🚀 Crowdfunding graveyard - a cautionary tale ⚰️

During this fintech crowdfunding frenzy - with the Financial Times Alphaville writing about Curve’s lack of proper disclosures and all (Curve will be crowdfunding on Crowdcube) - Emoov is an interesting case study of :moneybag: disappearing quickly:

This is a repost from the CarWow crowdfunding thread.

  • Emoov: $1.5mln - 150% of target raised in July 2018:

With just under a week left to go, we have reached 150% of the target that was set in its latest crowdfunding round. In the two-week period since the round has been live, £1.5m has already been invested and it is likely that there will be more investment before the round closes.

https://www.emoov.co.uk/news/2018/07/18/emoov-hits-150-crowdfunding-target/

  • Emoov collapses in 2018:
  • Emoov - it’s alive?

“This time it’s different!”

It’s a jungle out there.

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See also: Sugru.

However the Irish Times, which first reported the news, said investors were believed to have lost up to 90% of their money as part of the sale.

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Wasn’t there a brewery recently (I think) that sold its name/IP while the business went down? So crowdfunding shareholders got absolutely nothing.

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Hey @engineer, can you retitle this “Crowdfunding Graveyard - a cautionary tale”? Will be a good thread to track the failures over the years. :chart_with_downwards_trend:

Glint joins the list by the looks of it after having abandoned their successful raise :eyes:

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Do these startups spend retail investors’ money faster than WeWork?

Glint, the gold payment app, has fallen into administration, AltFi can exclusively reveal.

The news comes just three months after Glint announced a £5m fundraise from asset manager Sprott, and two months after Glint subsequently launched in the US.

Likewise Glint continued to solicit new customers on social media up until and including on Friday, similarly, customers on social media reported receiving their cards and depositing funds on Friday, despite the company having filed for administration on Wednesday.

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Can we do ones with crowdfunding success stories with actual investors discuss how much they receive in multiples. **

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Not forgetting Cocoon and The Chapar. Those 2 plus Sugru make up my 3 CrowdCube failures. As for the rest, time will tell. What does bug me is that some of the companies provide zero shareholder updates and there is precious little that investors can do about it. CrowdCube don’t or can’t do much about it either.

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Sure @Mello, found one about Freeagent Holdings:

The London Stock Exchange’s junior market today welcomed its first company with roots in equity crowdfunding.

Edinburgh-based tech company Freeagent Holdings began trading on the Alternative Investment Market (Aim) this morning, with the float raising £10.7m and valuing the company at £34.1m.

Freeagent, a cloud-based software-as-a-service accounting software company, is believed to be the first UK firm to launch an initial public offering (IPO) having previously raised growth capital through equity crowdfunding. The firm raised £1.2m from 700 investors on Seedrs in July 2015.

Note: Investing in private companies carries a huge amount of risk

Another one to add to graveyard is the London Jam factory - raised on crowdcube

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Beerbods was bought by Beerhawk for a significant lower price just a year after the last crowdfunding… i think it was a 80% loss for last round crowdinvestors.

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If they got to zero at least investors can claim loss relief, with this kind of sale investors lose EIS reliefs.

https://on.ft.com/2mMyJGn

Gold app Glint collapses just months after fundraising

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A quick look at my log shows 22 Crowdcube failures in my portfolio. There are probably a few more which have I have not updated and a load more that are dead in the water. Then there’s Solid Labs weird dilution which I don’t really understand.

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I had one called Recruitive go completely bust (crowdcube). Didn’t get any communication from the company leadership, just an email from the liquidator one day.

I have couple go bust and some are struggling.
Never much info till they have gone.

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22? Damn. How long you been investing via crowdfunding? Have you had any positive returns?

I just started really 3 on Crowdcube & 2 on seeders currently. I feel i see a lot of business I like but very few that are investable. But this definitely shed some insight.

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3-4 years. Only one successful exit so far. Wool and Gang got picked up a few months after investment. Lost EIS status and got a 5% return. Early years losses come before long term wins so I am cool with it. You can only lose 100% of your investment but you can make many multiples and that’s before considering EIS tax relief.

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Slightly off-topic: who remembers this beast of a “fintech” startup called Wonga? What a :poop: of a payday lender “tech” company that “made it easy when the month was too long :notes:”.

Pre-2007, subprime lenders/brokers technically had a sort of similar business models, only to sell the loan portfolios to banks (at a profit), who would then package them into asset-backed securities and pass them on to investors.

There was also a lack of strong involvement from the board or the company’s backers – the two main venture firms behind the business, Accel Partners and Balderton, were visibly not involved.

The fact that the company was caught sending out fake debt collection agency letters, and missing affordability criteria, suggests there was almost a total disregard for compliance.

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