There is no Hope

When it comes to fibs, Crowdcube's Hope pitch wins prizes.

Hope are looking to raise £500k and the pitch has just run out of normal time - well short of the line.  

But dont despair, Hope founders declare on the platform, they have some exciting news. Because the campaign has seen such great momentum, they are extending it for another 14 days. 

The only issue we have this statement, issued by Hope in the updates section of their pitch, is that it simply is not true. As the pitch very clearly states, the company is not really raising £500k on Crowdcube - £350k of this total was already in the bag before the pitch went live and was raised off platform. 

So in their allotted period, the company have only managed to raise just over £100k. Which quite frankly for a business backed by the ex CEO of M&S is pathetic. Recent activity has been next to nil.

What we can be certain of is that the extended campaign has nothing to do with momentum and everything to do with desperation. And why are we still finding Crowdcube hoodwinking their investors? It's such an amateur way to treat them.  You should really complain a little louder guys.

More Horlicks?

Nicola Horlick's Glentham Capital has come in for more than its far share of bad press. Recent reports state that the £250k she had promised the invest via Seedrs has now been paid in - meaning Seedrs do not have to follow through on their threat of legal action. Whoever thought they would? Companies House shows no new investment.

Glentham is now based in the US. There they have been trying to raise $125m since December 2016 via a platform called Castle Placement. The IP includes claims that Glentham has an exceptional team with a proven track record of building similar asset based platforms. Gone are the days when Glentham was focused on the film sector - it now intends to makes $1m-$10m loans to US lower middle market businesses.

One of the well established team is clearly Holick but what isnt made clear is that another member of the team is also a Horlick - well its Nicola's husband Martin Baker. Nothing like keeping it in the family. People might wish to critically review the term success when it comes to track records.

We will let you know if the paperwork for the £250k ever appears.

Alquity UK join the Crowdcube pile up

Alquity raised over £500k on Crowdcube at the end of 2015. Promised profits on growing turnover have turned into massive losses on disappearing revenues. Luckily, they do have a solid, high cost base to fall back on. 

Havent we heard all of this before?

Alquity are supposed to invest in Africa and other emerging markets. The director's report tells us that these markets have been very challenging. This may have come as a surprise to Alquity but we are not sure it would to anyone else.

Despite achieving a decline in revenues from the previous year of over 25%, and increased losses to almost £1m, the company is optimistic about the future. Two of the 5 directors have left.

Crowdcube's projections showed profits for this past year of £300k. As has become the norm, this figure was pure fantasy. Of course putting losses of £1m in to the projections, may have dampened enthusiasm for this investment. The company was valued at around £13m. Who knows?

Projected profits of £1.4m for YE June 2017 are looking unlikely. The Crowdcube claim that they will become a £1bn fund by 2019 is looking optimistic. We wish investors in this one all the best. 

Crowdcube's Vulpine crashes out

Vulpine raised over £1m on Crowdcube at the end of 2015. They have now decided to call it a day. A recent attempt to raise more cash on Crowdcube flopped and you have to ask why they didnt take a reality check and lower their ludicrous valuation. Too late now.

It's what happens when you get on the Crowdcube merry go round; high valuations lead to higher ones, as the platform doesnt do down rounds. The public are not that stupid. 

We have written about these guys before - http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=+vulpine on here. Nothing wrong with the product but zero business sense. We called this in 2015.

Left to their own devices and growing slowly they may well have made a good living for the founders. Get scaling up wrong and there is trouble. They got it horribly wrong. 

So in little more than 12 months, they have blown £1m and their business, apart.

In their £1m raise, they had only asked for £500k - so they have managed to deliver nothing with twice the money. The usual Crowdcube projections showed £500k profits on £4m plus turnover for this year. 

In other news Crowdcube claim to have had a record first quarter for 2017 - you may have tripped up over the countless press releases out there. I suppose that interpretation depends on what date you use - the completed campaign dates or the when the money gets to the businesses' accounts. Either way what they should be doing is leaving aside their incessant self grooming and telling us why they think a company like Vulpine has been such a disaster. Then we might get somewhere.

Crowdfunder borrows from Crowdcube

Crowdfunder, a UK based version of Kickstarter, largely for creatives, has raised almost £2m on Crowdcube in two tranches. Now Crowdcube are loaning them money.

In what is a bizarre development, Crowdcube have signed a loan agreement with Crowdfunder - amount unknown. Darren Westlake, one of the founders of Crowdcube is a director of Crowdfunder.

This loan was not in the financials when they raised £1.3m just over 12 months ago. So it wasnt planned. Accounts are due out in June. Accumulated losses filed so far amount to £610k. 

Crowdcube, despite what their PR says, are not generating net cash. At their average commission rate of 5%, they need to be raising around £160m each year just to pay their current costs of £8m pa. They are currently nowhere near to this with a disastrous April. If they break £100m we would be surprised. 

So what's the deal?

We have no idea. Crowdfunders' world is so separate to Crowdcube's we can see no synergy. Crowdfunders platform is currently plagued with SNP MPs trying to raise election funds. Hardly what Crowdcube investors are likely to be keen on and not exactly creative. Crowdfunders was due to have ample cash at this stage according to the Crowdcube projections and that was on raising only £1m 14 months ago. Seemingly, that projection was wrong. 

Any clues let us know.

The search for the truth goes on and we didnt find it here.

Seedrs facilitated Hokkei in raising around £250k in 2015.
Seedrs facilitated Hokkei in raising around £319k in 2015. 

Take your pick. 

If you havent read the post on Hokkei below - this one wont make any sense. It may not make any sense anyway. 

Having written the post below we were contacted by the Seedrs PR department. Every equity crowdfunding platform seems to need a PR department.

They asked us to correct an error in the post, which said that the platform had not raised £319k but had, despite its claims, only raised £250k. We posed the Q, where did the extra money come from? Seedrs explained -

'' Consistent with Seedrs longstanding policy, we allow investors to hold shares directly rather than through the nominee if the company consents. In these cases the nominee managed amount will not represent the full amount invested in the business through the platform.''

We asked them a very simple question. Did you get paid commission on the difference between £319k and £250k. We got a very simple one word answer  - NO. No explanation, just NO.

As it turns out, one investor put in the difference but not via the platform. According to Seedrs PR, this individual used the site to assess the investment opportunity and then invested off platform with Seedrs agreement. We have no reason to think this isnt true. But the statement above is clear - 'invested in the business through the platform'. This did not happen. That is a fact. So the amount invested through the platform was as a we stated - around £250k.

This matters because the equity crowdfunding platforms, or the two retail facing ones, use these figures on completed raises to boost their image. If it could be shown that these figures included sums raised off the platform - as was the case with Crowdcube and £800k of the £1m raise for Waterbabies the Musical - then the FCA might want to take a look. Only a peek mind.

So just how long is a piece of string. Well the answer seems to be just as long as you would like it to be. If anyone else wants to know how long it is, we can tell them but you will just have to take our word for  - it's our piece of string and we make up the rules. 

All in all not very helpful and not what we were expecting. Our chat with Seedrs PR ended with them accusing me of being overly combative. Moi? Must be some misunderstanding. It's what happens when the truth becomes a little blurred.

Hokkei liquidation shows fundamental flaws in system

 

Hokkei funded via Seedrs in the late Summer of 2015. By December 2015, the company had ceased trading and was in the hands of the administrators.

We wrote about them here. The final liquidation is now in place. However the amount raised by Seedrs  - claimed on their website as £319,580 appears in the Liquidators report as only £258,128. That's one hell of a commission Seedrs are taking out or they have been exaggerating their success numbers.

As usual the report can find nothing odd with a small one unit takeaway operation (already operating) burning up over £250k in cash in less than 6 months and ending up with overall debts of over £400k; a large chunk of this owed to trade creditors

Surely someone is taking the pea? 

In a final nose thumbing gesture, the ex director of Hokkei told the press at the start 2016 that he might well get the business back up and running again. That is precisely why the Insolvency Service takes away people's rights to be a company director. If we are going to make it easier for people to raise money then we do need to tighten up on the ability of the authorities to come down on those who abuse the system.

He is now back in  business - only cooking hoepfully!

It would also be good to know what happened to the missing £60k of investment from Seedrs?

Just had this from a SH - a note sent round to Hokkei investors from Seedrs. Clearly shows that their figure of £319k is fictional. Who can you trust??