Monday, 29 February 2016

Crowdcube crashes due to Mondo - what next?


It is hard to believe.

The much heralded challenger Bank Mondo's £1m Crowdcube raise has been a bit like watching Madonna on a bad night.

Despite lots of figures being banded about on the numbers of the Crowd who had registered to take part and had been sent emails etc, the platform crashed immediately the pitch went live. Two hours later Mondo posted a tweet apologising for the confusion and stating the pitch had been suspended - not a reference to Madonna's attire.

These are two tech based businesses that seem to find it hard to handle the tech.

Of course we will get the usual Crowdcube Langisms about how the unprecedented demand could not have been foretold and how is was not their fault, anyway but, yeah but cos it wosnt. So there. He can hardly blame Mondo.

Why did Mondo choose Crowdcube? That has to be down to their funders, it certainly cannot be because of their record.
 

Saturday, 27 February 2016

E Sign back on Crowdcube for third time - Lucky?


It is quite hard to know what to make of E Sign.

They appeared on Crowdcube in 2014 valued at £750k. They were successful in raising their money.

However things didnt go to plan so they came back again in 2015, this time with a valuation of £3m - thanks to advice from Crowdcube. This pitch bombed.

Now we greet them back again for the third time, projections all over the place compared with previous versions and now with a valuation of £1.4m.

At least some of this information is provided FOR the FIRST TIME EVER on the Crowdcube pitch. That has to be progress.

Most probably the business has been over valued since its very first pitch and is now suffering from not wanting to be seen by Crowdcube to be offering shares at a diluted value below the 2014 one.

It isnt the first and certainly wont be the last.


Idleman's lazy figures make for a Foresight Saga


Idleman, an on line cloths retailer, has a current pitch on Syndicate Room. We like Syndicate Room as they do try very hard to be open and up front about information.

Idleman raised a heap of cash in March 2015 on Crowdcube. Most of the raise was funded by the VC group Foresight and as usual on Crowdcube this was not made plain but it all came out in the end. Foresight are now backing Idleman again. Strangely this Crowdcube raise has now been removed from their list of successes, or at least we couldn't find it.

The real problem we have with Idleman is the constant use of lazy figures.

In the Crowdcube March 2015 pitch they stated -

 ''TheIdleMan is growing rapidly, with revenues increasing 70% month on month and totalling £235,585 for the last quarter.'' 

The 2015 revenue projection was £2.2m and based on the above stated growth rate this certainly looked achievable, given seasonal variations. The Crowdcube pitch duly successfully completed.

Now that the Idleman is back for more, we have the 2015 actual revenue figures - they took just over £600k in total. So a very long way from the £2.2m projected on Crowdcube. Either the statement above is simply wrong or something must have gone quite badly awry with the business model. You would have to say it is most certainly very misleading.

None of the above gets a mention in the new Syndicate Room pitch. According to the SR pitch sales for December 2015 were £200k, which makes the rest of the year a nightmare if you have access to the figures and the projections. Interestingly when asked about this, the CEO of Idleman said that they had new projections now, which appear on SR and that they had been using these for the last 9 months. Do the maths and this means they changed to the new projections just after they had completed on Crowdcube. QED you cannot believe a single thing you read on Crowdcube.

No one expects companies to be able to predict exactly what will occur 12 or 24 months out, these are simply guide lines. But if these guide lines are so far off track that they lead over the nearest cliff you have to question the ability of the company's management to create a profitable and sustainable entity.

We certainly would.

The need for a central reservoir where all of this information can be held independently of the platforms is an ever pressing issue.

Friday, 26 February 2016

It is getting very noisy out there

The world of Crowdfunding, Equity Crowdfunding and P2P lending is becoming increasingly noisy. It is getting hard to find your way around safely.

Here is a breakdown of the scene as we see it today


Established platforms
Name                                 Model
Crowdcube                          Retail
Seedrs                                  Retail
Syndicate Room                   Investor
Angels Den                          Investor

Newcomers
Name                                   Model
Venturefounders                    Investor
GrowthDeck                         Investor
InvestDen                             Retail
Angel List                             Investor

On the Edge
Name                                    Model
Bnktothefuture                       Off shore
Cadia SE                               Off shore
Square Knot                          Now Growthdeck
Crowdrating                          Advisory
EIS Intelligent TV                  Advisory

P2P Lenders
Name                                    
Trillion Fund                        
Zopa                                      
Funding Circle                             
Lendinvest
Thincats

Crowdfunding

Name                    
Indiegogo                         
Buzzbank
Fundme
Crowdfunder
Unbound
BloomVC
Kickstarter

We are not commenting on the platforms  - if you want to know what we think you will have to pay! We run a new equity crowdfunding consultancy that helps businesses break down this noise and make sense of this funding channel. For more see here ecfsolutions.co.uk 

We see the growth of the off shore (ie unregulated) platforms as the most worrying aspect. Different UK platforms use very different models and achieve very different results for the vast variety of business sectors that approach them. Clearly knowing which is best for what, greatly increases the chances of the ECf campaign being a success. Our advice is totally independent.


Just when we thought we had them all corralled, we have a new entrant. At some stage soon they are going to have to come up with some better names but Angels Cube is just out - a tech based start up ECf platform. The guys are French so maybe that explains the name?

Salty Film in production

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Further to our last post on Simon West's film Salty.

Harry Stourton, who is in charge of the production, has confirmed that West's resignation from Salty Ltd is standard industry practice now the film is in production. See Q&A on the last post for full text.

West is going to be busy with this film, already delayed and the launch this month of his long running saga with Thunder Run, which dates back to 2012. Maybe some news on the website would help?

Still it is good for investors, who can sleep easy in the knowledge that their £2.3m investment is about to see some Lights, Camera, Action.

Thursday, 25 February 2016

Simon West resigns for Salty Ltd - which raised 2.3m on Syndicate Room.

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Back in the Spring of 2015, Simon West, the film director behind blockbusters like Tomb Raider and ConAir, raised £2.3m in equity crowdfunding on the ECf platform, Syndicate Room. This was to make a new film entitled Salty.

The vehicle used to raise this money and to make the film was called Salty Ltd -  a company where West was one of the directors and a shareholder. Their website has gone a little cold - latest news dated in the summer of 2015 - http://www.saltymovie.com/index.html No news on the web about the film that we could find and certainly no film.

Syndicate Room described the set up - The company Salty Film Ltd will coordinate the production of Salty with West at the helm as lead director/producer.

What is interesting is the fact that West resigned from Salty Ltd on the 18th January this year and incorporated a new company a few days later, called Simon West Films Ltd. He is this company's sole shareholder and sole director.

The film has a signed deal with Carnaby for distribution and West had brought his production team from ConAir and Tomb Raider.

We have asked for some clarification on what this means for the film, if anything but have, as yet, had no response. It does seem slightly odd that the central figure in all of this, the famous director, is no longer part of the project that 145 film enthusiasts put £2.3m into, less than a year ago.

This was originally billed as an adventure comedy, we hope it isnt going to turn into a disaster movie.

Crowdcube's Rebus rides the Domino Line


While we wait for the full story behind the collapse of Crowdcube funded Rebus Investment Group, we thought this might interest you.

Back in October 2015 the film finance and tax planning firm Chancery UK, went into liquidation, owing hundreds of millions of pounds. The firm also offered wealthy clients tax advise based on property tax breaks.

The founder, Peter Nichols is a Michelin man and now runs the same operation with a new name. He used to be an HMRC inspector so clearly knows his ways around the dark back allies.

Back to Rebus.

Rebus was handling the claims of 90 of Chancery's clients when it too went into liquidation also owing large amounts. There, you see, off they go once you have pushed the first one. Estimates are that these 90 clients were claiming a total in excess of £65m via Rebus.

In a lovely twist, Martin Taylor, Head of Rebus' Client Relations when Chancery collapsed, told reporters ' Yet again we see another firm fold leaving behind a mass of debts and claims'. A few months later his dominoes were travelling along the same line.

Will May 1 change US Equity Crowdfunding forever?


Watching the Americans wrestle with Equity Crowdfunding is fascinating.

The nation that created Crowdfunding and has the world's two major platforms in Kickstarter and Indiegogo, has  been caught flat footed dancing with its equity sister.

Well maybe not.

As anyone reading this blog will know, the evidence for ECf working in the medium let alone long term under the lite regulation the UK has used, is at best, very thin.

In the States, May 1st will at last see 4 years of wrangling over the JOBS Act introduce a system where ordinary US citizens can invest in non listed US companies.

Up till that date you had be to worth more than $1m to take part and filing restrictions have prohibited all but the largest ECf campaigns from being viable.

This is how the new regulation will look. The 12 month limit is the amount a citizen can invest in ECf.



New arrangements for the companies trying to raise funding using ECf have also been put in place. This is a system of tiered financial disclosure.  The minimum level of financial disclosure required by the company depends on the amount of money being raised or raised by the company in the prior 12 months:
  • $100,000 or less – financial statements and specific line items from income tax returns, both of which are certified by the principal executive officer of the company.
  • $100,000.01 to $500,000 – financial statements reviewed by an independent public accountant and the accountant’s review report.
  • $500,000.01 to $1 million – if first time crowdfunding, then financial statements reviewed by an independent public accountant and the accountant’s review report, otherwise financial statements audited by an independent public accountant and the accountant’s audit report.
People we have spoken to suggest that a company wanting to raise over $100k will have an upfront non recoverable cost of at least $15k to cover these regulatory requirements. And then there is no guarantee that the company will raise any money. Experience in the UK shows that the average amount being raised using ECf has been on the up since 2011 and now it is unusual to find many pitches below the $100k or equivalent level. 

It does seem unlikely that this combination of regulations will help ECf take off in the US. But just maybe that is the idea. America has the unhelpful reputation of being the home of most of the world's largest financial scams and the authorities are not about to open up the market to another. 

The big question is who is right? Only time will tell. 

Tuesday, 23 February 2016

Carbonlights Solutions miss their targets,,,,,, again


Carbonlights Solutions returned to Crowdcube in the spring of 2015 and raised another £200k. It had raised £100k in 2013 and was a noted missed target company on this blog on its return.

Well they have managed it again just months after raising their last round. Accounts for YE Sept 2015 have been filed early and declare a loss for the year of £148,770 against the Crowdcube projected profit of £91k.

So a very substantial over estimation by the company.

And so it goes on.

Monday, 22 February 2016

Florette MD leaves Zero Carbon Foods just before accounts due.


Zero Carbon Foods have raised around a £1m on Crowdcube in two or three tranches.

One of the strengths of their pitch was the involvement of Florette's MD Neil Sanderson - its highlighted in the pitch and along with Michael Roux was clearly a factor in getting them over the line.

Figures for their performance since their last Crowdcube visit are not out yet but the departure of Mr Sanderson comes only a week before the accounts to May 2015 are due. Is that significant?

We'll let you know.

This is our last post http://fantasyequitycrowdfunding.blogspot.co.uk/2015/09/at-last-this-charade-is-over.html on the company.

Flavourly - surely time to jump ship!


Here are some more fantastic reviews for Flavourly - a continuing saga from Crowdcube that has to have the worst customer service record since the Titanic. Anyone seen the life jackets by the way?

This is what happens when you build a customer base on Groupon offers with no systems in place and it appears no staff in the office.

Love the incredibly lame responses from the CEO - they have been saying the same thing for over a year but have not managed to address any of the problems. The overall rating would be far lower but Flavourly have challenged many reviews which now just remain with a Trustpilot note saying deleted.

Flavourly reviews

Average
6.9
 from 0 - 10
Review company
187 reviews on Trustpilot

|

Latest review 
Rating distribution
1 star2 stars3 stars4 stars5 stars14.4%8%18.2%51.9%
starscount
1 star27
2 stars14
3 stars15
4 stars34
5 stars97

Group On Total Rip-off

Was given a Group On voucher for Flavourly for Christmas. Validity was until end of March. When I went to redeem in February, the Flavourly website said my voucher had expired.

I suspect this website is a complete scam as the wording used in the redemption process is riddled with errors and incorrect and inconsistent use of terms to describe the voucher code redemption process. Very disappointed to be ripped-off in this manor. Hopefully these guys will be shut down ASAP.





Incompetent admin; incompetent customer service

Got charged despite quoting voucher code. Wrong beer sent. Silent customer service.




Flavourly

Reply from Flavourly


Hey Rodger,

Ryan here, owner of flavourly.com!

I just wanted to say sorry about this, I don’t have any emails from you to support@flavourly.com or twitter or Facebook so we were unaware you had any issue with your account.

The last correspondence we had was back on the 2nd of this month. I have asked my customer service manager to contact you directly. Please look out for an email from Amin and he will sort this out immediately.

Thanks,


Can't cancel!!!!!!!!!

I have tried several times to cancel my subscription online. Originally bought a food box as a Christmas gift for a nephew, I received the next box, it was ok. Decided to cancel as I couldn't really see the worth. Tried several times from January to cancel online, it goes all they way through the process and then does back to your membership page, no confirmation of the cancellation. Turns out my Feb box is being processed, so clicked the box to cancel this, guess what? NO confirmation, no contact number, just email, so now got wait to see how quickly they respond. Not impressed.




Flavourly

Reply from Flavourly


Hey Louise,

Ryan Here, Owner of flavourly.com.

First of all I have to apologise about this, we try to make cancellation as easy as possible and always provide a support line for customers who get stuck.

I don’t see any previous email’s from you in the support line, if possible can you email Amin my customer service manager on support@flavourly.com and he will ensure this account is cancelled for you.

I would have stepped in sooner however I did not know you were having issues cancelling.

Thanks,

Ryan


Waste of time.

Update: Flavourly contacted me and have resolved the situation. Thank you and we look forward to our Feb box.

I started my subscription in early January. I thought the cook box was a great idea. I even considered adding a beer box if I liked the food box.
The Jan box was full of Christmas items, some of them being useless. As I imagined they were just using up stock I decided to continue and wait for my February box.
The money was taken from my account this month and since the 3rd Feb it has shown as processing on my account. Now the 10th and still no box. I waited longer than the 48 hours for the delivery. I have sent them an email with no response. Feeling quite unhappy at the moment.




Flavourly

Reply from Flavourly


Hey Marc,

I have just noticed you have given us a 1 star review for a few problems that we are not aware off. Can I ask where you sent your email as I have checked all inbound channels and can't find it.

If possible can you drop us an email to support@flavourly.com and I will get this mixup sorted out for you.

Sunday, 21 February 2016

Pip and Nut provides much needed cheer for Crowdcube


This may well be the success story from nothing that we have all been waiting for.

Pippa Murray started out like all great entrepreneurs in her kitchen. She has come a long since then.

Back in October 2014 she raised £120k for 20% of the company, which makes a small number of nut based spreads.

This year she has just raised, another £300k in equity and £200k in debt finance. The equity, via a private placing, seems to have been sold valuing the company at around £2.25m - so a very good uplift for Crowdcube investors. Of course this isn't a real value yet - even if Crowdcube pretend otherwise. The fact that the 2014 'value' was in the reasonable range, unlike so many of Crowdcube's pitches, has allowed the business to raise more equity capital and give those investors who risked their money earlier on, some hope a ROI. So you see it can work.

Her progress has been impressive and listings now appear secure with pull through demand.

Will she make the final goal - exit?

How long it will take for this niche product to be snapped up by a large brand remains to be seen but you have to applaud a success story when you see one.

 

Saturday, 20 February 2016

Seedy Saturdays - the show no gardener will want to watch.


All gardeners know that if you leave weeds they will eventually take over the garden and make it into a wilderness. They are like thugs, suffocating the space so that they end up being the only plant around.

As a follow on from our piece on Intelligent TV we have discovered that this site makes some very dubious claims.

Their website states -

.............................................

Each Thursday, Nick Batsford – City stalwart and financial journalist - will talk with four management teams before handing them over to John Eade, President of Argus Research, and you, our audience, for live Q&A via Skype. Then you’re invited to register an expression of interest with us: an amount that you think you might wish to invest, subject to review of the full business plan and financials, on our nominated FCA-regulated Crowdfunding platform.
If you, our audience, collectively indicate that a company could achieve its fundraising objective, it will go live, with our audience receiving a link which provides priority access in the investment round for 48 hours. When an investment round closes successfully, Intelligent Crowd TV is paid part of the total fee charged by the Crowdfunding platform to the company.
.............................................................
It seems highly unlikely that this company has any arrangements with the main ECf platforms, or is able to give investors 48 hours priority, as they claim they will do here. In fact the platform we spoke to and one of the largest, had never heard of the site until we pointed it out. So what they claim - that you the audience can make a pitch go live, is nonsense. Surely platforms that promote nonsense shouldn't be involved anywhere near to a FCA regulated activity?
It really does the image of ECf, already struggling with credibility issues after Crowdcube's abuses and Seedrs excesses, no favours at all to be associated with sites like Intelligent TV. They have found a loophole to get around FCA regulations, but if the platforms united to remove them they would have no choice but to move on. We don't need or want them. We are supposed to be cleaning the act up not making more seedy.
Likewise people who appear on the site should be sanctioned - Julia Groves and Modwenna Rees Mogg are two. Surely they cannot be that naive? If they are then they shouldn't be taken too seriously and deserve the ridicule their appearance will no doubt bring.

It is worth reading the CEO of ITV's response to out last post - it really sums up the problem. Lots a blarney and no substance. Why have a Recent News banner running across the home page with news that is nearly a year old unless it is supposed to mislead? The people running this shambles cannot even get the basic information right - Snugs did not complete its pitch on Crowdcube  - it failed. Why claim that their members are HNWI or SI when it takes about 2 seconds to tick a box and anyone is in. 

What this does reveal is the opening for a new, non gardening site called Seedy Saturdays which broadcasts this type of excess - all backers please form an orderly queue.  

Friday, 19 February 2016

Seedrs accused of fluffing up their figures


As with so many things that are wrong-  it's all about vanity.

At last we have some press that is objectively critical of one of the ECf platforms -

http://www.altfi.com/article/1747_why_can_nobody_agree_on_uk_equity_crowdfunding_volumes

We have been querying these 'completion' figures for ages but at least now we have proof that the platforms are fluffing them up to make themselves look good.

It's not as if they are only mildly altering reality, this operation looks like its a full face, tits and bum job.

We really dont want or need this type of playground one-upmanship - business and finance are not places for mine's bigger than yours games.

So for pete's sake, platforms, grow up.

Desperate Darren's Friday Comic



This made our Friday - http://www.crowdfundinsider.com/2016/02/81909-crowdcubes-darren-westlake-debunks-some-crowdfunding-myths/

No mention anywhere of the losses incurred by investors or the large number of zombie companies Crowdcube have funded that will never give their investors a return. Or of course the collateral damage that isn't their fault.

Love the stuff about the FCA. We all know that back in 2011 when this all kicked off the Lib/Con government were desperate for good news and decided under Vince Cable's shaky hand to give ECf a clear passage. We also all know, or do now after we pointed it, that the stats banded about, about how few businesses have gone bust after funding this way, are all nonsense. The time lag is ignored by those wishing to create the mirage - Westlake included.

The returns issue just wont go away Dareen because you try to confuse people about bond returns and  the lack of equity investment returns -the two are like chalk and cheese. In reality no one was expecting returns this early despite the ridiculous claims made in the Crowdcube pitches about 3 year exits. Claims sanctioned and some might think encouraged by Westlake and his team.

What people might have been expecting is that the funded companies had a good chance of getting somewhere near to their Crowdcube vetted projections. The failure of so many to do so and scale of this failure is something that the press have shied away from. We have been banging on about it for since we started this blog last summer. It is a real and present catastrophe which needs highlighting.

Why?

Well simply because companies that sell equity with 'promises' of performance need to be held partly responsible for these 'promises' or we just end with a large pile of nonsense. How do we know - well quite simply we have the records for a large number of the 300 Crowdcube pitches that have funded. It takes time but eventually filed accounts and web searches reveal whether these companies are on track.

Sadly most are on a totally different line heading in the opposite direction.

The real myth is that Crowdcube give a fig.