🚀 Crowdfunding graveyard - a cautionary tale ⚰️

Same with me for Sugru - very dubious plus Chilango, Circuitree, Filmore & Union, Gripit, Hopstuff, My Showcase; relying onb FT to bale me out!

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the new crowdfund will have the fee attached

FFS

Both Seedrs and CrowdCube are losing money so it’s understandable that both platforms are trying to add extra services and also extra fees. I don’t fundamentally have any issue with them wanting to be viable long term businesses.

I just wish their due diligence on businesses was better than a 5-year old with some crayons.

Actually, I’d love a world where there was no upfront fee (that would be impossible as they need operating cash) but they then took a bigger share of any profit. Right now they are built around volume which is why our own DD is so key as there is so much rubbish out there.

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I am more than fine with crowdcube taking a fee for providing a service, so many people live in a fantasy world where they think companies exist on magical fairy dust.

However I am the one who raised the funds and took the risk with my investment, not crowdcube - they’ve done their bit by providing the service and they have been paid for that with their fee, they are NOT entitled to a cut of my profit.

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If you think about it, disregarding any tax issues etc. If you assume that you would have invested the fee if they hadn’t taken it at the start; CC taking a 5% cut from your investment at the start, or taking a 5% cut of your profits at exit will effectively cost you the same

Would you be willing to pay a much higher upfront %?

Say you have £1000

CC takes 5% at the start so you only have £950 to invest. 10X gives you £9500 at exit

or you invest the whole £100 at the start CC takes 5% at the end you still end up with £9500

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Slightly incorrect as cc will only take 5% of profit so it’s 450.
I wouldn’t mind them taking an slightly higher fee but not 5% as they would effectively increase their income from all investment and not only the profitable ones. The 5% is only a long term return as most company won’t exit for many years to come. But when it does happen they won’t be loss making for sure

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Over the Monzo community they are having the same discussion, apparently the success fee only applies to “businesses that open to investment on or after 1st April 2021”, so I assume neither Freetrade or Monzo future raises are included?

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The next Freetrade campaign would include this carry fee…

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Well at least you can deduct that 5% fee off the 20-45% tax HMRC will charge you for CTG tax over £12k from non EIS investments.

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