Equity Crowd Funding

Equity Crowd Funding

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egomeister

Original Poster:

6,700 posts

263 months

Monday 24th April 2017
quotequote all
I've had a look round some of the main UK platforms and found that many of the opportunities seem to be based on pie in the sky ideas, or pie in the sky valuations (or both at the same time...)

I'm struggling to see much value here, even when the tax breaks are taken into account. Has anyone on here had much experience of equity crowd funding, and how has it worked out for you?


dazmanultra

431 posts

92 months

Monday 24th April 2017
quotequote all
I've invested in a handful of businesses in the last few months on Crowdcube and Syndicate Room. I am about to sign up to Envestors to have a look at that as well. Over such a short time period, it's impossible to say what the returns are.

As you say, a large number are very much pie in the sky ideas; or they are reasonable ideas but at a ridiculous valuation. This morning I read on Crowdcube the pitch for 'Charbrew' - they are raising £230K at a pre-money valuation of £1.7m. Their t/o for 2016 was just £200K!

egomeister

Original Poster:

6,700 posts

263 months

Monday 24th April 2017
quotequote all
dazmanultra said:
I've invested in a handful of businesses in the last few months on Crowdcube and Syndicate Room. I am about to sign up to Envestors to have a look at that as well. Over such a short time period, it's impossible to say what the returns are.

As you say, a large number are very much pie in the sky ideas; or they are reasonable ideas but at a ridiculous valuation. This morning I read on Crowdcube the pitch for 'Charbrew' - they are raising £230K at a pre-money valuation of £1.7m. Their t/o for 2016 was just £200K!
I just googled them, and found that they've already raised a six figure sum in late 2014 so not much progress since then...

I've not seen Envestors, so I'll take a look at that one too. Which businesses caught you eye enough to get an investment if you don't mind me asking?

dazmanultra

431 posts

92 months

Monday 24th April 2017
quotequote all
GripIt was the largest investment I've made. Despite a high valuation and therefore limited upside, it is a real business with real revenues and a really good gross margin.

egomeister

Original Poster:

6,700 posts

263 months

Monday 24th April 2017
quotequote all
I can see the sense in GripIt - where the sales will come from, and possible routes for getting out via takeover in the future.

Similarly, the closest I have come to investing was Flexyfoot where I could see a market for the product, and that they had actually got somewhere themselves before seeking funding, but I though the valuation was too high, and I couldn't really see it ever generating enough sales to pay back. https://www.seedrs.com/flexyfoot

DonkeyApple

55,245 posts

169 months

Monday 24th April 2017
quotequote all
It's worth doing a search in this forum as these businesses have been covered quite a few times.

I can give you a clue though: 💩

egomeister

Original Poster:

6,700 posts

263 months

Monday 24th April 2017
quotequote all
DonkeyApple said:
It's worth doing a search in this forum as these businesses have been covered quite a few times.

I can give you a clue though: ??
I did PH search.... lol. Perhaps haymarket could crowd fund something more useful.

I think your analysis of the sector may be correct... they opportunities seems to be vastly overvalued high risk propositions. From what I've seen, the best chance of return is from something simple and totally unsexy like GripIt mentioned above. I suspect I'd be better off fishing around AIM small caps to get my high risk kicks - at least there is a secondary market for the investment there....

JulianPH

9,917 posts

114 months

Monday 24th April 2017
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Have you tried;

www.pleasetakemymoneyaway.com

www.itsoundedgood.co.uk

www.ivelosteverything.com

www.iwantmymoneyback.com

Nearly every crowd funding site has nothing but wannabes trying to raise cash to keep their dreams alive. You can probably find a better investment in a business within your own village/town/city.

You will usually be investing in companies that cannot cover their own costs, have no strength whatsoever, are not stable and have no real exit route. Even when you find one that ticks all these boxes it is more likely to fail than to succeed.

If you have £10k (for example) to invest then invest it in the financial markets or gear it up (if you can) to buy property for rental (commercial is my recomendation).

Otherwise, put it into local businesses - that way, even if it doesn't work, you will get free haircuts/chops/take-aways/etc.

If you want to invest in ideas, you need to be driving them and controlling them. Giving other people money to try out their dreams with little/no risk to themselves is madness.

Just my thoughts (and I have invested in companies before crowd-funding existed).

DonkeyApple

55,245 posts

169 months

Monday 24th April 2017
quotequote all
Absolutely agree with that sentiment.

To sum up CF:

It's a fancy wrap of a very old wheeze.
No FSCS cover.
Fantasy valuations.
No control.
No credible secondary market.
Mostly businesses that cannot raise funds by any credible means. I.e. All market professionals have told them to go away.

Even OFEX wasn't that crap or dodgy and it was infamous as being the most crap and dodgy network that ever existed. biggrin

JulianPH

9,917 posts

114 months

Monday 24th April 2017
quotequote all
What DonkeyApple said.

You will be financially rapped if you go for this. Only invest in companies that stand a chance.

Julian

egomeister

Original Poster:

6,700 posts

263 months

Monday 24th April 2017
quotequote all
JulianPH said:
Have you tried;

www.pleasetakemymoneyaway.com

www.itsoundedgood.co.uk

www.ivelosteverything.com

www.iwantmymoneyback.com

Nearly every crowd funding site has nothing but wannabes trying to raise cash to keep their dreams alive. You can probably find a better investment in a business within your own village/town/city.

You will usually be investing in companies that cannot cover their own costs, have no strength whatsoever, are not stable and have no real exit route. Even when you find one that ticks all these boxes it is more likely to fail than to succeed.

If you have £10k (for example) to invest then invest it in the financial markets or gear it up (if you can) to buy property for rental (commercial is my recomendation).

Otherwise, put it into local businesses - that way, even if it doesn't work, you will get free haircuts/chops/take-aways/etc.

If you want to invest in ideas, you need to be driving them and controlling them. Giving other people money to try out their dreams with little/no risk to themselves is madness.

Just my thoughts (and I have invested in companies before crowd-funding existed).
I'm getting the feeling you and Donkeyapple aren't fans?

The post above is good though, I'd happy invest in the right idea (and myself) but I've not come up with something that fits the bill yet, and most importantly that I would have sufficient commitment to.

DonkeyApple

55,245 posts

169 months

Monday 24th April 2017
quotequote all
egomeister said:
I'm getting the feeling you and Donkeyapple aren't fans?

The post above is good though, I'd happy invest in the right idea (and myself) but I've not come up with something that fits the bill yet, and most importantly that I would have sufficient commitment to.
The problem is that even it's it is the 'right idea' you are still investing hard earned money into an enterprise which has been rejected by all conventional fund raising routes, is operated through a wrapper that is run by very incapable individuals in their field, you have absolutely no control or input over and is massively over valued in the first instance and structured to screw you over even if it succeeds.

It is the equivalent of going to a dog race, looking over all the good dogs about to compete and then deciding to bet on the one that is lying dead in the back of the van.

In reality, if their idea is so brilliant then the smart money will find their competitor that has proven management and capable of raising funds conventionally and invest in that. This stuff really is capital of last resort and flooded with shysters who have no intention of paying you back or making you part of their success and the people running the wrappers just aren't too people and are all too often in cahoots.

There is an extremely good reason why we regulated firms will never permit them to come in under the FSCS umbrella. We know what they are, who they are and categorically refuse for our contributions to be used to bail out what is a looming catastrophe.

I've had several of these firms approach me in the past to tap my client base for money to complete a fundraising they've not been able to complete and these people are not market leaders and not are their clients. Absolutely everything is priced wrong for the want to be investor. You are just a pig to be harvested.

Edited by DonkeyApple on Monday 24th April 20:20

drainbrain

5,637 posts

111 months

Monday 24th April 2017
quotequote all

http://www.dailyrecord.co.uk/news/scottish-news/sc...

If you always listen to old farts you'll end up an old fart.

DonkeyApple

55,245 posts

169 months

Monday 24th April 2017
quotequote all
drainbrain said:
http://www.dailyrecord.co.uk/news/scottish-news/sc...

If you always listen to old farts you'll end up an old fart.
Because securing a Govt grant that got you the chance to take your product to a leading trade show in the US is exactly like crowd funding.

What that article clearly shows is that smart people with a good idea and work ethic will use conventional means to be a success. And not need to resort to spanking mugs via fancy apps run by dubious businessmen.

egomeister

Original Poster:

6,700 posts

263 months

Monday 24th April 2017
quotequote all
DonkeyApple said:
egomeister said:
I'm getting the feeling you and Donkeyapple aren't fans?

The post above is good though, I'd happy invest in the right idea (and myself) but I've not come up with something that fits the bill yet, and most importantly that I would have sufficient commitment to.
The problem is that even it's it is the 'right idea' you are still investing hard earned money into an enterprise which has been rejected by all conventional fund raising routes, is operated through a wrapper that is run by very incapable individuals in their field, you have absolutely no control or input over and is massively over valued in the first instance and structured to screw you over even if it succeeds.

It is the equivalent of going to a dog race, looking over all the good dogs about to compete and then deciding to bet on the one that is lying dead in the back of the van.

In reality, if their idea is so brilliant then the smart money will find their competitor that has proven management and capable of raising funds conventionally and invest in that. This stuff really is capital of last resort and flooded with shysters who have no intention of paying you back or making you part of their success and the people running the wrappers just aren't too people and are all too often in cahoots.

There is an extremely good reason why we regulated firms will never permit them to come in under the FSCS umbrella. We know what they are, who they are and categorically refuse for our contributions to be used to bail out what is a looming catastrophe.

I've had several of these firms approach me in the past to tap my client base for money to complete a fundraising they've not been able to complete and these people are not market leaders and not are their clients. Absolutely everything is priced wrong for the want to be investor. You are just a pig to be harvested.

Edited by DonkeyApple on Monday 24th April 20:20
I didn't mean the right idea in the context of crowdfunding, but the right idea in terms of a business of my own that I could invest in and control/drive forward. I'm happy to consider that there might be a gem out there in crowdfunding though, but appreciate it might be the one in a million - no harm in keeping you eyes open...

You mention the lack of FSCS protection - what could be eligible for cover on this? In the case of Seedrs, I assume you are talking about protection of the shares held within their nominee account, rather than directly held shares?

drainbrain

5,637 posts

111 months

Monday 24th April 2017
quotequote all

sidicks

25,218 posts

221 months

Monday 24th April 2017
quotequote all
drainbrain said:
And the relevance to the thread is...??!!

drainbrain

5,637 posts

111 months

DonkeyApple

55,245 posts

169 months

Tuesday 25th April 2017
quotequote all
egomeister said:
I didn't mean the right idea in the context of crowdfunding, but the right idea in terms of a business of my own that I could invest in and control/drive forward. I'm happy to consider that there might be a gem out there in crowdfunding though, but appreciate it might be the one in a million - no harm in keeping you eyes open...

You mention the lack of FSCS protection - what could be eligible for cover on this? In the case of Seedrs, I assume you are talking about protection of the shares held within their nominee account, rather than directly held shares?
Sorry, I misunderstood. Yes, I think most people with ambition are in a similar boat.

Re the FSCS, no aspect of Seedrs or any of their competitors are covered. It isn't related to how you hold your investment you just don't have any of the protection that you'd have from other regulated investments.

Jambo85

3,319 posts

88 months

Thursday 27th April 2017
quotequote all
Haven't seen Brewdog mentioned... I invested four years ago (minimum amount, never realistically expecting a return) and I am in the process of getting back my initial investment, my remaining equity now a free carry, allegedly being worth about 5 times my initial investement.

However - unless they keep creating opportunities for share holders to liquidate shares (or get a proper stock market listing, which is in the plan, allegedly) maybe I'll get nothing further back.

They have been more successful than your average crowd funded venture and realising the gain is still a hassle!