easyProperty. Unfortunately, their campaign details are not accessible to non-shareholders anymore so youâd have to buy shares on the secondary market to access the information, but in summary:
They license the easy brand from Stelios Haji-Ioannou (founder of easy)
Stelios Haji-Ioannou âinvestsâ ÂŁ200k into the campaign to make the campaign look exciting
The governmentâs âFuture Fundâ matches the investment
Stelios gets his âinvestmentâ funnelled right back to him through licensing fees (~ÂŁ100k was already owed to him for licensing at the time of the campaign with many more hundreds of thousands to be owed over the coming years)
Although the campaign âraisedâ ÂŁ800k, it was actually less than ÂŁ100k from the crowd and >ÂŁ700k came from Stelios + Future Fund + founders. That wasnât a one-off, itâs part of the easy playbook, youâll see quite a few easy branded companies going through crowdfunding and theyâre all doing the same thing, although less egregious now since the Future Fund is done.
The related parties aspect of the very same campaign was also pretty ridiculous. Someone had shared concerns on the discussion forum about the history of easyProperty, and then a fellow member of the crowd called Robin Maxwell appeared on the forum to provide some helpful insight:
So helpful! And he makes a great point, Stelios is investing a lot of money (ÂŁ200k!) so it must be a great investment. Everyone should invest! And David, the founder of easyProperty sure agreed:
Well, youâll never believe it: Robin Maxwell was running the campaign for easyProperty! Quelle surprise! He was being paid to run the Seedrs campaign, which he bragged about on LinkedIn and eventually admitted in the same discussion thread.
All of their behaviour was reported to Seedrs, and of course, Seedrs were fine with it, totally appropriate conduct apparently. The campaign finished and theyâre still on the Seedrs platform today. That all happened in the open, just imagine what the people smart enough to not get caught are doing to rinse the crowd. How many big investments on Seedrs are genuine? How many people in the discussion forums are genuine?
Blatant misleading at the least because material information is not disclosed, Iâm not a legal expert but this sure smells like fraud, right?
On another note, brokers have to assess suitability as far as I know, how is it possible everyone can buy this crap? Itâs becoming clear you need certain expertise to sift through all the bad ones⌠I mean I want to keep this stuff open to everyone, but if the broker doesnât DD it, how can it stay open to all?
Funny example: I just looked at âAshley Black Experienceâ on WeFunder (okay the name screams no-no too) that loaned the founder/CEO $1.5m and $80k in 2021 and put it as a capital investment in marketing, aka does not show up on EBITDA so this one is âprofitableâ. Turns out there was like $3.6m and $450K outstanding on two credit facilities for the CEO at the end of 2021 and then you go to crowdfunding for more capital!
Unsurprising. Totally killed by lockdowns of course. They went down to a skeleton crew during lockdown, their CEO left, but I hoped that they preserved enough cash to see it through. Even now weâre past lockdowns though, daily rail commuting still isnât at a level it was before - annual tickets at a far lower level than pre-pandemic. Most of their customers will have left, which means expensive customer acquisition costs.
To get that return I have been tied up for 7years and only found I had an exit yesterday. While an S&P
tracker could have been pulled out any time. Arguably the EIS relief isnât included in that return so it is ÂŁ43 pound on ÂŁ7.
Also portfolio wise I put about ÂŁ1300 worth of capital in EIS, which ÂŁ550 worth has exited or gone bust. I have had back ÂŁ286 including the EIS relief on those ones. So have about ÂŁ750 of capital left which I have already had back 30% EIS relief. So to break even overall I need that ÂŁ750 to become about ÂŁ800. Which seems doable but I would ideally want a lot more than that given itâs been invested for as long as it has.
Edit: maybe it was harsh to say it was a naff return, its actually pretty good even over the long time period.
Kinda annoying how they blame their last raise (a covid response convertible loan note [CLN]) for creating uncertainty around valuation which meant others couldnât invest. From their update -
In addition, you will also be aware that GoodBox received investment via a CLN under the Future Fund Scheme. Uncertainty around reference valuation conversion points of the CLN resulted in further uncertainty for the company, any potential investment commitments, and/or support from existing shareholders at that time.
What does that even mean? There were more behind the scenes issues include a dispute with suppliers.
Goodbox does contactless donation points. You may have seen them at prime attractions such as the V&A or in your local church. Obviously contactless donation points are going to be way more prevalent going forward, Goodbox probably had their highest revenue ever this month. Whoever picks them up for pennies in the prepack is going to make money.
I was in Goodbox as well, and had felt very positive about them.
What I cannot figure out is, they raised ÂŁ9M in the last funding round, and they quickly spent (ÂŁ9.1M in total):
ÂŁ3.9m on stock
ÂŁ5.2m purchasing software IP
Clearly they would not have funds to run the business after spending all the money they raised.
It makes no reasonable sense to spend ÂŁ5M buying the software IP given their finances.
Without a doubt, we value all the support received from our shareholders during this time. The Future Fund round of ÂŁ9.1m put us in a position, based on our revised business plan, to achieve a sufficient cash balance to procure the necessary stock and see us through to profitability (ÂŁ3.9m). In addition it allowed us to obtain key payment software (ÂŁ5.2m) to strengthen our IP and unlock international expansion opportunities at a faster pace in a more cost efficient manner.
The Future Fund round happened in March 2021. They splashed out on the payment software after that.
Thank you. Iâm not a conspiratorial person, but âstrengthen our IPâ is such a ridiculous justification for spending that much capital on software that I can only assume thereâs more to it than that: perhaps they were providing a soft-landing to a related party. Do we know what the âpayment softwareâ is? According to their CTOâs LinkedIn, development was done in-house.
Iâll be careful with what I say here to avoid a legal nightmare, so I will stick to the facts. The GoodBox CTO also runs a company called âNGI Systemsâ. The CTO of GoodBox is the sole director of NGI Systems.
The employees of âNGI Systemsâ work on GoodBox according to the employeeâs LinkedIn(s). Therefore, it seems quite likely that GoodBox doesnât have an in-house technology team, rather itâs outsourcing to NGI Systems via the CTO.
The latest accounts for NGI show close to ÂŁ1m in assets, demonstrating a substantial transfer of money from GoodBox to NGI (prior to the latest fundraise, no accounts available for 2021 yet) over the previous 2 years.
If I were an investor in GoodBox, Iâd be asking whether that purchase of IP was made from NGI Systems who had developed the IP on behalf of GoodBox while their CTO was the CTO of GoodBox.
What on earth?! From Goodboxâs administration update.
We also wish to make you aware that our suppliers NGi systems are claiming huge sums of liabilities, which we dispute. NGi Systems have issued us with an administration order with a hearing due to take place this Friday. We continue to work to challenge this order and keep you apprised of the situation.
Itâs not clear that the software that was purchased was owned by NGi systems, but I think itâs a reasonable assumption. If that is the case, Goodbox should have made reference to that in their update, since their dispute has lead to the forthcoming court case.
It would also be odd (in my experience) if, Goodbox has been paying for software development services from NGi systems, but did not own the resulting software.
I think that all but confirms the theory, then: NGi have treated GoodBox as their cash cow and held them to ransom over the technology which the CTO built through his own company without assigning ownership to GoodBox, and then threatened to leave (along with the technology) so the company had no choice but to pay for the IP.
I wish I had access to the investor discussion so I could ask that!
Very much agreed on that point, but itâs also very abnormal to hire a CTO who owns the company through which all your offshore development is done and does not build an in-house team â so I think thereâs not much of a leap to make from that weird situation to the weirdest situation.
Do you have any more information about the court case? Maybe itâs possible to dig information up that way.
Software ie; syphoning money out of the company. It is very difficult to trace software money or for that matter put a price on it.
I would say 100% that there has been questionable events taking place and possibly illegal at that.
