Saturday, 30 May 2015
The times they are a'changin. There are a noticeable number of larger raises on Crowdcube from companies at the cutting edge of their sectors.
Back in 2011/12/13, most of the businesses raising money via equity crowdfunding were small start ups in consumer goods and services and the internet. That phase has been unsuccessful in that no single company has managed to return a penny to investors. Amounts being raised were averaging £50k to £250k - nothing above £500k. Equity on offer tended to be generous but then 40% of nothing isnt worth more or less than 4% of nothing.
Now the likes of Pavegen, Justpark and Sugru are all looking for around the £1m mark and selling in the region of 4% of their companies. So why the change?
None of these companies can sensibly be valued today at the price tag they give themselves but they are still a better bet than the Crowdcube class of 2011/12/13 and 14. You cant get rich buying an early growth company's shares at values of £50m upwards but you might at least see your money back. That's certainly more than anyone on Crowdcube can say today.
For the founders this is simply easy money for very little equity. All of the companies above have great products; all totally unproven as money generators. We believe that VCs, who are already involved in these companies, are pushing their companies towards equity crowdfunding to raise easy money before ramping up the company for expansion. Why would they give up what is a free offer of say £1m plus free PR and a cohort of 1000 plus supporters, for a much smaller percentage of the company than another VC would demand were they to approach this market. In 2011/12 and 13 it was pretty well unheard of for pitches to be involved with already signed up VCs. Now the VCs seem to be running the larger ones. Its akin to the canny pub chains creating 'local' 'organic' 'independent' brands to fool the public. The Crowd will find playing with these professionals a painful experience.
For Crowdcube itself, the need for some good PR is paramount - that's good PR not the rubbish they make up. These high profile companies are more likely to succeed than the restaurant chain or craft brewer but are they more or less likely to make money for investors. We cant see either achieving this objective but we are happy to be wrong.
Wednesday, 27 May 2015
Lets face it, Crowdcube needs a success.
Sugru - the British designed silicon glue that is forging a niche market in the US - has just launched a £1m raise on Crowdcube.
In 2013/14 the company very nearly came unstuck with a loss of over £1m, falling GPM and spiralling costs. However with new management input, cost cutting and new outlets in the States, they just might be on track for a bright future.
In our opinion there are a few things in the way. Copycat technology cannot be far away, cables and wires for which this has a major use, are things of the past and the name stinks. It's Irish for play - but so what.
The final hurdle is the perennial valuation. At £25m now, the company is going to have to get a lot right to make investors any money, given that they will certainly need new VC money on at least one more occasion.
Investors have piled in but then they did that on many occasions on Crowdcube, only to see the glue holding it all together melt away and their money head west. This product is trying to be the next Sellotape but surely we have moved on. Technology now moves at a pace unthinkable when the first sticky tape took off.
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.
Monday, 25 May 2015
Hop Stuff funded via Crowdcube in summer of 2013. A new craft brewer in London. Original idea.
The Crowdcube projections showed the usual flying start - year one profits of £96k and cash positive year end of £95k.
Accounts filed recently for year one show a loss of £37k and an empty cash account with £2k of stock. Assets in the projections are 3 times the actual assets and the company had £45k of outstanding trade creditors. As far as we can tell the business is still going and you never know it might one day make the owner a living. ROI for the crowd - come on, please.
When will people learn - Crowdcube produce fictitious, highly inflated projections in order to sell you the firms' equity so they can pick up their commission. Look at the large number of examples here.
Friday, 22 May 2015
Farmdrop raised an impressive £750k on Crowdcube at the end of 2014.
Their stated plans in their pitch video https://vimeo.com/100553532 are to have 400 collection units across the UK by 2017. They were supposed to have over 30 by now but seem to have hit some problems.
Currently the company only operates in parts of London - with a meagre 16 collection points. In the video it shows off its Worhting hub but this has now closed - only a year after opening. We dont know why.
This would seem to be yet another case of eyes being way too large for appetites. Investors literally piled in to back this company on Crowdcube, so it would be interesting to hear why the plans used to sell the equity seem to have been thrown out with the refuse.
Tuesday, 19 May 2015
Crowdcube must be going through a rough patch. Some of the pitches on their platform currently are just too ridiculous.
Take Sir Hans Sloane Chocolate. They want you to believe that their company is worth over £2m - today ...... right now. Trading since 2010, the company has never made a profit and all its directors bar one recent appointment have left. The pitch goes on to claim to be stocked in over 500 supermarkets in the UK. So why is not making any money? The Crowd are clearly better informed than the directors as they have voted with their feet and this pitch will fail. Mind you 50 idiots have pitched in to the turn of £13k so there are still plenty of mugs out there.
Another great example is FightMe - valued today at just a tad over £4m. The pitch uses the cricketer's slip catching technique of firing big names at you. Only problem is when you check them out they are highly dubious. Empty PO boxes in the US really are not enough to con the UK public and only 13 mugs have signed up to this one for a draw dropping total of £480.
Even the massive stardom of Kelly Hoppen seems to be wearing thin on Crowdcube. Her business is at least up and running and making waves. However styles change and we have the feeling hers might just be on the wane - her pitch is struggling to raise the £1.1m she is looking for...............valuing her business at just over £10m. Maybe that's the problem.
Its the valuations stupid. Ever increasingly optimistic valuations based on purely fictional future sales will hopefully see the end of this appalling waste of taxpayers money. You would think that Crowdcube would know this but then it is run by two advertising bods who really havent a clue about establishing a proper business.
Tuesday, 12 May 2015
Bank to the Future - an equity crowdfunding site featured here - has just filed 2014 accounts, showing a loss of £110k on very small activity and revealing that claims that the company had raised hundreds of thousands for itself through ECF are just not true.
Simon Dixon who runs this shambles has a long history of making things up. Bank to the Future is no longer active in the UK, he moved the operation off shore when he couldnt find an FCA badge to stick on his site. Its last venture run from Hong Kong with Spanish company First Vision, has gone nowhere and the site now shows a new pitch with the looney Max Keiser and some Bitcoin scam. If you invest in this project you get a free 'signed' copy of Dixon's rather old book - you can guess the title. Now that's a real ROI.
This guy was at one stage a founding member of UKCFA - the industry body. They asked him to move on. His Linkedin site is well worth a read.
Monday, 11 May 2015
We reported earlier that Green and Pleasant Beer - a brand owned by 28 Broadwick Street, had closed. The company had raised finance on Crowdcube.
This beer is now being sold online by a rogue trader - or at least a company that does not deem it necessary to to follow UK law for online selling - https://www.gov.uk/online-and-distance-selling-for-businesses/overview.
We have emailed them on two occasions via their site http://www.green-and-pleasant.com/contact/ but have had no response.
We'd suggest you steer well clear - its rubbish anyway!
PS - following on from this being reporetd to TS, the site is as of 12/05, no longer selling its beers online anymore. Wouldnt it have been easier to just put the required details on the site??
PPS - had an email from the new G&P London Ltd. They bought the brand off 28 Broadwick Street Ltd in September 2014 and intend to run with it. They had no idea what happened to the Crowdcube shareholders in Fleur Emery's company - our guess is they have been ditched. If anyone has any information, we'd be interested to hear.
Sunday, 3 May 2015
We reported a few weeks ago that the company who owned the brand Green and Pleasant had filed for closure. The company is now dissolved. 28 Broadwick Street Ltd raised money on Crowdcube for its start up cuckoo brewing operation, labelled Green and Pleasant. Cuckoo might easily have referred to the business as well as the brewing plan.
The original website www.greenandpleasant.co.uk has ceased to function. However a new site has just launched, using the same branding at www.greenandpleasant.com. This site has no details about who owns it It has developed two new G&P products.
Anyone with any news on this please comment. It may well be all above board but investors put their money into 28 Broadwick Street Ltd not G&P as a legal entity. We would be interested to know who now owns the GP brand and website.
Shortly after raising funding on Crowdcube the company filed to be struck off but this was countered by a DISS40 notice a week later. More recently the company changed its accounting reference date and then again filed to be struck off - this time successfully. It never filed accounts post investment.
Oriental Rugs of Bath is a noble enterprise but they predicted turnover of £1.5m for 2013/14 and achieved £105,000. That is a gap of over 1000% which is a new record for Crowdcube. Accounts for 2014/15 have just been filed and show a turnover of £121k with a small profit, their first, of £11k. One can assume that this turnover would have been predicted at more than the previous year's £1.5m. So that is two years in a row where the actual figures have missed the projections by more than a 1000%.
3 year projections ended in 2014 but profits for 2013/14 were projected to be £147k against actual losses of £5k.
We have still to see more than one company out of the 100+ that have funded through Crowdcube, achieve the predicted turnover and/or profits used to value and sell the equity to the Crowd. The Crowd are certainly being very very patient.
Friday, 1 May 2015
For businesses funded via Crowdcube this gap is quite small - still its a substantial gap between what they predicted and what actually happened. When will investors wake up and smell the BS.