[Crowdfunding 🔨] Clim8

What do you think…

a. As an investment…?

b. The opportunity around ethical investing. If such a key consideration for a new generation of potential investors, could/should freetrade make product adjustments to make ethical investing choices easier?

Curious what you all make of it…!

I asked them this question about why I shouldn’t just buy an actively-managed fund such as BlackRock Climate Change Fund. I wasn’t convinced by their answer. Lots of big asset managers are doing climate change and sustainability funds these days. I struggle to see why I would buy a Clim8 fund rather than a fund from BlackRock or Invesco, since how they position themselves is essentially an asset manager.

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Completely agree @piyushsg

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Good point. Thanks.

Their evaluation of market size was an eye opener to me. Wondered if Freetrade might do more to highlight funds and stocks like the Blackrock fund or similar… A sector category in discover perhaps?

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Sure.

If you want to get hold of a list of ESG or climate change related funds, your best bets would be with ETFdb (the site has a theme called ESG and sustainability) and Genuine Impact (the app has some fund themes on ESG and EV etc).

I am more of a fund guy so know less on stocks. Genuine Impact does have a ESG ranking for stocks but I don’t know much about that.

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I thought it looked interesting but got put off when I saw some of the legacy investments and results some of the key people were involved in that did’t give me so much confidence in their secret sauce on picking

Plasrecycle Limited

Sterecycle (Rotherham) Limited

This was an ambitious project , but when you look at the admins report it doesn’t look like the company was really on top of things.

Unless the fund grows rapidly could also see a bit of concentration risk in terms of both number of investments and if they go larger in a few how large they would be in terms of daily traded volumes which would also make them relatively illiquid or liquid with a haircut
In November someone also received 250k GBP worth of shares for services rendered to the company and I am surprised that’s not been asked about on Crowdcube as thats a lot compared to the initial 400k Crowdcube ask in cash

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thanks for digging those up. without reading the lengthy documents (sorry!), you would agree with what I concluded above?

Yep agree. I also think that their model may have been hit as a result of COVDID. Their marketing materials seem to very much target millenials as the ones ripe to invest in this.

I think that millenials are going to

  1. Be hit hard by unemployment and large reduction in disposable income

  2. Move to be cash conservers rather than medium term ,or long term investors and unlikely to be taken large credit as well as I think many will have been hit hard by the recent shock events if they don’t have a few months free cash in the bank

I think they will struggle due to above impact on their target AUM and also as you say many more options with people where it may just be a switching. I would expect expect the TER to be higher than a lot of funds and that can be significant for low AUM funds and its not just the management fee that needs to be compared as early stage funds unless TER is capped and the management company subsidises it then investor get stiffed. SUbsidising the TER also means of course the company raising crowd will be paying the subsidy

I always used to work on a fund below 100m AUM was not sustainable looking at compliance and other overheads which made the TER a barrier to investors. If they can get 100m through the door then they have done well.

I just don’t think economics work here

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Clim8 crowdfunding again ?

Yes, caught my eye that after reaching 4x their target, they are back fund raising again…what’s changed now?

Are they capitalising on the govt’s future fund scheme?

To do a raise asking for 400k and getting 1.5m at 3.3m pre money and then funding out you need another 400k 6 months later (somehow the extra 1m wasn’t enough ?) , but now have it at 9.5m pre money ie double the value in 6 months seems a bit flaky

If they are that far off on their forecasts and financials , I would have concerns about their DD on anything they invest in.

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Exactly. They keep answering this by saying “we want to grow faster than planned” but can’t explain why the overfunding hasn’t allowed this. I do understand that more money means that they can hire more people which means they can do more things. Just odd that they don’t share what the previous money was used for and what the new one would cover too.

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I was also concerned about some of the main guys past that didn’t really show up much in the pitch at CC, but I think are relevant as they were sustainable /renewable related.

I don’t like the way that CC and Seedrs allow founders to cherry pick what they put on the pitch, but assume that’s all OK with the FCA and rules about disclosing past insolvencies etc are only for full-blown prospectus etc, but as a potential investor I would have felt relevant information was withheld

https://find-and-update.company-information.service.gov.uk/company/04393028/filing-history/MzA2NzI1OTIwMWFkaXF6a2N4/document?format=pdf&download=0

https://find-and-update.company-information.service.gov.uk/company/04393028/filing-history/MzA2NTkwODMxNGFkaXF6a2N4/document?format=pdf&download=0

https://find-and-update.company-information.service.gov.uk/company/07456989/filing-history/MzE1OTExNDMyMWFkaXF6a2N4/document?format=pdf&download=0

https://find-and-update.company-information.service.gov.uk/company/07456989/filing-history/MzE1NzQ4MjQzM2FkaXF6a2N4/document?format=pdf&download=0

It’s seems like they’re treating this like a side project where they can make extra income. The team has a lot of experience but they don’t look like they are committed to the project full time.

Its also a bit naughty I think that it is not disclosed upfront that the founder is closely connected to the VC who has “validated” the valuation at 100% or so uplift.

Not saying that its wrong, but when you use a “British Bank Backed VC” in the pitch as an investor to give credibility and justify that the valuation has been "validated’ by a VC, I think transparency which if you are an investment platform is important means you should be upfront about any relationship.

The ceo did say he used to work for the VC fund and still asses pitch decks for them.

As far as im aware they’re just selling existing funds? Or white labelling them and adding on their own platform fees. I don’t like these platforms as they dont seem to offer anything to anyone except to make investing into funds more expensive.

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All sounds a bit flaky to me, get a mate VC who was in the early round to invest a tiny bit more at a 100% uplift in 6 months and get the crowd to pile in at that British Bank backed VC’s validation of the price so they get a load more cash and minimal dilution. If the VC was going to put in a serious amount compared to the crowd then it gets more reasonable otherwise its looks a bit suspect.
Anyway not for me, I think there are enough red flags for me on the CEO’s past and it as others have said looks like a consolidator really and adding more cost and hoping to jump on the Greta bandwagon

I don’t really think running a company and it not working out is such a negative., it’s what happens to most entrepreneurs.