Another sticky mess - Superjam in fruitless search for profit

Superjam  - no not some confused 70's tribute band - leaves investors cold with results many miles off target.

Superjam is the brainchild of one very famous young man, Fraser Doherty OBE or 'Jam Boy' . Unfortunately for Crowdcube investors, Fraser's charity work has not translated into a money making business. Well not yet anyway. 

Superjam raised £318k at the start of 2015 for his existing Jam business. He makes Jam. You get the idea. 

He doesnt sell that much Jam though - hence the small profit of £3,000 compared with the Crowdcube projected figure of almost £700,000. We thought he might have paid out massive dividends, but his corporate tax account suggests he just didnt make much. YE September 2017 has a profit tag of £1.3m. His claim that it's stocked in Waitrose seems to have passed its sellby date - the link on the company website doesnt work. The Waitrose site helpfully tells you that this product is unavailable. It's been like this for a while - at least 6 months. The link to the Ocado site doesn't work either and a search there for SJ, brings up Bonne Maman - which is not such a bright idea!

A little giveaway is the TM printed next to every Superjam logo. Surely he knows this is totally meaningless?

He is also heavily involved with Beer52, an Angels Den miscreant and failed Crowdcube pitcher. This is another online business building stability on sand with heavy use of the now infamous discount code to collect 'customers'. We wrote about them here. You can still get a 75% discount 3 years later. Losses are mounting.

All in all, exactly what you would expect. 

The worst jounalism on the planet - Borrow My Doggy refunds via Angels Den

Various equity crowdfunding publications have recently carried a story about the funding of Borrow My Doggy. 

The same 'journalists' ran another story about the same company last year. Where are they coming from? Are they accurate? 

Here are the various stories - 

 https://www.crowdfundinsider.com/2016/10/91017-borrowmydoggy-closes-angels-den-funding-round-surpassed-1m-funding-goal/

Example  - ''On Friday (7th Oct), dog lovers service BorrowMyDoggy officially closed its equity crowdfunding campaign on Angels Den. The company successfully secured its minimum £1 million funding goal as it continues to develop its UK and Ireland dog services.'' The pitch is still open. 

Example - ''BorrowMyDoggy launched a Crowdcube campaign last year to raise £575,000, but then shut down the initiative after the company secured a £1.5 million investment from IW Capital through Crowdfinders, a crowdfunding event that brings investors and companies together for face-to-face pitches.'' The £1.5m has still not been invested.

http://www.cityam.com/226952/borrowmydoggy-rent-a-dog-startup-fetches-15m-via-crowdfunding-event-crowdfinders

http://startups.co.uk/borrowmydoggy-lands-1-5m-crowdcube-funding/

http://www.crowdfundinsider.com/2015/10/76127-borrowmydoggy-shuts-down-crowdcube-campaign-fetches-over-1-5m-through-crowdfunding-event-crowdfinders/

The list goes on - just google it.

So the story told is that BMD pulled out of a successful Crowdcube raise because they had received £1.5m in funding from an event run by Crowdfinders. The investor was IW Capital, apparently. IW Capital is run by the same guys who run Crowdfinders. They are essentially marketeers. They have a loose group of associated ECF companies under the umbrella marketing name Race for Scale. What this actually does in the real world is not entirely clear. Claims that it invested in various companies are not backed up by filings at CH, so we assume they punt investments rather than take them for their own account.  

The story goes on to say that Borrow My Doggy have just completed a £1m raise on Angels Den. In fact this a £1.6m raise (according to the platform) and is still active. The money raised so far, £1m, includes £879k from IW Capital (listed on Angels Den as a HNW individual) and the rest is made up by 4 investors - what you might call a very small crowd . For a company claiming to have 300,000 members you might expect a few of them to be investing? IW Capital have told us that Angels Den have their PR all wrong but have not explained exactly what this means.

So a year later some of the money reported as raised does appear to be there - subject to this Angels Den transaction actually completing. Remember the last time someone claimed they had raised £1.5m  - they hadnt.

Back in April this year the IW Capital press machine was whirring  - this is from http://www.techcityinsider.net/four-startups-join-100m-race-to-scale/ - ''IW Capital has committed £1.65m in funds raised for Borrow my Doggy. I love that company, it’s awesome,” said Davis, who is also the chief executive of IW Capital. So that's the same £1.65m that BMD is currently crowdfunding on Angels Den - or is it? April to October is 6 months but no investment even though its was 'committed'  - but was it? Who the hell knows. It's like wadding through a never ending mangrove swamp. 

Essentially both stories are complete rubbish. They have populated the internet as the truth, been picked up and regurgitated by lazy journalists. They are now facts. 

We dont know why they pulled out of their Crowdcube pitch, which was going well. Maybe someone out there does? The Crowdcube projections have been revamped for Angels Den with a much healthier looking EBITDA.

Confused? Well we are pretty sure that's the idea. 

And so it goes on. 

Equity Crowdfunding Tarts

A recent trend in ECF is tarting. Either before you have finished with one platform, you go and pitch on another or if you have already used one platform, then you use a different one next time. This helps to prevent any critique of your previous pitch should you have failed to get anywhere near to your projections.

Of course the new pitch doesnt mention the old pitch. It's a fairly typical example of the phoney claims made by the platforms that ECF is transparent and for the people.

Here are two examples we just happened to stumble across.

Earlybird is trying (desperately) to raise more money on Crowdcube. It's not going very well, despite increased equity offers and numerous extensions. However dont worry because the same company is on Angles Den - with its chairman as ''lead investor'' and open for investment now of £300k for 16%. They are offering 20% for the same amount on Crowdcube right now. Both campaigns are running together with different % - eh? We havent looked but you can probably find them in Aldi for £300k for 25%. What is a lead investor you might well ask when it comes to using your chairman.

Silkfred raised money on Crowdcube a while back and has failed to deliver on its projections since. It has just completed a £850k raise on Angels Den and is now overfunding. Looks like CC may have missed out on this one. Clearly Fred felt he didnt want to answer questions about dilution and projections.

Is it really acceptable that companies run simultaneous or end on end campaigns on different sites - without giving any indication that this is what they are doing? We dont think so but then we are maybe over critical of some of the ECF practices which claim to be totally transparent.

BEER52 - Yet another epic failure for Equity Crowdfunding. Here's why.

Beer52 is a online craft beer subscription site run out of Scotland. It has taken the internet and the upsurge in craft beers to create a new demand.

In January 2014, Beer52 raised £100,000 on Angels Den. This ECF platform purports to be different to others - but we will go into that later.

The pitch has all the usual misinformation you might expect from an ECF platform. It states that year one will deliver a NP after tax of £316,000. This allows for the usual ridiculous company valuation. Year1 filed accounts now show a loss of £86,000. So a difference of ~ 450% on their projections.

Looking in more detail at the pitch plan, there are some obvious reasons why they have missed by such a large margin. As with a few other ECF pitched businesses, strangely run by the same people, Beer52 launched with a Groupon heavy discount deal. This was a Christmas deal and as you might expect was jumped on by bargain hunters.

In the plan it all appears rather differently. The plan states that they had 6,500 subscribers in their first 3 days and sold 30,000 bottles in the first month. No mention here of the Groupon deal. Its uses these figures to extrapolate its Yr1 projections - the ones it has just missed. Groupon is not a sensible way to up your retention rate. We all know that.

This technique was also used by Flavourly.com, who funded on Angels Den and then Crowdcube, after their results missed projections. The Flavourly.com founder is an 'advisor' to Beer52. So I suppose we can expect to see Beer52 on another ECF platform anytime soon.

What Beer52 dont tell you is that for them to be able to offer these beers at a good price, they have to deal mainly in bin ends - lines that the brewers cant shift. Subscribers will not hang around for long to put up with this sort of con.

So how do Angels Den fare in all of this? Well the platform has had a number of successes - successful funding that is. It claims to have a 90% rate of funded businesses still active. Well ahead of the sector norm, it proudly declares. When you look into this claim, it proves to be totally spurious. The platform has only been funding businesses for just over a year - so its is hardly surprising that few have gone bust. It took Crowdcube almost 2 years to see its first collapse. It is just another example of the ECF platforms' desperate attempts to sell themselves.

As a footnote Angels Den seem to have a large number of pitches that have either raised money on other ECF platforms or worse have failed to raise money on other ECF platforms. It appears you can do the circuit now, selling your wares to the first idiot willing to buy.