Equity Crowd Funding
Discussion
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?
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 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...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'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?
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
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 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 can give you a clue though: ??
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 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?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).
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 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. 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.
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
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?
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