Tuesday, 11 April 2017

Crowdcube's Brewdog back slapping uses alternative facts



Crowdcube are rapidly overtaking KellyAnne when it comes to BS

Lets start by stating that Brewdog is a massive success and that all the first three EFP round investors will see great returns - even if they cant realise them all now. Worth noting the company was a massive success before they went to Crowdcube. 

Then lets read the PRing put about by Luke Lang's machine - here 

Firstly the whole tone is very misleading, as Crowdcube investors came to the party very late, in 2016 and will only see returns of 1.7X. Not that great unless you look at the other returns CC have offered.

Secondly this PR is clever in that it glosses over the facts - that Crowdcube investors who are affected by this £1bn valuation are a very small number in terms of the figures CC quote here. Only £800k of the total came via equity  - the rest, £12.3m of the quoted £13.13m, came via bonds which have a fixed rate of return no matter what the valuation. These, representing the vast majority of CC investors, are totally unaffected by this £1bn story.

Finally, as someone very kindly pointed out in the sick as a dog post, TSG are getting Pref C shares which gives them a guaranteed 18% return and all the other share classes will pay for this. The comment is worth a read if you want to see how clever Brewdog have been and how minimal the upside really is for CC investors. 

So rather than blowing their own massive trumpet, isnt it time Crowdcube ate a good helping of humble pie and agreed that yet again CC investors have been ridden over with no regard to their rights whatsoever. 

7 comments:

  1. Buddy, I have to agree with you - this CC PR is pretty dreadful.

    The Pref C's could very well be worth the additional 77% if there are all these protections in place.


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  2. Great article as always - 18% compounding Prefs just shows how meaningless the implied Unicorn valuation is.

    In a few years, unless the values of BrewDog keeps growing at the same 18% rate (unlikely from an over-valuation at this issue), then the ownership of TSG at sale/IPO/liquidation just keeps growing.

    This is a desperate deal, akin to borrowing at 18% APR, the rate for a very poor company, yet without any ability to re-finance.

    This is a loan, so the investors don't really care about the share price it's done at other than the publicity value - exactly why these are always done to drag companies to spurious Unicorn status.

    GAR

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  3. Maybe CC don't really understand how the TSG deal works, they really think it is a unicorn? I mean they don't understand business plans...

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  4. i bought 2 shares on CC in oct 2015 at £47.50 per share and now i am being offered 13.18 per share .. less transaction fee of £12.50 , so basically i invest £95 and get £13.86 back ...

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    1. Are you sure - please contact us at info@ecfsolutions.co.uk. this doesnt sound like a return of any sort!

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    2. Ah..... Brewdog have had several splits and or rights issues so your holding will probably be higher than 2. My understanding is that you as a CC investor will get back 1.7X on your investment so for £95 you will get back a total of £161.50 or thereabouts.

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  5. i invested on CC in oct 2015 and bought 2 shares for £45 each, i am now being offered as part of PE deal £13.18 per share less transaction fee of £12.50 , so if i sell both shares i get 13.86 for an £95 investment .. is that right when the valuation is 1 billion ..

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