🚀 Crowdfunding graveyard ⚰️

Stay well away from drinks companies,soft and alcohol,property,restaurants.
In fact after reading the post above @philgq maybe best to stay away from crowdfunding non-stop.

6 Likes

Found a relevant news article: WSH Group acquires London’s Notes Coffee Roasters & Bar - World Coffee Portal

Presumably, based on the £10 return on £40 invested, they’ve been acquired for around £2.5m in cash. I imagine there’s more to the deal that will go to the founders by way of earn-outs, perhaps equity in wsh, given it’s been acquired to continue operating (“…both of whom will continue to lead the company post-acquisition…”).

Looking at the shareholding and campaign, from the acquisition only, the founders are walking away with:

Fabio Ferreira: 6.5% = ~£160k
Robert Robinson: 6.5% = ~£160k
Alan & Marion Elizabeth Goulden: 15.64% + 0.21% = ~£400k
Edward & Lynda Halfon: 15.14% = ~£400k

Plus the early, pre-crowd, investors:

Paul Kempe: 15.36% = ~£400k
Francis Norton: 7.62% = ~£200k
Bruce Golden & Michelle Mercer: 7.32% + 0.23% = ~£200k

Probably not the exit the founders and investors hoped for, but still better than the crowd who are getting 20p on the pound. Granted, they all appear to be people who are wealthy independent of Notes (some generationally, some earned) so they probably don’t care much. The crowd loses again!

7 Likes

Yes, it was sold as a going concern, just for less than has been invested in it to date.

1 Like

Some companies have done well for me, and overall I am up but appreciate this is not the case for all, perhaps most. Crowdfunding is not for the masses, but they make you think that it is because you can get involved from as low as £10. It needs much more regulation.

2 Likes

Ha it’s funny because I would agree with all of this advice but then when I look at my crowdfunding portfolio it’s almost all drinks companies. Something I don’t own any listed equivalents of.

That said they are all solid companies like Square Root & Five Points that I at least have some kind of personal connection to so I feel good about my investments overall.

I haven’t had a crowdfunding exit yet, but I’ve also not had a failure. I’ve only been doing it for a few years but contrary to the popular “it’s a numbers game” approach. I don’t make that many crowdfunded investments. I guess I’ll have to give it 5 years and see if that was still a smart move…

1 Like

I did my taxes two weeks ago (mostly claims on failed crowdfunds) and there have been three more failures in the meantime. Pretty grim for all at the moment.

Just doing mine now - have you had to repay any EIS/SEIS for any failures within the three year window?

Have you just declared the claims on the self assessment return ?

I have in the past had to (in theory) repay EIS, but I did it as an amendment to my self-assessment, and at the time I had additional EIS to claim, so I didn’t have to hand anything back, as such.

Yes, on the self-assessment, you claim a loss as if a negative capital gain, so it’s in the capital gains section (caused me a right pain the first time, not knowing where to put it), but it’s straightforward enough and it even gives a worksheet-type aid so you can do each one individually and it adds it all up for you. I’ve always just given dates on which I found out the shares were worthless, rather than waiting for the company to be dissolved, and they’ve never questioned that, though obviously they could always ask for evidence.