Wednesday, 27 May 2015
Congatulations.....it's a very healthy valuation!
Cake (Spleat Ltd and or Cake Technologies Ltd) has just launched a bid to raise £800k on Crowdcube, valuing the company today at almost £11.5m.
Cake claims to be an easy way to pay restaurant bills. Its been tried before and failed but maybe they have something new to offer. To date Cake has been trialled in just twenty outlets in London and its plans state it will be in more than 100 sites by the end of 2015 and will be employing more than 50 people by 2017.
The company is run by two ex corporate financiers, both under 30. One had her own business for just over a year which is now being closed. For the other one this is a first solo flight.There is some undefined relationship between Spleat Ltd and Cake Technologies Ltd - started by Aaron Ross. Mr Ross's record is not impressive and shows signs of a serial flopper. Cake T has traded for 2 years with cumulative losses of £730k.
Adding all this together the picture is not great. Zero experience starting and running a company. Zero experience working outside the blue chip bubble. A very short and honestly pathetically small trial period - itunes currently has 2 reviews of the app. And a valuation which makes most on Crowdcube look sensible. Take all of this and add the most important ingredient - it didnt work before and now Paypal offer a far more rounded service - and the mix is up the Suwannee. If you need further proof read the comments here about the launch of Cake - http://www.thisismoney.co.uk/money/smallbusiness/article-2888679/App-won-t-make-meal-splitting-bill.html. Their naivety is highlighted by the claim that their USP is the targeting of top end restaurants - places where the rich and famous spend hours splitting their bills!!
PS - one additional feature to increase confidence in the management is that the site for Cake http://www.thecakeapp.com/policies/terms-of-use/ has the site owned and managed by Cake Ltd Reg 08292050. This is a legal requirement. In fact the company registered at CH under that number is Spleat Ltd not Cake Ltd - so they are technically in breach of UK law. Cake Ltd is (was) a Manchester based company that is completing its liquidation - maybe a Freudian slip.