Tuesday, 28 March 2017

How many times can Sugru promise the earth and deliver a teaspoon? Endlessly it seems.

Sugru are back - not once but twice. Having raised over £3m on Crowdcube in 2015, they then raised over £1m on Envestors in 2016 and are now looking for loads more on Crowdcube. They just love spending investors money.

The really good news for investors is that the valuation on the current pitch is around £34m, up from £27m back in 2015 and also up by £30m from last year. All of this on the back of vastly reduced revenues and vastly increased losses. But wait; growth is just around the corner to be sure. Is someone taking the Michael.

If you care how they are really doing or are wondering where they come on our scale of missed projections; they are winners. Projected revenues for 2016 were over £8m. The actual delivered revenue was just over £4m. Whats more worrying is that the overheads to deliver just £4m where the same as to deliver £8m and the inventory has actually increased on halved revenues. Long term debt has ballooned. Similarly, the crucial GPM was a sorry 48% against the projected figure of 60% and its progress rapidly north in 2017 to 64% is now projected to be a mere 55%. Of course given their record so far, it would be amazing if they get even close to these reduced figures.

In a helpful explanation of the current valuation, the management come up the usual. However if we sure to believe this valuation, then we have to believe the projections. History dictates that this is not sensible. Reasons given in the forum (there is no mention of this in the pitch) for the 2016 £4m revenue shortfall in no way cover this shortfall.....QED the £8m 2016 projection was nonsense and if you extrapolate this, the current projections are nonsense. So the valuation is nonsense.....so you are paying too much for your shares even if this company does make it. 

The glue maybe good but by heck the management stinks.

In the in-between round on Envestors, in 2016 and not mentioned in the current pitch, they projected revenues for that year, that they now appear to have failed to meet. It is a constant story of making up some figures which they never get near to. 

Sure they might get bought by other larger sniffers, but where is the upside on £34m when they always fail to deliver those crucial sales. With an advertised 2m plus users, it doesnt say much for repeat business when they are only buying less than one product each pa! The claim that it's used in over 170 countries is also an odd one - how could they know that? 

The Crowdcube pitch says they are poised for growth - an awkward position they have been holding for 2 years. Profitability is due next year......of course it is. If you are into a little self flagellation, this one might be for you.  

1 comment:

  1. Great talking to you on Saturday Rob.
    as mentioned, love the blog and glad i didnt invest with em.
    just to echo your thoughts, the product is amazing (ive used em, tempted to buy another pack). their numbers just don't stick for me.