Sunday, 25 October 2015

Equity Crowdfunding Tarts

A recent trend in ECF is tarting. Either before you have finished with one platform, you go and pitch on another or if you have already used one platform, then you use a different one next time. This helps to prevent any critique of your previous pitch should you have failed to get anywhere near to your projections.

Of course the new pitch doesnt mention the old pitch. It's a fairly typical example of the phoney claims made by the platforms that ECF is transparent and for the people.

Here are two examples we just happened to stumble across.

Earlybird is trying (desperately) to raise more money on Crowdcube. It's not going very well, despite increased equity offers and numerous extensions. However dont worry because the same company is on Angles Den - with its chairman as ''lead investor'' and open for investment now of £300k for 16%. They are offering 20% for the same amount on Crowdcube right now. Both campaigns are running together with different % - eh? We havent looked but you can probably find them in Aldi for £300k for 25%. What is a lead investor you might well ask when it comes to using your chairman.

Silkfred raised money on Crowdcube a while back and has failed to deliver on its projections since. It has just completed a £850k raise on Angels Den and is now overfunding. Looks like CC may have missed out on this one. Clearly Fred felt he didnt want to answer questions about dilution and projections.

Is it really acceptable that companies run simultaneous or end on end campaigns on different sites - without giving any indication that this is what they are doing? We dont think so but then we are maybe over critical of some of the ECF practices which claim to be totally transparent.

10 comments:

  1. Earlybird is also listed on angel investment network.

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  2. If you want a story - investigate 88 Delicious. I blame Crowdcube for that. Crowdcube didn't notify potential investors of the incriminating evidence against the firm which came out in their 'Due Dilligence' process. Instead they just emailed investors and said there was a disagreement and the opportunity was no longer available. Shocking really.

    http://www.ft.com/cms/s/0/e9d998c2-ee93-11e4-88e3-00144feab7de.html#axzz3pg7U9BZe (2013 case)

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    1. Cant find much on this - is the case that was due to be in court this year?

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    2. I stupidly invested in 88 Delicious. My largest to date. Serves me right really, annoyed with CC but ultimately my greedy fault. Still trying to get the guy in court.

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    3. Hi Mike G - so did this pitch fund in the end? We inderstood that CC found some nasties after the pitch had closed but before the legals so no money was lost by investors - or that is the story Luke Lang told the FT. If you invested via CC then we need to do something with this.

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    4. Hi Rob, it did hit it's target but it then got cancelled. I take full responsibility for where I put my money but all it would have taken from CC was to tell the investors the reasons for the pitch being cancelled and warning us not to do business with Alan Colton. Of course they didn't tell us anything, Alan then emailed everyone blaming the entire thing on CC and saying he still wanted to raise funds, still offer the rewards etc. The most annoying thing was I originally invested £100, then later on increased it to £1000. It's been almost two years now and some shareholders are trying to take Alan to court but the police and beyond slow. Every few months I'm asked to submit info I gave them 18 months ago. The money is gone and Alan had some good holidays judging by his social media profiles.

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  3. Swept under the carpet as usual and very little on public forums because the case is still under investigation. Basically the pitch was up for 40 days - attracted 90 investors and then it disappeared like a few others have done recently. The entrepreneur had all the emails because you have to contact the business for the business plan and said to the investors after the pitch that there was a disagreement over fees - meanwhile potential investors had no idea that fraudulent contracts with a major pub chain had been uploaded which were signed off by Crowdcube's sleepy DD department. It turns out that Crowdcube had actually spotted the fact they were fraudulent before the pitch was completed (victory for them! seems they do wake up when they could be incriminated) and kicked him off the site - failing to warn would be investors. His pitch was probably one of the best I've witnessed on Crowdcube in terms of playing the crowd - a very convincing con-artist.

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  4. I believe earlybird started both at 16% but half way through they adjusted the % on Crowdcube....

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  5. Rob, you say "in which case, Crowdcube lied to the FT".

    I have a generally low opinion of Crowdcube, and I suppose it's possible that they lied in this case. But in reaching straight for that extreme interpretation of what is likely to be more complex than that, or a misunderstanding based on how media have reported a story, you tend to undermine your cause. This is something you do very frequently, and while it probably reflects your starting point - which is that you're highly cynical about the current state of ECF - it isn't a proper analysis, that acknowledges complexity. Worse, this blog, which could be a useful critical eye on the industry, is relegated to being the one-eyed ravings of someone who is more concerned with throwing barbs than investigation.

    It's shame. You could do better.

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    Replies
    1. Thank you for your anon and slightly sanctimonious comment. If you are not a fan of my style that is quite understandable; many are. It is unlikely to change in my lifetime.

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