taking action against people who misuse his face. 

P2P lending sector starts to unravel. Havent we been here before?

With news that Crowdstacker have outstanding loans with Amicus Finance, now in administration, coming hard on the heals of their loans with BurningNight, also in administration, looking likely to fail, Seedrs investors in Crowdstacker must be a little worried.

If there is one thing P2P lending platforms hate, it's loan defaults. One is unfortunate but two side by side is careless. How many more out there are waiting to go?

Seedr's investors put £800k into Crowdstacker - one of the UKs leading P2P companies - in July last year. Now, with two large partial defaults on outstanding loans totalling £4m and £7.5m, Crowdstacker doesnt look quite so appetising. 

According to some good research from the Times, Crowdstacker was also borrowing money from Amicus, as well as lending to it. Here

Calls for better regulation and more transparency in the P2P and equity crowdfunding sectors, led mainly by private investors, have fallen on deaf ears so far. Is that about to change? Or will it take another train wreck like 2008 to get some reaction. Seriously, when will we learn. 

We wrote about Crowdstacker here. The Amicus administration has not yet filed relevant documents but the latest on Burningnight suggests that only a fraction of the 'secured' £7.5m loan will be repaid.  

Finally the Cgon saga ends in liquidation. Another Crowdcube success story.

Cgon raised £180k on Crowdcube in 2014. Next week it goes into liquidation. Their projections showed profits for £14m by now on a £20m turnover. Where will it all end?

Cgon dont seem to have done much since 2014; except make losses. We have covered their progress here.

Hard to know what to say to investors. Maybe  - 'Loss relief is finally available'.

Their website tells visitors to go here for servicing Qs. 

At a £20m valuation, Den's new Seedrs funding round poses an interesting question.

Den are overfunding on Seedrs, having set themselves a very low target. The valuation is £20m for a company that has only just started to sell a product. Its major competition is having a 50% off sale and saw revenues fall in its last FY.

Should that ring alarm bells?

We think so. Den are late getting to market and have already raised around £5m to get to this stage. It is far too early to tell if the product is a winner or not but you wouldnt know that to read their pitch.

Their main competition has been selling into this market for a while now, is a plc and has had £12m invested. And still it has come out with its YE Sept18 numbers looking distinctly damp. Revenues were down from £3m to £2.8m on a falling GPM and a huge rise in expenses. The directors and various NEDs have been taking out large sums considering the lack of any profit.

All of that maybe an advantage to Den. But not if the falling sales figures are part of a market retraction, rather than poor management. That we dont know...yet.

We still think a valuation of £20m is bonkers. But what do we know. And why set a target a touch over £200k, with large investors putting in £50k sums. How is that equity crowdfunding and how is that transparent? We wonder what the real target is?

Having remote light switches may well be useful but is it really required? Does it really do some good for our lives and for our planet. As a child I was taught to turn out lights. What happens to all those children who have this remote system when they live in homes that are without it? They leave everything on because they were not taught to turn it off. When did we become unable to turn off lights? So is this really the next big thing?

Of course if our ECF.Buzz forum was up and running, as it will be in July, you could all discuss this without fear of the investor platform removing your comments. So if you havent already, take a look and sign up now whilst the 50% discount is still on - here
https://www.indiegogo.com/projects/ecf-buzz-the-crowd-investors-information-centre/x/19804529/