A Suit that Fits has launched its own funding exercise, under the shade of Envestors' FCA license, having achieved little that the Crowdcube £800k pitch promised less than a year ago
One thing the Crowdcube pitch did not show was a new funding round. This after the amount in the pitch financials to make this business work was stated at only £500,000 against the achieved £800,000 plus. Now they need another £500k at approximately the same valuation.
The new prospectus shows that the company has strayed off the path they so carefully laid out only months ago and which Crowdcube verified in their OTL dept. Namley losses of £310k against realised losses of £460k.
Of course this fact doesnt quite make onto the new pitch deck.
Envestors are the platform that recently had the Early Bird business pitching.This was then withdrawn once it was pointed out they were touting their wares elsewhere and had failed on numerous occasions to explain why their projections were so far removed from the reality of their performance. They also currently have SUGRU asking for more cash - not it appears with much luck.
One interesting point that Envestors might like to look at with regards to the Suit that Fits offer. The offer gives a variety of rewards based on discounts for suit orders and a 20% bonus share award. Now it is our understanding having recently dealt with a similar offer and HMRC, that if you take up these cash incentives as part your investment, you lose some or all of your EIS relief. All comments welcome.
Of course this fact doesnt quite make onto the new pitch deck.
Envestors are the platform that recently had the Early Bird business pitching.This was then withdrawn once it was pointed out they were touting their wares elsewhere and had failed on numerous occasions to explain why their projections were so far removed from the reality of their performance. They also currently have SUGRU asking for more cash - not it appears with much luck.
One interesting point that Envestors might like to look at with regards to the Suit that Fits offer. The offer gives a variety of rewards based on discounts for suit orders and a 20% bonus share award. Now it is our understanding having recently dealt with a similar offer and HMRC, that if you take up these cash incentives as part your investment, you lose some or all of your EIS relief. All comments welcome.
Whence cometh that last paragraph? Many pitches offer shareholder incentives, and I've never seen a suggestion that it might affect EIS. Indeed, if it does, many of us might be unwittingly defrauding HMRC, at the instigation of crowdfunding platforms.
ReplyDeleteOn a related note, investor offers have also happened through mainstream VCTs. For instance, a year or two ago, Mobeus VCT investors got a supposedly-exclusive offer (OK, really a promotion) from investee company Virgin Wines.
Its an interesting point. We put together a pitch which appeared on Seedrs and received EIS advanced assurance. HMRC made a note that the rewards would effect the relief as they would constitute 'value received'. Im pretty sure every single funded company via ECF is in breach of this!
DeleteI remember that Crowdcube used to warn in the rewards section of their pitches that 'Rewards with monetary value over £1000 can affect the amount of EIS you may be able to claim. Please obtain independent tax advice if there is any concern as Crowdcube does not provide legal or tax advice.'
ReplyDeleteNow it looks to me that new pitches don't offer rewards any longer.
It's in every ECF pitch I've seen on CC and possibly Seedrs (can't remember) but yes if you receive monetary rewards it can affect your EIS eligibility. It's to stop fraud obviously. How it's calculated or tracked I do not know.
ReplyDeleteThe £1000 warning is still on Crowdcube. It would be quite a suit if a 20% discount breached that!
ReplyDeleteHMRC guidance
ReplyDeletelong story short - reward must not exceed £1000, or if it exceeds £1000 it is insignificant in relation to the amount subscribed by the individual for the shares in question.
https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm15050
One wonders why the likes of A Suit That Fits and Sugru didn't re-raise on the same platform (Crowdcube?). You would expect that they would since their last raises were successful. There must be a good reason why they chose not to, assuming CC didn't reject them.
ReplyDeleteLooks like they need more cash again. Bit worrying if you were a previous investor - the current round is at a £5m valuation (versus £10m just 18 months-24 months ago!).
ReplyDeleteThis company went into administration owing people hundreds of thousands (which they allude to in the small print as restructuring) then raise almost £1m on crowdcube by promising to double their business year on year over five year’s. I don’t feel sorry for anyone who would invest in this business that quite clearly has failed at every stage it completely astounds me.
ReplyDelete