Only a few days ago we wrote about Little Brew - we now have confirmation that the company has ceased trading although it has not yet technically closed.
This collapse happened back in March this year and one has to wonder if Crowdcube knew about it? If they did then where was the announcement? There wasnt one - just the usual PRing about how great they are.Was this failure included in their summer £8m funding prospectus? If not surely that is contrary to FCA regulations?
Simply put, this business never stood a chance; like so many that fund on Crowdcube. The founder admits as much by telling shareholders the model didnt work. No doubt it was not for effort or diligence - it was just not well enough funded and could never gain any traction in an overcrowded niche market. He couldnt make a living out of it and so had no choice but to cease operations. What will follow will eventually be a final striking off by CH - the first gazette is already actioned. In the end Little Brew did less than the name suggests.
How many times do we need to see this happen before the FCA takes some action? Its now two Crowdcube closures this month already and we expect many more.
Our thanks go to the shaerholder who provided this information.
rob out of interest, what would you expect the FCA to do to sort out this mess that seems to be a trend lately? Also do you think most of these founders pay themselves highly then close the companies?
ReplyDeleteandy
Something - anything would be better than nothing. We do have plans but not sharing them at the moment. What we have revealed so far is just the tip of the iceburg. And yes and no - no way of telling for sure but it seems a lot of them spend their new found 'investment' rather quickly with nout to show for it!
DeleteSeedrs have limits on founder pay in their shareholder agreements.
ReplyDeleteIf you have money you find ways to spend it. If you don't then you can't. Businesses ruin themselves by raising in the first place. they should be bootstrapping for as long as humanly possible.
ReplyDeleteCrowdfunding is being used and abused because the majority of investors are "unsophisticated" and let's be honest...pretty stupid.
I'm just going to leave this little interesting snippet of information here.
ReplyDeletehttps://www.google.com/trends/explore?date=all&q=crowdcube,seedrs
Why is this interesting?
DeleteIt's very interesting - it shows how Crowdcube searches have declined rapidly since NOV 14 which I'd observe to be their peak by investment quantum. Seedrs however (the better platform in terms of standards) is still rising. Crowdcube take heed is my message as footfall is going else where.
Delete@MichaelG The business owners raising money are often not the experienced CEO's and seasoned entrepreneurs crowdcube portray them to be either. So couple unsophisticated, stupid, inexperienced (on both sides) and put that into crowdcube's hands, a place where it is good (even necessary) to lie................Crowdcube are ruining good businesses too IMO- tho it may be harder to see.
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