Thursday, 9 April 2015
Yet another Crowdcube funded business misses its targets
It strikes us that the rise of ECF has led many SME start ups to do just that - start, knowing that they can help themselves to free cash. Failure to meet projection figures will not result in any sanction - they just lose other people's money if the business closes.
Hop Stuff has just posted its yr1 accounts. The Crowdcube projections are as usual for slightly different dates but in any case, the loss made in reality of £37k is a long way off the projected profit of £96k, when you consider what a very small business this is.
You cant blame the guys for trying - they were told by Crowdcube to push optimistic forecasts. The equity wouldnt sell otherwise and Crowdcube would not get paid.
You do have to question just how sensible it is to encourage small business start ups to over estimate their initial sales. If you read this blog, you will see that we have many examples of the same thing. Where is the FCA? Why is this Government encouraging the misuse of tax payers money through EIS and SEIS income tax rebates?