Friday, 26 May 2017

You just cant keep a good man down!

Mal MacCallion used to run Rater Agent, which raised £150k on Crowdcube at the end of 2015. He was the main man in the Rater agent pitch. Then he left and worked for Callwell. Now he has rebirthed Growtion (nee Tramal).

Rater Agent are late with their accounts and Confirmation statement. We expect there are the usual reasons for this tardiness - projections showed a healthy profit.

We wrote about this before here and here

We expect Growtion to appear on an equity crowdfunding site near you very soon. They have a good list of customer reviews for a company that has only been trading for 12 months, including two from Callwell. They help you grow, apparently.

On the Growtion website, they have some case studies, along with a glowing account of Mal's business acumen and successes. It is hard not to laugh out loud.

One of the case studies is ......... Rater Agent. According to Mal, Rater Agent is profit making - obviously thanks very largely to his business skills.  The last set of accounts field at CH for YE April 2015 shows net assets of £1 balanced by Shareholder Funds of £1 - in fact £1 is the only figure on the balance sheet. Another case study is Zoopla. By dint of working at Zoopla at some stage (apparently), years before Growtion was incorporated, Growtion has helped Zoopla to its success. The final case study involves Callwell. Callwell is a tiny company making small losses. When we say tiny, it is really teensy.

So if you are willing to believe any of the above means that Mal has a clue about business, you really need to see someone. Why was he allowed to pitch on Crowdcube? I think we all know the answer to that.

Lucy's Dressings defies the Righteous message

Lucy's Dressings is back on Crowdcube - a year after its first raise. According to everything we know from the Righteous salad dressing company, this should be a no no.

Old timers on Crowdcube will remember Righteous - a company set up by the same people who now run Cauli Rice. The founders of Righteous sent an email to investors a year or so ago, explaining that they had been delisted by most of their glittering band of supermarkets. Why? Well the founders explained, salad dressings are not really selling and no one now expect them to in any great quantity. Good to know, if a little late for the investors who had believed the hype behind Righteous' previous CC pitches. Their PR was excellent.

Now Lucy has some salad dressings with glittering stockists. Hang on, havent we been here before? 

How many times can people make the same mistakes? Countless it appears. Good luck. 

Idleman Crowdcube pitch very casual with the facts

Reading the new Idleman Crowdcube pitch you would think this company was on track. Put simply it hasnt been on track since its first Crowdcube money grab in 2015 and its now very definitely in the sidings.

As usual with Crowdcube, nothing in the pitch is a lie. It's just not all quite true or very important bits have been left out.

Example - in 2016, so only a year ago, Idleman raised £1.2m on Syndicate Room. In the section on this new Crowdcube pitch, dedicated to listing all previous funding, this fact has been totally left out. Neither the amount or the raise are mentioned. Why?

Well we think probably because the valuation in April 2016 is now the valuation in May 2017 - despite the massive progress the platform tells us Idleman has made in those 12 months. Of course as the raise on SR isnt mentioned, neither is this valuation; which means in essence that this round is a down round. 

Example - in the SR documents the projections showed revenue figures that Idleman have since missed by miles. They have of course also missed their 2015 Crowdcube projections by even greater margins. Neither fact gets a mention on the current CC pitch.

Example - In the SR 2016 pitch they show the Trust Pilot aggregate at 8 out 10 - a reasonable result. However if you go onto their page now on TP, you find they have dropped to 7.5. This is very clearly heading in the wrong direction. This gets no mention. One star reviews are not uncommon. 

There are more but to be honest we simply cant be bothered to go through them. This company has never delivered on a single target that we have seen. Any company that quotes revenue figures including vat really needs to back to kindergarten business school. Our guess is it never will get close to its ambitions. Invest if you must but at least do it with your eyes wide open. 

Thursday, 25 May 2017

Ethos spins a complicated web.

Ethos Global raised over £700k on Crowdcube just last year. Accounts are now 8 months overdue and other companies now appear to be running the Ethos Yoga studio in London. Where are shareholders in this complicated web?

Shareholders invested in Ethos Global Ltd on Crowdcube  - a company run by Dr Theodoros Koutroukides and Jennifer Lynn Hersch. Company number 07874390. Remember those names.

We have written about this company before - here

Ethos was described by Crowdcube as - 

Looking to disrupt a £50b+ global industry, ETHOS is a chain of boutique yoga & fitness hybrid studios combining health, science and technology. Growing the cash-generating Cambridge headquarters........

For a company with one studio, you might think the use of the word 'chain' to be typical Crowdcube BS. Shortly after this investment was completed, the 'cash generating Cambridge HQ' closed down; annihilating the one link chain. The property, St Andrews House First Floor, appeared on the market for re let and is still there with Bidwells.

Shortly after this, a new Ethos studio opened in London. This studio is still running but is not run or owned by Ethos Global according to their website's T&Cs. This studio is run by Ethos London England Ltd co number 10601085. Not to be confused with Ethos London Ltd which is an entirely separate company. The Directors of Ethos London England are one Theodoros Koutroukides and Jennifer Hersch. By dropping the 'Dr' and the 'Lynn' they appear at Companies House to be different people to the ones running Ethos Global - but they are not. Hersch has now resigned from Ethos Global. Since February 2017 when this company was set up, it has changed its name to Soma London England Ltd. It is in turn 100% owned by Soma Holdings, company number 10598796, which is 100% owned by Koutroukides. 

Meanwhile accounts due at the end of September 2016 for the Crowdcube funded company, are missing. So what exactly do shareholders in this Ethos now own? Who knows. Crowdcube projections had them making £1.6m by the end of 2016 and £4.6m by the end of this year. Who wouldnt want a piece of that; if it was true?? It seems unlikely as Ethos Global dont seem to do anything anymore. Maybe that's their version of Mantric Yoga.

The company was issued a compulsory closure notice a few months ago but has since had this rescinded as it has raised what appears to be £280k in a new share issue. Or so the filing shows. As it appears to have nothing to do with the London Ethos Yoga studio, why would anyone invest in it? Again who knows.

All in all, a very strange set of events and far. The accounts would help but when we asked (repeatedly) about them we got nowhere. We were told that the company was just fine - doing well. Certainly the London studio, which appears to be 100% owned by Koutroukides is doing well. We just wonder what money helped to set up this studio? Could it have been the £700k plus raised for Ethos Global on Crowdcube? If this is all perfectly normal, why change the company name, twice, set up a totally new company structure and close down your cash generator and why appear in CH filings with different names to the original company directors' names. One being different might be normal but both of you?? Seems unlikely. 

Saturday, 20 May 2017

Crowdcube promotional wheeze unmasked

Crowdcube pitchers are informed by the platform that if they reach 50% of their stated target, this releases new Crowdcube PRExtra, which will promote the pitch. 

We didnt know this and we have been involved with the platform since its inception. It's not really a problem unless investors dont know about it - and we are pretty sure they dont. Well now they do. 

We came across this when one of the pitches, currently live on the platform, sent emails to existing investors asking them to push the company over the 50% line, in order to activate the powerful Crowdcube PRExtra machine. For this they promised to up the rewards to investors.

This doesnt really sound like a very sensible way to operate a business or a funding model that uses tax payers EIS monies. Surely the underlying viability of the business to deliver on its projections should be the driver for the crowd to invest? Not some smoke screen PR blitz hatched behind closed doors and known only to the company and the platform. 

The pitch has someway to go to get to 50% and has almost run its course. We think there are fundamental business reasons for this. It will be interesting to see if PR wins over business sense.

As a recent anecdote, the now catastrophically collapsed GF Foods, manipulated its second raise on Crowdcube in order to squeak over the line, only to take all investors down with it, just over a year later. 

Friday, 19 May 2017

Another sticky mess - Superjam in fruitless search for profit

Superjam  - no not some confused 70's tribute band - leaves investors cold with results many miles off target.

Superjam is the brainchild of one very famous young man, Fraser Doherty OBE or 'Jam Boy' . Unfortunately for Crowdcube investors, Fraser's charity work has not translated into a money making business. Well not yet anyway. 

Superjam raised £318k at the start of 2015 for his existing Jam business. He makes Jam. You get the idea. 

He doesnt sell that much Jam though - hence the small profit of £3,000 compared with the Crowdcube projected figure of almost £700,000. We thought he might have paid out massive dividends, but his corporate tax account suggests he just didnt make much. YE September 2017 has a profit tag of £1.3m. His claim that it's stocked in Waitrose seems to have passed its sellby date - the link on the company website doesnt work. The Waitrose site helpfully tells you that this product is unavailable. It's been like this for a while - at least 6 months. The link to the Ocado site doesn't work either and a search there for SJ, brings up Bonne Maman - which is not such a bright idea!

A little giveaway is the TM printed next to every Superjam logo. Surely he knows this is totally meaningless?

He is also heavily involved with Beer52, an Angels Den miscreant and failed Crowdcube pitcher. This is another online business building stability on sand with heavy use of the now infamous discount code to collect 'customers'. We wrote about them here. You can still get a 75% discount 3 years later. Losses are mounting.

All in all, exactly what you would expect. 

Thursday, 18 May 2017

This is what happens when you let Crowdcube amateurs loose on Business Finance

GF Foods York raised money twice on Crowdcube. Now the Liquidation has revealed that 'unexplained discrepencies' in the company records were being reviewed.  The company owes £1.4m to various creditors. This could all have been avoided. It's a very bloody mess.

We called this disaster out a long time ago - the pitch details in both raises were highly suspicious and the company had already collapsed once. Crowdcube just ploughed on as usual, ignoring the obvious facts and allowing the founders to take investors money not just once but twice. You can find our posts here.

It seems beyond the bounds of possibility that Crowdcube will wheel out Luke Lang yet again to try to PRing his way out of yet another blood bath. But we guarantee they will. 

When will investors wake up??

We have copies of the Crowdcube Q &As from their second raise at the end of 2015. When asked if the company was trading in line with its projections for that year of £1.4m revenues and a NP of £200k, this was the founders response -

At present we are matching sales to forecast - we have higher rates of sales from Sept - Dec in forecast due to seasonal listings and at present current orders for these products are matching the forecasts by customers.
We have new product listings with two major retails scheduled for February, so unless these range reviews are postponed by the retailers, which is highly unlikely we believe we will be on target to meet the forecast


This raise only crossed the line because the company increased its equity offer by 40% at the last moment. Perhaps a warning to heed for the future? Whichever way you look at this, the comment above was nothing but a lie. The company never managed to file the accounts for this period. Crowdcube vetted projections for YE December 2016 had Revenues at £4.7m and NP at £1.5m.

Reading the 55 page Administrators report is chilling. They found the information they were presented with was wholly inaccurate and were forced to remove all the IT systems and place new locks on the company's buildings. It was such a mess that even now they have no exact idea what is owed to whom. Crowdcube investors can kiss goodbye to their £345k of investment for sure.