Crowdfunding round seven, Wed 24th Nov 2021 🎉

I don’t understand people who are saying they won’t invest dues to 5% carry. That’s like saying you don’t want £100 because you have to give £5 of it back

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I agree and hence my comment that I 100% expected to pay 1.5% in and 5% out, no problems to me for the reasons you mentioned. :+1:

What is not good is when there seems to be very conflicting information from either side of the official sources. Forum gossip is one thing but it seems the companies are posting opposite views and that is confusing. :man_facepalming:

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Its not that Im resentful of paying fees. I understand that CC need to be a sustainable business but they are taking fees direct from the business being listed, then direct from the investors at investment time and then again on exit. Seems a little excessive but ive not really looked at CC profitability or margins.

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It’s also like saying I refuse to work because HMRC will deduct NI :joy:

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Hi,

Does anyone know when these are awarded? I sit in the £100+ bracket.

Also, how do you go about claiming them?

Thanks :slight_smile:

Bit surprising that Freetrade need to clarify the investor fee structure with Crowdcube after the UK leg is fully funded.

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Only if you’re employer is telling you that you don’t pay NI and HMRC are saying you do.

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I really don’t understand why we are here talking about “Crowdcube margins”, “Crowdcube have to to this in order to build a sustainable business model”, “it is not a charity”, etc. We are here to invest on Freetrade, so it is not the point to discuss CC business model.

As a former investor, I invested on Freetrade since 2018 and when CC introduced their new 5% fee, I asked several times to clear this out because, as @GMCay said, their wording wasn’t clear at all and they never explained if the fee applied for Freetrade new rounds or not (because their business opened to investment before that date) and how matching previous shares with X conditions and new ones with Y conditions would be done if the fee applied.

Reading “5% carry will be charged on shares bought after April 2021 and only applies to profits made on investments in businesses that opened to investment on or after the 1st of April 2021”, my point of view was clear: Freetrade opened to investment BEFORE that date, so 5% carry fee didn’t apply.

And that point of view about no 5% carry fee applied to Freetrade was confirmed by @adam on his tweet (“We’re still using the structure from 2016, so everyone is a direct shareholder. There shouldn’t be any carry) and on his answer on this thread:

“I suspect the customer service person wasn’t aware that we aren’t using the nominee structure, which is standard at Crowdcube now (it didn’t exist when we first raised in 2016). He implied that Crowdcube would receive the proceeds of any share sale, which is not correct for direct shareholders.”

I am an investor on Freetrade (not on Crowdcube) and Freetrade is telling me that 5% carry fee model doesn’t apply, so why I have to pay a 5% success fee when conditions indicate it is not the case?

I am also not a charity for Crowdcube and as a former investor, on my calculations about investing again on Freetrade or not, that 5% fee is relevant for my decision. That is why this situation needs an urgent clarification.

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Not sure on timescales. My guess is couple of months (R6 updates took a lot longer). Email / details cross checked with your freetrade app details then updated could take some time (for everyone).

Agreed. All I can hope for is my 5k worth of shares eventually make me a profit irrespective of the 5% from CC.

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CC are taking none of the risk in investing their hard earned money, but are taking 5% of the success after already charging to make the investment.

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Hi Louis
I missed out. How much are you selling?

Guys, no one is forcing you to invest. I agree it should be clear. I’m sure it will be clarified before the round closes. After this you still get a further 7 days cooling off after the Articles of Association etc are provided. If you not happy to invest at any time before that point there is a cancel button you can press. There are a legion of FTers who missed out and waiting to soak up any cancelled orders.

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The 5% is only applied to any profit made on the investment, not on the invested amount.

I’m curious how Crowdcube will collect the 5% carry fee on a direct investment, as they will have no way of knowing when an investor sells their shares or how much (if any) profit they have made on the sale.

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Parasites. I can think of no better way to describe Crowdcube and their uncapped percentage based “success fee”.

They take a cut of investor’s success whilst taking on none of the risk. Absolute parasites. A real scummy move and I hope a competitor platform comes along soon and steamrolls them. Imagine if Freetrade took a % of your profits when selling stocks… eesh.

Yes they need to make money, yes they deserve to turn a profit but this is just taking the proverbial. I’d wish that Freetrade could find a different partner for future rounds but I think Draper Esprit are investors in FT and CC so I don’t see it happening.

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I was/am happy to pay the 5% as that is what I thought I signed up for but to take 1.5% in and 5% out plus the FT charge to them is a bit of a big jump from previous it seems and wouldn’t be surprised to see them beaten in price by competitors.

Really they should charge either in or out the % along with charging the company but they will make a fortune and does make me glad I enquired about the CC raise coming up.

It could be done with the help of FT.

Assume FT is a listed stock. Once you transfer your shares for sale from FT to your favourite broker, FT records the move including the prevailing price of the shares and sends monthly a spreadsheet with all the moves to CC and then CC sends u nice bill in the email.

It all depends on what was signed in the contracts between CC and FT.

@olivug For a such a nice email in such conditions - I am sure the Financial Ombudsman would have something nice to say too.

Financial ombudsman would just see that you agreed to terms and conditions, which say there is a 5% carry fee, and say fair enough you owe CC 5%

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The wording is vague

Crowdcube’s success fee only applies to profits made on investments in businesses that opened to investment on or after the 1st of April 2021.

If it’s businesses then FT has been crowdfunding since 2016, if it’s campaigns, or rounds then it would be different. Or even investments made after 1st April 2021. CC picking April Fools day to roll out the 5% success fee hopefully suggests someone at CC has a sense of humour. Anyway, FOS might side with you…

The communication around is all dire though.

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