Thursday, 6 April 2017

Shaken fiasco gives shareholders a hard screw up against the wall.

The Seedrs platform helped raise over £200k for this subscription start up in 2016, having already helped them raise over £120k in 2014. Within 6 months they had announced they were closing down.

How is that possible? 

It's very hard to understand how this could happen unless there was some element of shady dealing going down. The Seedrs video paints a very positive picture; traction over Christmas 2015 appeared strong according to figures supplied by the company - £40k in revenue. 

However the key figure is the retention rate. In the January following on the growth in December, 70 of the 300 active subscriptions became inactive. You cant survive a business on those figures. Yet during this time, the company was actively promoting its pitch on Seedrs. And the promotion was very strong - lots of positive noise about take up and traction and many leading industry experts stating that this was the next big thing.

More is revealed in a despairing email at the end of April 16 from the directors. Here it shows monthly costs were around £30k on a monthly income of under £10k. There's your problem boys - right there! What percentage of this £30k is their salaries isnt clear but our guess on this tiny income, is a very healthy slug.   

We have seen some poor businesses pitch on ECF platforms and go quickly bust - but this one seems a little odd. They had stockists like Fortnum and Mason, Harvey Nichols and Selfridges. They had some traction and they raised over £300k. That should have been enough to get them going. So you have to ask why did it only take 6 months after the last raise for them to close down?

Of course one explanation regarding the stockists, is the age old tale of first time listings. Whilst they look impressive, an opening listing means very little if the pull through customer demand doesnt result in follow up orders. Did Seedrs check this?

The final twist here, is that they are not being allowed to close. The voluntary strike off has been suspended which indicates that someone isnt willing to let this happen. It is often HMRC who prevent this - on the grounds they are owed rather a lot of money. Either that or an irate shareholder wanting to know how all those positive vibes resulted in the company being shaken to death. Either way, this is tale worth noting for would be billionaires investing in ECF.

In what is surely one of the most pathetic apologies ever written for a rapid fail business that has burned over £300k in 18 months, here is the eulogy that the founders gave at this year's Seedrs Oscars Ceremony - hanky at the ready please -

Dear Shareholder,     

Last week we shipped the final Shaken box: this is the end of our startup.    That's the hardest thing we’ve ever had to write .   

Despite trying everything, we couldn't quite make it through a tricky cash­flow period to get to the scale we  needed. This is the end of the road for us and that breaks our hearts.    We wanted to write this to explain why, and to thank you.    

As David said: “We went from “not knowing what we were doing” to becoming “​ a leading voice in the world of  cocktails​ ,” because ​ the best way to become an expert is to do something nobody has ever done before. 

We all  became experts in our field. We all pioneered a new way of doing booze. We all defied convention and did it the  hard way.”    But that was not enough.    Without new investment, we couldn't scale fast enough to make the business successful. The upsetting irony is  that we were starting to see industry ­leading retention numbers, more and more brands sign up exclusively, and many other indicators that we were at the tipping point. No business has an innate right  to succeed, but we gave  it everything.     

We’re sorry we let you down. We tried everything in our power to make this venture a success and, though we  got close, it just wasn't the right time.  Most of you will benefit from SEIS/EIS tax relief, so it's not a complete loss.  Thank you for being the engine driving this journey. In particular, special thanks to Allan Sayers who first believed  in us and James Cronin, Bimal Shah and Duane Jackson who were great inspirations and more.      

To anyone who ever made a Shaken cocktail: every day, it delighted us to see your photos, blogs, emails and  comments. We set out to help you mix the best cocktails you've ever made and we know we succeeded at that.  

We’ll miss seeing your great cocktail creations and hope you'll remember us fondly and go on to spread the word  that making great drinks at home is not difficult. There is a home cocktail revolution coming and you're the  vanguard.    

We poured every ounce of ourselves into Shaken. It will take a little time to accept that we won't be steering this  fine ship anymore, but we will all live to fight another day, stronger and wiser but hopefully just as ready to try  new things, to experiment, to break rules and to have fun.    Are we disappointed? More than there are words. We had a shot at creating something grand and we fell short.    

Would we go for it again? In a heartbeat.    

Thank you.  Until the next round,  Alex, David and Mark 

You can also listen to this guy giving his reasons for the failure on a radio interview here  as part of his self promotional BS. It turns out that Mark Jennings is now selling his wares as an expert in equity crowdfunding - he approached one of the platforms, not Seedrs, to sell his snake oil products but they declined. Rubbish breeds rubbish.


  1. Firstly, how have they possibly burnt through all that cash? Surely this business didn't require any staff beyond the founders. Overheads would have (or should have) been tiny. They must have been making a gross margin on the ingredients of each kit sent.

    Secondly, why did anyone think they would get ROI from this business?

    My guess is that traction was so weak that the founders realised it could never work.

    Shame really, as it looks like a nice product (on Twitter)

    1. Burning through £200k in 6 months is incredibly easy to do.

      £50k on FB marketing a month, gone in a few months. Before salaries, stock, office, packaging, web product and design (and the rest).

      Karhoo burnt thorugh $200m, spending $6m a month before going bust. Homejoy $80m.

      Little startups in the UK raising £200k must seem so quaint to american VCs.

    2. Hard to take this comment seriously. This wasnt a VC backed company with millions to blow. And investors are simply asking what did happen to their money - to which they are getting no reply. Kahoo for example raised $200m not £200k and had 60 staff not 5. Seems a little pointless making this comparison.

    3. Maybe I was unclear. The comment above asked "how have they possibly burnt through all that cash?".

      It is very easy to burn through £200k in 6 months. If they had 5 staff as you imply, it would be easy to burn through that in 2 months with not even particularly heavy spend on FB or Adwords.

      It's not pointless it's just a fact that £200k doesn't go very far if you aren't careful or make the wrong choices (or can't raise any more money).

    4. But my point is that your comparison was very foolish - chalk and cheese. Hell they only asked for £200k so one assumes they felt that was adequate? So that brings us back to did they ever intend to do anything other than spend the £200k on what (?) and then close. Who knows but Im being told by investors they would like to. And if you have ever run a very small business (which my guess is you have not) you will know that burning through £200k takes some planning in 6 months. When we refer to staff, we are not talking about City traders on £100k weekly bonuses. As he hever produced the accounts and says he wont, we will never know. IMO the guy is clearly a total conman. You are free to disagree.

  2. "ever had a pisco sour?" only when I've drunk too much lime juice.

    jokes aside, again great site please keep this up. Looking forward to reading the report you've mentioned.

  3. This is one great example of a totally pathetic apology. I really feel for the investors who were taken in by this pitch and I am sooo glad not to be one of them. After watching the pitch and reading the info during the raise, my first impression was quite positive; upon reflection (approximately 30 seconds after digesting all the detail) ... I thought it sounded a tad pretentious and not for me. What a catastrophic miserable fail on behalf of the management of this company, totally shameful.