Tuesday, 18 April 2017

On line journalism is wholly unreliable



Spot the difference in these images, apart from the perspective. That's right, they are in fact the same places.


These images appeared in Business Insider and the Manchester Evening News a year ago in articles on a Crowdcube funded company - U Brew.

The Manchester article had the caption - 'The UBrew Taproom in Manchester' and the Business Insider piece had the caption 'UBrew's Bermondsey Taproom'.  Both articles were about the company opening a new UBrew in Manchester, off the back of the reported phenomenal success in London. This was a year ago and according to the Business Insider, the company had already pre-sold 75% of its Manchester memberships and was massively oversubscribed in London.

We dont know if these pictures are taken in London or Manchester but we think it's London. It certainly isnt both unless they have a cut and paste business model. According to the company's website, they only have a taproom and operation in London. New hubs in Berlin and Manchester are 'pending' and have been for over a year now. This seems a little odd given that a year ago they had 'sold' 75% of Manchester's membership; according to the articles. 

What can you believe? Well clearly nothing in either of these two virtual fish and chip wrappers. The intern who wrote the piece for BI, then wrote another piece on Ubrew in February this year. Seemingly Ubrew was a massive hit with 459 courses sold in 2016; up from just over 300. Courses costs on average £100 - you do the math and see if this a scalable proposition! BI just trotted out more and more of their plans to go global whilst ignoring all the nonsense it wrote back in April 16. The two pieces are here and here. The Manchester EN piece is here.

There are other oddities. In the BI article, it is stated that the company had just raised another £140k from some business angels but there is no allotment of new shares form SH01 at CH for this. The Confirmation Statement for 2016 confirms the issue of extra shares and the presence of some new shareholders. But where is the allotment document? Failure to file this document is an offence. Ubrew contacted us on Twitter to say they had 'raised' 3 rounds of funding - two via subscriptions and one equity. The one equity must be the Crowdcube campaign. Never in the history of business funding have we heard of business angels 'funding' a company by buying their product in advance. That is simple rewards based crowdfunding. So again the BI article is incorrect. We asked Ubrew to confirm this but had no response.

As you would expect the interns at Crowdcube have been posting all this rubbish as real news. How investors are supposed to be able to make a value judgement based on this type of false news is beyond us. 

10 comments:

  1. Having been to the excellent UBrew a number of times, I can confirm the pictures are the London one. Whenever I have been, it has been packed with drinkers, so the courses are clearly not the only revenue. I have never done one for a start.

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  2. To be fair you wouldnt need an army to fill this space! Even if the courses are a tenth of the revenue, it doesnt make sense. I liked the idea when it funded on CC. But when you run the figures, you need massive spaces to make it work. I said that at the time they were on CC. How can they have presold 75% of the Manchester space and delivered no Manchester hub in over 12 months?? Smacks of vapourware or PR.

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  3. It's not huge, no, but startups rarely are. It also has as much space again outside... I'm not involved, so I have no idea about Manchester, but any pub that can stay open in this climate is doing well, whether they do brewing courses on the side or not. I almost invested, but I wondered if it was a victory of passion over substance, and left it in the end. I'm sure it'll make money, but may never exit. That's the skill of crowdfunding though, for those who are after a return. I would imagine most who invested in this either just wanted to see it succeed, or wanted perks. The first share I ever owned was Eurotunnel. I'm glad I helped to fund a successful project, but I never expected a return. I did get a ride before it opened though ;-)

    PS - Any chance of turning down the settings on your anti-bot thingy? It's almost too tedious to bother these days...do you have a huge problem with bots?

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    1. Yes I think thats spot on - many CC funded co's are ok for making a living for the founders but will never return a penny for investors - this looks like one of those. But it begs the Q why is is this being heavily subsidised by the Govnt when it isnt delivering for UK plc? Or alternatively this could just be a case or very journalism - which is rife.

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  4. Creating jobs is more important than returning to shareholders. If you look at the number of jobs created by Crowdcube, the Govt have probably recouped most of the EIS. Better to have the other 70% raised by people with money to spare than have people on benefits.

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    1. That my friend is complete CC PR and if I might say a little naive. Look at the number of failed businesses and the costs to HMRC of these failures (HMRC always end up being the largest unpaid creditor) and the loss of jobs and all the knock on effects this has for trade creditors and their staff etc etc. The failures seen to date of 43 are just the tip of the iceberg because of the time lag. Many from 2015/16 waiting in the wings doing v little just waiting to collapse due to lack of cash..... oh and of course the lack of any credible plan to make the business work. Our research on 400 CC funded businesses is conclusive. Sorry to burst your bubble but the research is plain - this doesnt work using the CC model. When we say it isnt delivering for UK plc, we mean jobs and GDP not ROI.

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  5. There may be some truth in that, but job losses are rarely heavy because the ones that go bust rarely hire huge teams anyway. Another factor here is that a lot of CC investors are actually quite small, and would probably not bother doing a tax return, so they would never get EIS anyway. Be interesting to see those stats but probably not an easy one to get hold of

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    1. Too many maybe's here for me. Evidence is that if you try CC wihtout S/EIS then you fail. Lots of CC companies have tried expanding ie from one unit to 4 and then retrenched back to one as plans are so poor. This means large losses in terms of SMEs. EG Hen Restaurants, Pizza Rossa, London Distillery Co, Ethos Global etc etc. CC reckon their ave investment pp is increasing and is now quite substantial but then thats CC for you. They need to be doing £160m in investments at their ave 5% comm pa just to break even on burn rate £8m pa. They are not even getting close to this. Days are numbered.

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  6. S/EIS definitely makes average companies more investable, but good businesses will get funded regardless. Some of the most popular crowdfunding campaigns ever such as JustPark, Monzo and Revolut didn't offer any tax relief.

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    1. All good examples but they all funded well after their start up phase and all had major backers behind them - so not really your average CC candidate. One of them is certainly struggling now.

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