Wednesday, 7 December 2016

Crowdcube customer service goes missing

Crowdcube sent an email to the unlucky investors in Flavourly, saying how sorry they were for their loss. Oh and giving them no advice on the state of their EIS relief.

Flavourly funded on Crowdcube in 2015. £500k was invested by over 300 people. A few days ago the main shareholders and the key Directors sent a one line note to investors to say they would now be forced to sell their shares - at a ~85% discount to the price they paid for them just over a year ago. We wrote about it here.

Today the same investors received an email from Crowdcube - see below - 

Hi [...],

We understand that the major shareholders of Flavourly Limited have issued a drag along notice to all other shareholders. As the value offered for each Called Share under this notice is less than the price paid by you during its Crowdcube round, you may be able to claim loss relief (if eligible).

If applicable, you should have received your EIS3 form to enable you to claim any tax relief you may be entitled to and if you haven’t yet done this, we recommend you do so. Income tax relief can be claimed within five years of the year you made the investment.

If appropriate, loss relief is also available under EIS. You should seek professional advice if necessary. For more information about EIS, please visit the HMRC website:

 HMRC - 'How to claim EIS tax relief'

Once again, we understand your disappointment and if you have any further queries please do let us know.

Kind regards,

The Crowdcube Team

We put a comment on this post that referred to the loss of the EIS relief as the shares had been sold within the 3 year period. 

To be more precise and to help Crowdcube investors who do not have access to expert advice, we have looked into this further and have found the following - 

1. EIS relief at 30% that has been claimed on this investment will be lost on the proceeds of the sale not the initial investment as the sale has resulted in loss. So for example if you invested £10k and have claimed 30% under EIS, you will have your EIS income tax relief withdrawn based on 30% of the sales proceeds ie ~ 30% of £1500 or a withdrawal of ~£500 of the initial £3k. The loss you can claim is then reduced by the balance of the relief you claimed ie ~£2500 will be taken off your loss claim.

2. So for example someone who invested £10k and had claimed £3k. They would now have £500 of that withdrawn so they could claim only £2500 against income tax. The loss they made when they received their sale proceeds of £1500 is £8500. But they have to reduce this by the relief not withdrawn ie £2500. So they can claim loss relief on £6000 only.  

3. If you have deferred capital gains into this EIS investment then this will also have to be corrected.

You should of course check this with a tax expert. We did. But we are not experts.

So the net result seems to be it would have been better for the company to close. You would then have kept all the relief and be able to claim on the full loss. 

Oh and what about the service from Crowdcube on this? There is none. The interns at Crowdcube simply dont have a clue. Sad but there you are. They really dont give a fig about their investors - but we do :))!!

Monday, 5 December 2016

More Horlicks anyone? SUPERWOMAN crashes.

The Glentham Fund saga roles on. It might one day become a film produced by Derby St.

We helped with the piece in the Times tomorrow - today now as we promised to hold this post back. In fact, despite the Times' lack of thanks - the whole saga with Horlick is only in their paper thanks to us!

Someone here is taking the P and it aint us.

We cant think of another situation where you could take £400k off investors on an FCA regulated site, spend it, promise to provide another £250k and not deliver and end up a with a promised $250m fund that has precisely nothing in it.

Well we cant think of a legal situation anyway.

Hats off to all involved for legally ripping off 569 investors. Nice. We can hardly wait to see what Horlick does next.

The only piece of good news is that thanks in large part to the work we do here, Horlick was unable to get away with this sham. Seedrs are, belatedly and only because of pressure from us (see here), being forced to chase her for the money.

According to Jeff Lynne, Seedrs CEO, Horlick will be selling an asset to cover the missing money. But in a strange quirk, he states the asset is not very liquid, so she has been given until March 2017 to cash up. Well she has already had 12 months and has done nothing  - apart from spend all her shareholders' investment.

In a move that wouldnt go amiss in Crowdcube's office, Lynne, who was put on the spot this week by the Times, has issued his version of events to Crowdfund Insider, which is essentially the mouthpiece of the pro Equity Crowdfunding 'No matter what they get up to' faction - here. Its hard to make this farce look good, but they give it a go. Just by way of illustration this is how they describe Horlick in the opening paragraph - ''a renowned investment manager, film producer and CEO of Money &Co''. Really? Have you seen 'In The Blood', the accounts for Money&Co or the Glentham Fund? Infamous maybe.

Read this if you want to see Nicola's PRing machine in action - or this if you like one star film reviews

The CFI piece goes on to conclude -

While it is not clear yet as to how the 569 investors will make out some progress is better than none at all.
Investing in early stage companies comes with few guarantees regardless of who is at the helm. While we hope this one works out for all investors it is a cautioning reminder of the intrinsic risk involved.
Is that really the conclusion we take from this? Surely the conclusion is dont believe a bloody word they tell you, whoever they are and however many times they promise and do chase up all promises using Fantasy Equity Crowdfunding to get the best results. We would love to know what progress CFI are referring to here. Read my lips......There - is - NO - Fund. Or Refund for that matter.
The same CFI journalist druelled all over Horlick in a piece he wrote about her in July 2014. Here is a Q&A that was part of the piece, which makes for interesting reading given Glentham Funds current zero position - 
Crowdfund Insider:  The share price for the 2nd round has increased from £10 to £12.  Please share the progress made at Glentham that justifies the higher valuation.
Nicola Horlick: We are a long way down the road in terms of launching the first fund, Glentham Film.  We have an anchor investor who wishes to invest $20 million when the documentation is ready.  There is no absolute guarantee that they will invest as nothing is signed, but they remain very enthusiastic.  We feel this is sufficient progress to justify increasing the share price  
$20m now that would be great. Hey how about $2m or even $2k. No? 20 cents? .................. In this post truth world, this makes for a wonderful piece of evidence for just how easy some people find it to manipulate half truths and innuendo into fact. Full article here

To top it all, Nicola was involved this year in the Crowdcube fundraising attempts of Twelve London Ltd, a newco of which she is a director. We assume it would have been difficult to use Seedrs. This was without doubt one of the worst failures ever on a crowdfunding site - we wrote it up here. In the CFI piece on her, the last Q reveals much about her relationship with the truth -

Crowdfund Insider:  You have been very busy with Money&Co., Glentham Capital, etc.  Do you have any other projects in the pipeline?
Nicola Horlick:  No! I have more than enough to be getting on with.

 Maybe the birds are finally coming home to roost.

What, we wonder, will Jeff do with his 'agreement' if/when she doesnt pay up? Seedrs will then clearly claim they have done all they could. We hear a future 'denial of responsibility' resonating from the Seedrs Pring Dept; one they will no doubt copy straight from Crowdcube's broken record.

More importantly, why after 3 years is there still no Fund?

Lots of eggy faces here.

Our advice - if you see Horlick coming over the hill ....RUN LIKE HELL.

Saturday, 3 December 2016

Last orders for London Distillery and Dodds Gin?

The London Distillery Co raised money on Crowdcube back in 2012.

We have written about them before here 

Its now unclear how much they raised on Crowdcube. The original Crowdcube site stated that they had raised £250k  - which in 2012 was a great success for the platform and was overtly used by it to promote Crowdcube. This now appears to have been a lie. The current CC platform states that they only raised £95k.

Who is surprised?

Anyway, whatever they raised, they have not managed to deliver much. Despite having new equity backing of almost £1.4m, they continue to make large losses. YE March 2016 showed a loss of £350k.

Recently the company set up Dodds Gin. This is 98% owned by LDC.

Dodds are very late with their accounts and have had a compulsory strike off placed on them. They did try to raise £1.5m via help yourself equity crowdfunding portal Envestry, which is part of Envetsors. Seems to have failed from filings at CH.

Drink Up.

Flavourly snacks leave a very bitter taste.

This is really hard to believe.

Flavourly, a very poorly run snack subscription service, initially raised money on Angels Den and then in 2015, over £500k on Crowdcube. The Crowdcube investors bought in at £1.2m - which for CC is low.

We have written a lot about Flavourly here. It has been disaster since day one so this should really come as no surprise. It's the way it's been done that takes one's breath away.

Now shareholders have received an early and very unwelcome Christmas Present from the directors/majority shareholders of Flavourly Ltd - Andrew Veitch, Ryan O'Rorke and Kevin Dorren - remember those names.

These directors/shareholders have gone behind the backs of the Crowdcube shareholders and triggered the Crowdcube Drag Along clause, which states that all shareholders must sell their shares if the majority holding agrees to the sale. The text is below

We, Andrew Robert Veitch, Ryan Lrwin O'Rorke and Kevin Matthew Dorren (the "Selling Shareholders"), together holding a majority percentage of the A Ordinary Shares of the Company, have agreed to transfer all of our interest in our shares in the Company (the "Sellers' Shares") to the Proposed Buyer (the "Sale"). We, therefore, constitute the Selling Shareholders for the purposes of article 10 ("Article 10") of the articles of association of the Company (the "Articles"). Pursuant to Article I O, we, the Selling Shareholders hereby give you, the remaining shareholders of the Company (the "Called Shareholders"), notice that you are required to transfer all of your shares held in the Company (the "Called Shares") to the Proposed Buyer. This notice, therefore, constitutes a "Drag Along Notice" (as such term is defined in Article I O) and is given pursuant to and in accordance with Article I O (the "Drag Along Notice").

No one was asked but they are now having to agree that they will sell their holding - at a massive loss. In fact the email we have seen says absolutely nothing by way of explanation or apology. These 3 geezers are exactly what Crowdcube promotes.

The 3 directors/shareholders of  Flavourly have sold all the company's shares to Drinkshare Holdings Ltd. The total sum made from this sale is to be £118k - against the 2015 valuation put on the company at the time by the same directors of £1.2m.

Wait there is more.

Drinkshare Holdings was incorporated in November 2016. It has no trading record. The sole director is one Alistair Duncan Stewart, whose record speaks for itself. The company as yet has no shares issued. Stewart is listed as an investment  specialist who seems to get involved in liquidating companies.

So what is going on here?

Why didnt Flavourly follow the normal process and just close down like so many Crowdcube funded companies? This way investors do at least get some money back, but it seems unlikely to us that Drinkshare is going to turn this company around and if it was, why couldnt CC shareholders have a piece of the action?? They did after all hand over in excess of £500,000 to Rorke and his mates. That has all now gone where?

Utter shambles. Or Scam? The 2015 valuation was low to entice £500k into their bank. We have to assume that most of that has now gone. It's all perfectly legal of course....for the moment.

Finally, as a reader kindly pointed out, anyone who claimed S/EIS with Flavourly will have to repay HMRC. Nice.

Friday, 2 December 2016

Brewdog issue 7.5% 4yr Bond via Crowdcube to fill funding gaps in USA

Brewdog have launched what looks like an attempt to raise much needed funding for their US development - on the back of the US fundraising failure.

No one could argue about BD's success and the style they used to get it. 2015 EBITDA of £5m speaks for itself. 

But the US adventure may have been a mistake. They have a half built $30m facility in Ohio but do not have the money to finish it or pay to run it. Running costs in the UK have increased and higher turnover is producing flat profits. 

The US fundraising, which has been running for many months, has only raised $3m of the intended $50m. They announced this week that they are offering some ludicrous double or quits deal to try to PRing the raise into action. It has just really made them look a little silly.

Does the Brewdog message really translate into American? They wouldnt be the first UK success to fail over the water. And the US has had its own craft brewery explosion, so its not like BD are offering anything new.

Now in another attempt to breech the cash gap, they have announced a Bond with Crowdcube. Whilst this is safer than equity investment in principle - it gets paid back in 4 years with annual interest of 7.5%, if Brewdog dont manage to get the US facility funded and up and running then all bets are off. 

If the company gets into trouble then the bond is just as at risk as the equity in terms of repayments. It will be interesting to see how it goes.

One question worth asking is was this Bond in the plans a year ago? 

The other one is why is the Bond's minimum investment only £500k and max £10m. What difference will £500k or even £3m make?

According to James Watt, this is 'Funding for the 21st Century'. Well that maybe so but the basic business model of cash in and cash out hasnt really changed much since the 12th Century. If you run out of cash you go bust. 

BeerBods rapdily losing its friends

Beerbods, a subscription beer delivery club, raised £150k on Crowdcube a couple of years ago. Since that time is has reported two years of losses against two years of projected profits.

Who knows why? Only thing that is certain is that this a yet another example of Crowdcube inflating expectations in order to gain investment and their commission. We wrote about then before here 

You have to ask how many times are they going to be allowed to repeat this before something is done about it.

Projections for Beerbods showed profits of well over £100k for 2016 and the real loss reported to YE May 2016 is £41k. Profits were also forecast for 2015 but the reality was a loss of £53k. Beerbods do have a holding company but results here do not seem to reflect trading.

Thursday, 1 December 2016

Brewdog US fundraising enters realms of pure fantasy

Brewdog - The UK's fastest growing food and drink company, is now offering investors a chance to double their money by playing roulette. Is this a Dead Dog bounce we ask?

Brewdog have been trying to raise money for months in the USA to support their new brewery in Ohio. We have written about this several times here - the campaign has been nothing short of a disaster.

According to Business Insider, Brewdog have only raised $3m of the $50m target. 

So now they have introduced this ridiculous gimmick. If you have invested in Brewdog you get one chance to gamble using roulette's red or black to double your money and if that fails you lose your shares. What? The way this will work is that its supposed to entice possible investors to take the plunge - its only for US Brewdog enthusiasts. This isnt the stated aim of course! But then they are desperate.

That James guy needs to see a shrink. Where are the SEC? How is this not rigged?

Look, the people of the USA voted for The Donald, so theoretically anything is possible. Sensible it aint.

After the slightly farcical Brewdog share sale held recently on Asset Match, where the price of the shares was well below the last Crowdcube raise until the last few minutes when one large purchase was made, this is surely confirmation that the founders have lost touch with reality.

Crowdfund Insider have Watt, the co founder, saying that they are fucking Wall St and putting the small investor in charge. Has he ever played roulette?

It's a gimmick of the worst kind. Desperate and ever so slightly embarrassing. We dont expect the Dog to get up this time.