Friday, 27 November 2015

Crowdcube's incessant over optimism is a sales tool.


It's nice to occasionally come across an indisputable fact.

Cell Therapy raised almost £700k on Crowdcube at the turn of the year - some achievement as it had only asked for £250k. The company has some groundbreaking regenerative cell therapies and is backed by some industry giants. It may well go on to be one of Crowdcube's major successes. See here http://www.celltherapyltd.com/pdfs/Financial-Times-article-Oct-4th-2015-Cell-Therapy-Ltd-eyes-initial-public-offeringFT.com.pdf
 
At this stage however, with the YE accounts to July 2015 just filed, they are a long way from where the Crowdcube pitch put them only months ago.
In the pitch, they stated that the Director's loan of £57k would remain in the company. The accounts show it has been repaid.

In the pitch they stated -


Cell Therapy is scheduled to complete a public listing on Jan 14th 2015 on the Euromarket GXG exchange at an initial valuation of £100M (~£50 per share). This Crowdcube funding is the final private placement prior to listing with a pre-IPO discount of over 25% at a £64M valuation (£37.00 per share).

This listing never took place and they have sold more private equity since.

In the pitch it shows capital invested into the company by now of £15.5m. The accounts show £2.5m has been invested, with another £2m plus invested since.

In the pitch it shows a turnover for YE Dec 2015 of £3.9m. In the accounts the turnover is zero. This would appear to be due to the delay (or collapse) of a licensing agreement with a Chinese company.

So you can see that pretty well everything in the pitch turned out to be grossly over optimistic. Investors need to know that this is common place on the Crowdcube site. All of the companies we have accounts for, to compare to their projections, bar one, have failed to get close to those projections.

Of course it doesnt mean that Cell Therapy wont go on to be worth hundreds of millions - it just means that it wont be worth that now, as predicted. 

The point here is a wider one - Crowdcube pitches are always ridiculously over optimistic - it's part of their sales arsenal. So just be aware.


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