Lucy's Dressings defies the Righteous message

Lucy's Dressings is back on Crowdcube - a year after its first raise. According to everything we know from the Righteous salad dressing company, this should be a no no.

Old timers on Crowdcube will remember Righteous - a company set up by the same people who now run Cauli Rice. The founders of Righteous sent an email to investors a year or so ago, explaining that they had been delisted by most of their glittering band of supermarkets. Why? Well the founders explained, salad dressings are not really selling and no one now expects them to in any great quantity. Good to know, if a little late for the investors who had believed the hype behind Righteous' previous CC pitches. Their PR was excellent.

Now Lucy has some salad dressings with glittering stockists. Hang on, havent we been here before? 

How many times can people make the same mistakes? Countless it appears. Good luck. 

A Righteous Offer

This is a bowl of Cauliflower rice - it takes about 3 minutes to prepare fresh. As an alternative to rice rice, its been around for quite sometime. It's very good for you.

You could of course choose the instant, packaged option which is prepared by Cauli Rice, using a patented system, which is now sold in 2800 UK supermarkets. That you would have to agree, after a few teething problems, is a success story. Personally Id choose the fresh version every time but then I enjoy cooking and never eat pre-prepared food. Ignoring the price difference, to me there seems to be an inherent contradiction between a pre-prepared packaged food and something so simple to make fresh.  

Cauli have run out of cash  - again. And they will shortly be back on Crowdcube asking for more - despite the last raise bringing in over £1m against their target of £500k. To date they have raised almost £2m on CC in three tranches - none of them predicting the need for a another raise and all of them using projections which have proved to be pure fantasy. Still as they are keen to stress, who knows what will happen with a new product and a start up. To be fair to them, listings in 2800 stores is a great achievement. 

Interestingly, we went to an angels investors evening recently and listened to an astute, experienced engineer pitch his patent protected widget. He had  had statements of intent from large multinationals and when asked after the pitch why his year 1 and 2 sales figures were so low, he stated that in his experience, promises and intentions have to be aggressively watered down to deliver a realistic sales forecast. Better to under promise and over deliver, he said. It was very refreshing and the way we believe projections should be prepared. Of course it's not a sentiment shared by anyone on Crowdcube.

The same couple who run Cauli, Gem and Jamie Harris, run Righteous, a salad dressing range that we recently wrote about. Righteous has now been delisted by the UK supermarkets - 4 years after its first listing. Righteous promised a lot but delivered little in the end and who knows what the future holds. You have to take a view as to whether Cauli, which was started when Righteous was still a fledgling, will fare any better. 

Gem was quoted in Management Today in February 2015 '''The great thing with Righteous is that it's been four years running so now it's running quite a lot on its own.'' Maybe it needed a little more attention? Still for now she is concentrating on Cauli.

Back to the heading of this post - The Righteous Offer. For once we can say that this is a genuine and wholehearted attempt to put things right for their investors. Gem and Jamie are offering to give Righteous SHs stock in Cauli Rice from their own holding, to replace the Righteous shares they hold. We dont know at what value this offer is being given but assume its at the new CC campaign value. Which does call into question the whole valuation of Cauli......but that's for another day. 

For now we raise hats to this bold and generous attempt to repay shareholders' trust.  

Beware the DeListing - Righteous succumb to an inevitable end

The curse of DeListing strikes again. Isnt it time we all learnt the very obvious lesson?

Righteous have often been held up by Crowdcube, where they raised all of their finance, as a shining example of a great funding success.

Now in a letter to shareholders, Gem has offered to buy back their shares after the company's salad dressings have been delisted by many of their main clients. It now appears, according to the email, that salad dressings are not the guaranteed success story that was sold by Crowdcube to its investors - or at least not in this country. It's not clear what has changed - maybe the whole thing was made up from the start?

Righteous is a classic example of how not to do things. There is no doubt that they work very hard, but their business judgements have now been proven to be very poor. A deal recently struck in the US has been a disaster, their own words, and the company appears to be being prepared for mothballing. They cant say what they can pay shareholders for their shares - but acknowledge that they are strapped for cash  - so not much. 

Investors might feel slightly misled. In one of the early raises they carried out on Crowdcube, they had a contract with a US distributor as a mainstay of the offer. Not long after promising the earth, it turned out the first shipment had not sold well so the contract was cancelled.

Then Gem discovered cauliflower - creating Cauli Rice as a separate company and using Crowdcube to raise money for it. Despite some serious problems with a failure of the their product using winter cauliflowers, this business appears to be going quite well. But then, we all thought that about Righteous - right? Did investors in Righteous really sign up to a deal where the two founders walk of into the sunset through a field of cauliflowers - somehow we doubt it. It will be interesting to see what they offer to pay back  - maybe a share deal with Cauli would be a better option?

So the obvious lesson, in case you are a little slow, is that you cannot believe what they tell you and if the listings are mainly with the big boys, they cannot be relied upon. Do you think anyone would have invested in Righteous had they known what Gem has just told them - 

Because salad dressings is a shrinking category, supermarket buyers are giving it less space and cutting down the brands in the range - and sadly Righteous has been part of that cull  

- that it turns out salad dressings are not an important market in the UK after all?  

Cauli Rice and Righteous increase losses

More disappointing results for Cauli Rice and Righteous mean one of Crowdcube's better companies is still a long way from giving investors any ROI.

You cant fault the work ethic behind the founders of Cauli Rice and Righteous. But you might question their business sense.

We have lost count of the number of equity crowdfunding raises these guys have made but it's a few now and each time their projections promise much and deliver less. To be fair, each hiccup has a genuine reason - it's just that these reasons are often foreseeable. Any business acumen would have factored them into the original plans. But then would have dropped the expectations and ensuing 'value' of the shares. Investors in ECF should expect predictions to change but they should also be allowed expect a level of confidence in management that is missing here. 

Examples include a major US buyer taking a sample order and then not reordering. As the projections included sizable orders from this source, this impacted the real revenues. Then there was the problem with winter cauliflowers - they didnt like the Cauli Rice process and this is one reason why these latest accounts are so poor. Instead of a projected £400k profit for 2015, we are looking at a £800k loss. Money seems very tight so we'd expect them back again soon for more.

Righteous has never made money, despite its projections and plans. 2015 shows more losses of around £40k, against a profit projected by the Crowdcube raise of £350k. Righteous is now one the older companies funded via Crowdcube, still alive and kicking. So lets hope they can turn out a profit soon.

Things for Cauli Rice look more promising if there are no more slip ups. Although we feel that the process of making the rice from cauliflower is so simple that people should really be doing it themselves with fresh cauliflower. This product seems to be swimming against the flow.