Thursday, 2 March 2017

The Crowdcube Gluten Free Double Meltdown


Lick and GF Foods both collapse to mark a sad February 2017 for the UK's leading Equity Crowdfunding Site

A piece in The Grocer http://www.thegrocer.co.uk/finance/fundraising/crowdcube-darlings-lick-and-feel-free-go-under/549343.article has the story as the details are not yet available at CH.

As usual Crowdcube have trotted out their 440 funded businesses and 93% of them still ok rollocks. What they dont mention in this distortion, is that of the 440, around 75% were funded in the last 24 months. Despite Crowdcube's ability to promote duds, it would take something special to get these to collapse in this time frame. Whats a far more significant real fact that our research (due out this month) will reveal, is that over 98% of the companies that have filed accounts since using Crowdcube, have missed their projections by miles. Crowdcube dont mention this, of course. 


GF Foods had already gone bust in its original form - owing £400k. Why people chose to trust them to get it right this time is anyone's guess. They promised the world in their projections. They even showed profits in their historic accounts when the real accounts showed a loss. When GF were pitching for the second time, a forum Q dated October 2015, asked them if they were on target for the year, as they were already over half way through it. This was their response -

''At present we are matching sales to forecast - we have higher rates of sales from Sept - Dec in forecast due to seasonal listings and at present current orders for these products are matching the forecasts by customers.
We have new product listings with two major retails scheduled for February, so unless these range reviews are postponed by the retailers, which is highly unlikely we believe we will be on target to meet the forecast .''

They only achieved a t/o for the year of £600k according to The Grocer, against a projected £1.4m.  When they made this comment they must have known that the £14.m target was pure fantasy. Oh well the CC DD dept must have been off skiing. How is it that the FCA just turn a blind eye to such obvious abuse? 

Lick was just a non event. They had blocked us from their twitter feed because we asked them why their listings didnt match the real stockists. Now we know. Just young guys who decided to use other people's money to experiment with a fun idea. Crowdcube do lots of this type of facilitation. It's great for UK PLC - makes us look very professional.

Surely the time has come for something sensible to be done? People will, given the freedom of choice, continue to be conned by Crowdcube's dizzying promotions. But the facts all point to the failure of the platform to scrutinise what they publish, the failure of all but 2 of their pitches to produce any return - and even these two were very small. Its a total sham. Equity Crowdfunding can work but not when its being run by a couple of Ford dealers using a model where the crucial driver is is the top speed. It is the equivalent of buying a second hand car, where the seller tells you it has a new engine. 50 miles later the engine blows up. Well, says the vendor, that engine was new - it was new to this car!   


3 comments:

  1. Wow GF manage to pull the wool over peoples' eyes twice? Would have been useful if CC were helpful about issues like this.

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  2. Have you seen https://monzo.com/invest/ ?

    Looks like CC gimmick of pledging again. No idea what Monzo promised last time but they have no revenues so presumably no margins. Would be really interested in your thoughts on this as it does seem like a solid business model and good traction but hugely overvalued.

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