[Crowdfunding 🔨] Curve

Article in ft about curve crowdfunding
https://www.google.com/amp/s/amp.ft.com/content/ef52897c-be08-334e-ba05-a6971ad64e67

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That FT article is very true. We keep seeing a lack of meaningful information in pitches. Companies want to be like Monzo until it comes time to share information, then it’s all hush hush. Apparently because all the competitors are watching and you don’t want to risk seeing them execute better or something silly like that.

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Ouch they’ve stuck the knife in

Yeah I had to cancel my curve investment. other than the huge dilution with no access to some basic financials it’s not worth it to me. Plus I feel the idea that ppl will still not trust relying on one card to pay for everything (chance the card don’t work) is still in the back of my head. But good luck to them.

The last thing I saw about Curve was that they were “like Spotify”.

It’s the new “Uber for X” but in fintech.

I’m not an investor in Curve but transparency is :cool: and this FT article has some good stuff:

Financial Regulations in the UK require companies to produce a prospectus where they are raising more than €8 Million from retail investors. As Curve was below that threshold it was not required to produce a prospectus.

That’s fair enough, after all, why tell anyone more than they need to know? But then again, you’d perhaps expect some level of financial disclosure to guide investors on how the commercial side of the business is performing, or might perform.

Curve told us that investors could look at its Companies House page for more detail. Unfortunately, the 2018 accounts contains little meaningful financial data, bar a balance sheet which is now 10 months out of date. We do note, however, that its profit and loss reserves doubled last financial year to negative £10.6m which suggested back then at least, profitability was still a long way off.

:rofl:

Curve’s cloudy crowdfunding

Curve is a banking app that allows you to collate all of your bank cards onto one smart card. Think a wallet which is not a wallet, but is also kept in your wallet.

Since its launch in April 2018, the fintech product has proved popular, with the company citing over 500,000 users to date, with the hope of reaching one million by the year end.

In aid of its grand plans for bank account unification, Curve raised £43m in Series B funding from names such as Gauss Ventures, Oxford Capital and Connect Ventures in mid July. The valuation — £159m — put it firmly in the top tier of the most valuable UK fintechs, alongside companies such as Monzo, Starling Bank and TransferWise.

So it was surprising that in August, Curve decided to return to the capital markets. But this time, it wasn’t institutional investors committing cash. But retail punters.

In an echo of Monzo’s crowdfunding last year, Curve announced it was seeking £1m from investors via crowdfunding platform Crowdcube. The valuation was the same as investors in the Series B round received.

The marketing crowdfunding went swimmingly. Within 42 minutes of the campaign opening on September 3, Curve managed to raise four times as much as it hoped — yes, £4m — according to Finextra. The round eventually closed with £6m committed from 9,591 investors, the company told us.

The story may just sound to you like one of a buzzy product with ardent followers, but the Curve crowdfunding does feel exceptional for one particular reason: disclosure.

Curve’s investment deck for the raise was pretty opaque. The 31 page document, which was shared with FT Alphaville, did not contain one set of financial metrics relating to the company. Indeed, the “financials” page of the document consisted of a title page, and one slide outlining how it proposed to make money:

There was no discussion of the sort of metrics an investor might want to know, such as customer churn, cash flow, margins or management’s preferred key performance indicators.

There was, however, widely optimistic charts such as this:

And relatively uninformative ones such as this:

(We took a quick look at the American Express figure in the final graph. And there isn’t a UK average monthly spend number in the credit card businesses 2016 annual report. We asked Curve where they got the figure from, and it said it used Amex’s average card spend outside of the USA of $13,073 per annum. Which, we think you’ll agree, is not quite the same thing.)

We weren’t the only ones to notice a lack of any meaningful financial data. Some of the comments on the Crowdcube page, now inaccessible, voiced similar concerns.

For instance, here’s user balmf with some rather pertinent points:

Curve did a reply to a few of the users who asked about the lack of financials, but the responses were pretty lacklustre:

So we asked Curve why there was no financial disclosures, and it told us:

Financial Regulations in the UK require companies to produce a prospectus where they are raising more than €8 Million from retail investors. As Curve was below that threshold it was not required to produce a prospectus.

That’s fair enough, after all, why tell anyone more than they need to know? But then again, you’d perhaps expect some level of financial disclosure to guide investors on how the commercial side of the business is performing, or might perform.

Curve told us that investors could look at its Companies House page for more detail. Unfortunately, the 2018 accounts contains little meaningful financial data, bar a balance sheet which is now 10 months out of date. We do note, however, that its profit and loss reserves doubled last financial year to negative £10.6m which suggested back then at least, profitability was still a long way off.

Curve likes to compare itself to the £2bn Monzo, if this particular slide is anything to go by:

But Monzo, for all our questions about its business model, is extremely transparent about its commercials. For instance this year, it took the step of publishing a full annual report, even though it had no real need to.

So perhaps Curve should take a leaf of Monzo’s open book? But then again, as one person on Curve’s crowdfunding page put it, “given the that crowd investment is nearly 400 per cent over-committed in less than 2 hours nobody seems to care ;-)”.

Well, at least for now they don’t.

Related Links:
What crowdfunding is really about - FT Alphaville
BrewDog scrapes the bitcoin barrel - FT Alphaville
Investors don’t like your company? Try crowdfunding - FT Alphaville
The weird world of property crowdfunding (updated) - FT Alphaville

Source - https://ftalphaville.ft.com/2019/09/17/1568725922000/Curve-s-cloudy-crowdfunding/

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If this isn’t a :triangular_flag_on_post: then it’s a marketing error.

Is it a bug or a feature?

You decide :see_no_evil:

Do people see a strong future for physical-card based payments? Almost every wearable/pocketable device sold today has payment capabilities. The increased physical card friction as a result of Strong Customer Authentication (SCA) will make using traditional “dumb” cards even more of a hassle. I think SCA will push many to start using their Apple/Google/Whatever Pay devices instead, which almost everyone already owns

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Curve’s valuation may be is boosted by the new oil which is your data. You can thank the Open Banking API initiative for that. Your spending habits are :oil_drum: :soon: :moneybag:.

What I learned: The card data business is booming for advertisers, for aiding investors and for helping retailers and banks encourage more spending. And there are many ways a card swipe can be exploited that don’t always require a transaction being “sold” or “shared” in a way that fully identifies you. Data can be aggregated, anonymized, hashed or pseudonymized (given a new name), or used to target you without ever technically changing hands.

Many free financial services are after your data. Intuit’s Mint, which lets you track all your accounts in one place, uses your data to market to you in its app. Financial software maker Yodlee sells de-identified data from customers to market research firms, retailers and investors.

Many of these companies say giving us these “choices” is sufficient. That’s nonsense. With data, the devil is in the defaults — companies know a vanishingly small number of people will ever adjust settings. And how can we exercise a choice if we don’t even know what’s happening with our data?

i’m thinking about cancelling my investment or reducing it to like 20 quid. love the product but they did’t provide enough info

Looks like just 14% of Curves 500,000 users are monthly active users:

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You don’t have to feel like much of an oracle to predict Curve as the first super large fintech to go bust.

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When I looked at their pitch deck and did a bit of googling it seemed like some people may have been using curve to pay HMRC using their credit card indirectly (as far as I know HMRC do not accept credit card payments) - and then getting cash back from their credit card.

But I read recently that Curve now apply a fee to do this - so I would guess if people were using Curve for this reason, they will now stop using curve, reducing active users further.

Gaming CC cashback/points has always seemed to me the main draw of Curve. I stopped using mine in the early days after Amex withdrew support but there have always been other good points cards that could be used for the same purpose.

Hi everyone,

So it appears Curve has raised quite a big chunk of cash (95m$) although apparently a bit less than what was expected (around 100m£)! Their plan is to launch in the US. Any happy crowdfunder around?

Without knowing the valuation I can’t comment.

I’ve not had an email from them yet confirming the terms.

im an investor in Curve .

Curve just filed their accounts

£28.5m operating loss on £5.9m of revenue 😯

(It was a 14 month period so not entirely comparable to 2018)

Other stats:
- Gross txn volume: £826m (up from £219m)
- Customers: 860k (up from 230k)
- 73% of revenue from interchange fees

🔥 pic.twitter.com/EGqKS12nYR

— Robert Collings (@RobertCollings_) January 11, 2021

Users doubled in 2020 then - at 2m now.

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Did anybody who invested in Curve through Crowdcube get contacted about the latest investment round?

According to the docs they originally sent out it stated:

“Investors shall receive pre-emption rights providing the size of the Crowdcube Nominees shareholding remains above 2% of the Company.”

Also given that Crowdcube had an open call to register interest at - Crowdcube + Curve | Express your interest | Crowdcube

It’s all weird - did I miss a mail that others received?

Do you have any idea how curve is making money from interchange fees? I would have assumed they’d have to pass any fees onto the underlying card so wouldn’t keep any for themselves

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