Pronto, the latest failure in the growing list of failures with companies funding via equity crowdfunding, is telling us something. But are we listening?
If you run a quick search on Pronto, you get a large number of hits from last year and this year talking about their success. Their awards, their funding , their plans. Its all very upbeat, very positive, very believable.
Less than 3 months after this success, these awards and these plans, had achieved over £800k in funding via the Seedrs platform, the founder of Pronto wrote to shareholders. He said that despite superhuman efforts by his team, the plans, the awards and the funding had achieved nothing and they were giving up, closing down, going home.
ECF encourages fatuous businesses to create ridiculous plans and promote themselves with shallow PR, which is then picked up by online media and mushroomed. Simply because they know that they can and it will raise cash - if not on this platform then one of the myriad of others out there. EIS and SEIS mean that investors who dont mind losing a little of their income if they can get some of it back via the tax relief, blindly put in their money.
Can we not see that this is not a sustainable way to build our country's SMEs?