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 isnāt included in that return so it is Ā£43 pound on Ā£7.
Also portfolio wise I put about Ā£1300 worth of capital in EIS, which Ā£550 worth has exited or gone bust. I have had back Ā£286 including the EIS relief on those ones. So have about Ā£750 of capital left which I have already had back 30% EIS relief. So to break even overall I need that Ā£750 to become about Ā£800. Which seems doable but I would ideally want a lot more than that given itās 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 couldnāt 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 Ā£9M in the last funding round, and they quickly spent (Ā£9.1M in total):
Ā£3.9m on stock
Ā£5.2m 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 Ā£5M 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 Ā£9.1m 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 (Ā£3.9m). In addition it allowed us to obtain key payment software (Ā£5.2m) 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. Iām not a conspiratorial person, but āstrengthen our IPā is such a ridiculous justification for spending that much capital on software that I can only assume thereās more to it than that: perhaps they were providing a soft-landing to a related party. Do we know what the āpayment softwareā is? According to their CTOās LinkedIn, development was done in-house.
Iāll 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 āNGI Systemsā. The CTO of GoodBox is the sole director of NGI Systems.
The employees of āNGI Systemsā work on GoodBox according to the employeeās LinkedIn(s). Therefore, it seems quite likely that GoodBox doesnāt have an in-house technology team, rather itās outsourcing to NGI Systems via the CTO.
The latest accounts for NGI show close to Ā£1m 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, Iād 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 Goodboxās 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.
Itās not clear that the software that was purchased was owned by NGi systems, but I think itās 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 itās 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 ā so I think thereās 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 itās 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.
The Goodbox saga has taken another twist and it appears that NGi may not be the issue.
Another investor posted this FT link in the Seedrs forum:
In summary, the FT says a Guernsey based investor called āQ Investā invested Ā£4.5M in the future fund round. Then the FT says, shortly before completing the funding round, Goodbox licensed payment gateway software from āQ Investā for Ā£5.2M. So āQ Investā received their original investment back plus Ā£700K.
FT also quote NGIās secretary as saying āWe consider it in the interest of GoodBox for administrators to be appointed by the Court to scrutinise certain questionable dealings of the Board. A key example is a Ā£5.2mn transaction that involved UK taxpayer funding.ā
I thought my theory was the worst-case scenario but this is absolutely insane. So, the board actively tried to defraud the Future Fund by arranging a totally legitimate investment that just happened to be repaid afterward by purchasing software (what are the odds any money actually changed hands, except for the Ā£700k?), so that theyād qualify for the governmentās funding? Wow. The board is in big trouble. At least the other companies that tried to do similar things were a little bit subtle about it.
Over the last few years, I invested in 17 start ups between Seedrs and CC and only one of them has gone bust for now. Fingers crossed I donĀ“t have increase this count!
The company is Coconuts Organic, later renamed as CecilyĀ“s, a brand of vegan icecream that use fat from coconut oil instead of cow milk for the elaboration of the product.
They raised three times through Seedrs until earlier this year they announced that the company would be sold to a new shareholder for GBP30k with no rebate for Seedrs investors. (ie, from whatever you invested to GBP0)
The increase in the cost of ice for deliveries and the lack of commercial traction among big UK retailers were pointed as the factors that took the company to such a difficult financial situation. WhatĀ“s frustrating is that the brand still trades, but all Seedrs investors have been pulled out of the shareholding of the company.
