Carwow investment
Discussion
They are not the first YTer to try this.
The last one I saw was "clearvaluetax" in the US (us based financial channel) who have 2m subs.
If you dug into the detail the returns were pretty much nil.
The biggest return was 0.04% if you invested $1500.
And if you read the fine print you got 0.04% of 20% of the profits. Your initial holding is subject to a 10% admin charge too. So you are never going to make a return if he exercised the right to buy back the share, which the contracts say he can at any time at the initial value.
That said he hit over $700k of "funding" and his goal was $180k.
Its basically a near 0% loan with zero security and no PG.
The last one I saw was "clearvaluetax" in the US (us based financial channel) who have 2m subs.
If you dug into the detail the returns were pretty much nil.
The biggest return was 0.04% if you invested $1500.
And if you read the fine print you got 0.04% of 20% of the profits. Your initial holding is subject to a 10% admin charge too. So you are never going to make a return if he exercised the right to buy back the share, which the contracts say he can at any time at the initial value.
That said he hit over $700k of "funding" and his goal was $180k.
Its basically a near 0% loan with zero security and no PG.
Crowdfunding is a great way to raise money if you can’t (or for some reason don’t want to) raise money from experienced/professional investors (the sort of people who would do proper diligence and understand how to value/price an investment).
£2.8m is not big money to raise, so don’t be overly impressed by it. There are many VCs and private early stage/growth investors who would write such a cheque if the investment case made sense.
£2.8m is not big money to raise, so don’t be overly impressed by it. There are many VCs and private early stage/growth investors who would write such a cheque if the investment case made sense.
Yep the fact they're not raising money via conventional channels rings alarm bells for me. I don't know a huge amount about the business, but presumably their revenue comes from commission on selling cars through dealers. It's a low-margin, hugely competitive game, they've been going 10+ years and aren't making money. I guess they need more volume to turn a profit.
to gamble some spare cash for some kind of early-stage investment opportunity I'd be looking at EIS schemes where the downside is at least tempered by some generous tax relief.
Cawwow disclaimer said:
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
This is the long and short of it. Huge risk, no/unclear upside. If I was looking matrignano said:
I'm surprised they needed to raise 2m from crowdfunding when they have already raised 150m+ from proper VC investors?
It's mostly spent. Losses to date exceed 100M. A very rich valuation and no path to profit, imo. I struggle to see how they will 3, 4,5X their revenue given their saturation, currentlyLast year alone they lost £26M-and with a valuation > £300M.
Being 'very' familiar with their HQ in Victoria I've always thought it would be great to work for them. Except the average age is in the 20's and I need to bring a dog into work every so often. Looks like they have a right ball mainly wfh but dressed down and chilled at work with regular pizza and beer evenings!
I would have thought the agency sales model could make them obsolete.
They were effectively a go between, between desperate dealers willing to discount and savvy customers willing to buy from far afield if the numbers were right.
Agency sales completely shuts this down as it’s the manufacturer that sets the price nationally and you then chose a local dealer for delivery. So no need for an intermediary to do the haggling.
Some manufacturers have already switched, Merc & Volvo, some have dates in place to switch and the rest are watching with a view to follow.
At that point the original business model is shot, which I take it is why they have tried to diversify to the used car side and start their equivalent of we buy any car/motorway side of the business.
They were effectively a go between, between desperate dealers willing to discount and savvy customers willing to buy from far afield if the numbers were right.
Agency sales completely shuts this down as it’s the manufacturer that sets the price nationally and you then chose a local dealer for delivery. So no need for an intermediary to do the haggling.
Some manufacturers have already switched, Merc & Volvo, some have dates in place to switch and the rest are watching with a view to follow.
At that point the original business model is shot, which I take it is why they have tried to diversify to the used car side and start their equivalent of we buy any car/motorway side of the business.
Edited by Stupot123 on Tuesday 21st November 18:43
I’m not sure the uk does far sighted investing. I remember how everyone poo-pop’s Facebook when they did an ipo as nobody could see them ever making money etc.
Uber and many others are years away from profitability but still they’re swimming in other peoples cash!
One good thing about crowdfunding is that it can get your brand out there in front of an audience that may not have heard of them before.
A cool local company have just launched one:
https://www.seedrs.com/cherans-bakery
Apart from the aforementioned they don’t usually give any financials, all just wishy washy crap!
Uber and many others are years away from profitability but still they’re swimming in other peoples cash!
One good thing about crowdfunding is that it can get your brand out there in front of an audience that may not have heard of them before.
A cool local company have just launched one:
https://www.seedrs.com/cherans-bakery
Apart from the aforementioned they don’t usually give any financials, all just wishy washy crap!
AnotherUsername said:
One good thing about crowdfunding is that it can get your brand out there in front of an audience that may not have heard of them before.
I think this is the strategy with a lot of the more significant / proper businesses which raise via crowdfunding, generally they have VC funding and in some cases strategic funding in place, a decent road map and probably some early stage but significant revenue that has decent legs - Crowdfunding like Seedrs and CrowdCube allows for a pretty significant retail investor base to be built up quickly, acting as a fan club / supporters club in the 12 - 24 months before an IPO. Stupot123 said:
I would have thought the agency sales model could make them obsolete.
They were effectively a go between, between desperate dealers willing to discount and savvy customers willing to buy from far afield if the numbers were right.
Agency sales completely shuts this down as it’s the manufacturer that sets the price nationally and you then chose a local dealer for delivery. So no need for an intermediary to do the haggling.
Some manufacturers have already switched, Merc & Volvo, some have dates in place to switch and the rest are watching with a view to follow.
At that point the original business model is shot, which I take it is why they have tried to diversify to the used car side and start their equivalent of we buy any car/motorway side of the business.
Daimler (Mercedes) are a very significant investor and Volvo invested recently taking a minority stake. They were effectively a go between, between desperate dealers willing to discount and savvy customers willing to buy from far afield if the numbers were right.
Agency sales completely shuts this down as it’s the manufacturer that sets the price nationally and you then chose a local dealer for delivery. So no need for an intermediary to do the haggling.
Some manufacturers have already switched, Merc & Volvo, some have dates in place to switch and the rest are watching with a view to follow.
At that point the original business model is shot, which I take it is why they have tried to diversify to the used car side and start their equivalent of we buy any car/motorway side of the business.
Edited by Stupot123 on Tuesday 21st November 18:43
I’d suspect that with the agency model carwow or similar become very useful in pushing discounts without needing to reduce the published retail price. One of the problems with the agency model is how manufacturers can move excess stock on with it being obvious that they are trying to move stock on.
poppopbangbang said:
AnotherUsername said:
One good thing about crowdfunding is that it can get your brand out there in front of an audience that may not have heard of them before.
I think this is the strategy with a lot of the more significant / proper businesses which raise via crowdfunding, generally they have VC funding and in some cases strategic funding in place, a decent road map and probably some early stage but significant revenue that has decent legs - Crowdfunding like Seedrs and CrowdCube allows for a pretty significant retail investor base to be built up quickly, acting as a fan club / supporters club in the 12 - 24 months before an IPO. Being cynical, the strategy is likely to be much more simple. Many early stage firms looking to raise money at the moment are staring down the barrel of, or hit by, “down rounds” (rounds where the valuation is lower than the previous round). VC’s will typically need to revalue periodically, especially when there is a new round. A tiny crowdfunded round may, by virtue of lack of sophistication of the investors it targets and limited disclosure, actually see the implied valuation increase. Nice outcome if a VC’s LP’s don’t have their eye on the ball…
Either that or they are desperate for working capital and the other wells have run dry. It is much harder for VC’s to raise money from LP’s at present. The combination of tech, consumer, and heavily loss making would be unappealing to most.
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