Wednesday, 21 October 2015
Companisto model maybe way forward.
https://www.companisto.com/en/ - Companisto is a German ECf platform.
Their website has useful information on it - its not filled with Dragons Den style promotions. Since inception in 2012, this platform has raised 26m Euro for 46 businesses - it has to date had 5 failures. It does have a due diligence department and they dont take lunch.
They list these facts on the site - they could go further by listing the failures and perhaps looking at why they failed but its a start. This would be far more useful than the tenuous 'share' value nonsense they have on there at present.
Crowdcube on the other have in a time frame only marginally longer, raised over £100m or 160m Euro for 314 businesses. They do not disclose the number of failed businesses but there are many.
ECF is crying out for both transparency and quality - it's common sense. Crowdcube seem to believe that their figure of 314 businesses is one to be proud of. This shouldnt be about quantity.
The Companisto model has some oddities which may yet prove it's downfall - one being the legal set up for investors who have a fixed time frame for what is essentially a loan. If the business is sold within this time frame they benefit but we'd guess that many founders would want to jettison the Companistos before selling - in which case they get a tiny 1% annual share of profits (if there are any declared) plus their original stake.
They would probably say that this is better than holding shares which have no liquidity and we might agree.
Companisto do not go in for the type of blatant misleading that appears to be Crowdcube's hallmark. Things like ensuring the projections on the pitch do not match up with the accounting dates for the company, so that direct comparison is difficult. Stating a pitch has 30 days but then extending it until it completes, changing the amount raised with no explanation and no new projections and so it goes on. Completions are the only driving force here.
We give you one current example - the pitch has projections that are already almost two years out of date, and the dates do not match the accounts. When asked by an investor if current sales (Jan to Dec 15) were matching the projected Yr1 sales, the founders replied yes they were and that new client orders were due on line in Feb 16 which would ensure the projections were accurate. But Feb 16 is not in Jan to Dec 15!