Megathread - Crowdfunding

As for me, previous year had only FT as an option, all other businesses are too small or not interesting

Anyone looking at Hydraloop here on Crowdcube? I might make an exception to physical goods investments because this seems really interesting.

Main DD topics for me are (i) the new build go-to-market strategy, (ii) the partner distribution channel model and (iii) whether this is the right time given that the necessity is not yet fully felt in terms of money (aka water is really cheap in Western countries atm).

Pros: I think the product is great, validation through CES, founders seem strong, team expanded to 30+. Valuation is reasonable given traction & the EUR 9m which has already been sunk into this. Rabobank is a strategic investor, its a Dutch venture and banks are bit more active in the startup space here; personally don’t count is as highly as a proper VC, but its better than angels alone for sure.

Might have a home turf bias though :slight_smile:

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I tried investing in the Klarna opportunity too but was saddened that it didn’t go through. Would have been nice to own a piece of the world’s top performing BNPL player that is this close to an IPO.

I suspect the seller got a better offer somewhere.

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maybe its for the best… the share price of Affirm, the main competitor of Klarna is the US, declined by 50% in the last month…

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Maybe this is the wrong bit of the forum but did others get an invite to a Freetrade round happening on Seedrs (a big shift from many years with CrowdCube)….

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Has anyone any thoughts on SOLIVUS? Revenue generating and management team seem to be at the heart of all things renewable.

Did any one get this email from 1854 media below ?
They are selling our shares by force and “dragging us along”?
Who knows how much we will get, if anything?
They raised €1.8m on crowdcube few months ago, who knows what happened to the money??
Glad I didn’t invest in this last round.

Dear shareholder,

This is an official notice of Drag-along as per clause 8 of the Articles of Association of 1854 Media Ltd. In line with clause 8 of the Articles of Association it is deemed that a majority of A shareholders have accepted a bona fide offer from an Offeror and that as a result of the proposed transfer the Offeror will hold more than 55% of the issued A Shares.

The Offerees therefore require the dragged shareholders, being effectively all shareholders, to sell their shares to the Offeror at the same price per share and on the same terms as the Offerees, simultaneously with completion of the sale of the Offerees shares to the Offeror.

Share transfer documents and all other relevant documents will be provided to you in due course upon completion of the proposed. Proportionate distribution of ex-shareholder sale proceeds to your nominated bank account will be administered following receipt of completed share transfer and other documentation.

Yours sincerely,

Mark Bounds
Finance Director
1854 Media Ltd

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Probably settled some director loans because they knew they’d need to sell.

Really odd that the email doesn’t say how much they’ve agreed to sell for though.

Yes,makes me think will be peanuts :crossed_fingers::crossed_fingers:.
Fingers crossed.
The raise done was just 6 months ago.

And they promised shareholders a 6x return in 4 years.

@Gold1 unfortunately there are no promises in crowdfunding - it’s always high risk. Good luck.

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Reading this I got a flash back to the study books about ‘principal-principal’ problems, where the majority shareholders do something to the detriment of minority sharesholders. Hope it works out for you guys & founder(s) dont sell their hide cheap to cash in. Will be an interesting case to learn from once we know the valuation as it is one of those companies that seems to have raised exclusively from crowdfunding and no institutionals, who generally take precautions to prevent the above.

Other than that, I invested in hydraloop. I think the main risk is execution, with the massive growth and reliance on partners and getting the foot between the door with new build projects. Other than that, there seems to be enough Western areas in the world where water supply is more strict and/or more expensive to scale for the years ahead and they seemed to have nailed that by focusing there first. I think the idea is great and new / easier to install product line should accelerate growth given its lower installation costs with reasonable valuation, strong team, and great traction (how many others startups appear in a Netflix documentary, lol).

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Did anyone else see that YHangry, who were supposed to offer a round on Seedrs have pulled the offering due to taking a place in YCs Winter 2022 batch.

Definitely disappointed that the opportunity appears to be lost for crowdfunding. For the moment at least. Fingers crossed they return in the future.

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Everybody has a different risk profile so I don’t mean to suggest this is a bad idea for every person on the planet but personally I wouldn’t touch them with my worst enemy’s money, let alone my own. I have seen their godforsaken adverts on LinkedIn so many times in the last 24 months that I alone must have cost them at least a couple of suckers worth of investment.

There’s a lot to be said about their ridiculous pivot, advertising and business, but the biggest red flag is the way they were continuously launching new “rounds” of “funding” which conveniently took place every time they needed their “investors” to see a valuation bump so they’d convince their friends to pile in… despite none of the rounds ever being fully subscribed.

Consider the $2 round, a target raise of $44.5m which ostensibly increased their valuation from $785m to $1.6bn… that round raised $9m, they were less than 25% subscribed. And then they did another round to increase the valuation from $1.6bn to $2.4bn, which raised less than 10% of the target. I guess they’re valued based on Earnings Before Anyone Looks At Them Close Up.

I have to admire their absolutely brazen insanity though. For example, they’ve now “closed” their “private funding rounds” (presumably because their LinkedIn adverts stopped generating any investment, hence the 10% subscription on the last round) and are instead offering a “20% High-Yield Note” which is framed as some sort of genius business magic that allows this once-in-a-lifetime company to change the world when it’s actually just horrible, horrible debt. I mean, this quote alone is something that belongs on an episode of Silicon Valley:

The value multiplication capacity of this FinTech project enables us to pay the interest rate of 20%, four times higher the market average.

They’re not even junk bonds, they’re sewage bonds, toxic cholera ridden sewage. Money is everywhere at the moment, it’s sloshing around at absurdly low rates, anybody with any credibility borrow money at rock bottom rates, and here they are offering to pay 20%! 20%! That’s comparable to a consumer credit card!

Naturally, the issuance of this horrible debt after failing to fundraise has increased their valuation from $2.4bn to $3.2bn. I’m starting to suspect their multiplication capacity might just be referring to their ability to bump their own valuation.

If any consumers who invested in TransparentBusiness / Unicorn Hunters lose less than 100% of their investment, I’ll be gobsmacked and consider retiring from ever thinking about investment ever again. I’m at the point where I enjoy seeing what they’re up to because it’s always some new and inventive way to defraud people.

They initially started advertising their fundraising using exactly the same language as now but without the “Unicorn Hunters” narrative, just as the TransparentBusiness SaaS. Early 2020, they promised to go public at $10/share by the end of 2021, then in 2021 they invented this Unicorn Hunters gambit, which included a show that was ostensibly produced for Amazon Prime but it wasn’t really, they just paid to have it distributed on Amazon Prime (which anyone can do).

Unicorn Hunters is much like the grifts taking place in crypto. On the one hand, it’s very entraining to watch, on the other, it’s very sad to think about all the people losing their money because regulators allow people to get away with this without any scrutiny.

This doesn’t even scrape the surface of the stuff they’re doing or have done but I need to stop typing.

Disclosure: the position I hold in TransparentBusiness, Inc is keeled over with laughter.

edit: actually one final thing, because it’s a funny fact to end on: they spend more money on producing their tv show than they generate in revenue from their SaaS business. Their business is raising money from LinkedIn adverts.

edit edit: ok ok FINAL point, something I just learned, their software doesn’t even generate their revenue. The revenue they do generate comes from “talent as a service” which is more commonly known as… recruitment. They’re a recruitment agency masquerading as a software business performing as an investment platform valuing themselves at multiple-billions of dollars based on ~$1m in recruitment revenue.

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Hello S_M,

Completely agree that there are red flags everywhere. I don’t do this often but every now and then allow myself a few wildcards. Am curious to see what happens and completely accept that I may lose it all but like any crowdfunding,

But at 20-cents a share, I feel it was worth a punt and compared to many other campaigns that appear to be more stable, these guys are certainly more interesting. Time will tell and 100% open to people calling me a fool in the future ;o)

I almost did out of morbid curiosity because I want to be up close and have the best view when it implodes. I don’t begrudge anyone who did invest (whether they expected to lose or expected to win) because it is designed to be a compelling offering, and it’s certainly more fun than buying a lottery ticket, my only ill will is towards the people who consider it acceptable to defraud people. Actually, I don’t know if I could even say I have ill will towards them because they’ve given me so much entertainment. Maybe, in a moment of self reflection, I am the ultimate villain: I am enjoying fraud without even making money from it, at least they’re getting rich, they have a reason.

I actually quite like the Unicorn Show. The concept works and that’s no different to a SeedInvest raise or equivalent right (taking a US platform for comparison). How they got there is a winding road but the end business looks fairly legitimate?

Personally I think that if a business is built upon fraud (or misrepresentations if you wish to be charitable) then it is very difficult to see a path to success because it no longer depends just upon beating the odds (most startups fail) but it also depends upon a radical shift in how the business operates: sure, the founders can build a business using fraud misrepresentation, but does that mean they can build a business legitimately? I’d go as far as to say it doesn’t just tell us nothing, it tells us they cannot build a legitimate business.

The history of the company and behaviour of the founders alone is enough of an argument to convince me that they aren’t going to go on to achieve anything, but for arguments sake I’ll assume history doesn’t tell us anything. So on that basis, let’s interrogate Transparent Business / Unicorn Hunters specifically.

Last year Seedrs, the biggest crowdfunding platform in the UK, sold to Republic for $100m. Seedrs was generating ~£5m/yr in revenue. Transparent Business is ostensibly valued 34x higher, at $3.4bn, based on $0 in revenue from crowdfunding, near zero software revenue and at best a few million in recruitment revenue (a very low margin business compared to software). The business model of Seedrs is simple: take a cut of money raised through the platform. Unicorn Hunters business model is to take equity in the companies they feature on the show, because of the potential for long term returns – which is much, much higher risk.

Transparent Business has issued somewhere in the ballpark of a billion shares with promises of going public this year for at least $10/share which would value the business at close to $10,000,000,000 with no crowdfunding revenue. If they do not go public by the end of 2022 for at least $10/share, they have to forfeit one of their acquisitions which is responsible for almost all of their recruitment revenue, turning them from a recruitment business into a nothing business.

Then there’s the money they’re borrowing. If they manage to borrow the target amount ($10m) from their revolutionary “High-Yield Bond” (which I can’t say without laughing) they will have $12m due in 12 months… paid for how? Where’s the money coming from? Another private round? They could barely scrape a 10% subscription on their latest round. Plus, it needs to be emphasised so I’ll say it again: they’re borrowing at 20%! That’s a “lenders think they’re going to default” rate.

The TV show idea is fine – I’d argue it’s an inferior approach when compared to, say, a website like Seedrs or SeedInvest or Republic, but it’s definitely possible to see a world in which it could succeed – but this company is rancid. Even if the show was a resounding success, the business would still struggle. There’s nothing redeemable about the company, and if there was a prospect of the TV show idea working, why wouldn’t ABC or Sony or whoever launch it under the Shark Tank or Dragon’s Den brand? What does Unicorn Hunters have to offer?

24 months ago Transparent Business was advertising an investment in their SaaS business (which is used by a few companies and generates negligible revenue) with grand promises about 30,000% returns… and then they pivot to advertising the same investment opportunity with the same language but now it’s a TV show without a network.

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@s_m

Not a fan then :rofl::rofl:

Some very good points and you could be right but I’ve seen far more outlandish investments and concepts than this succeed and even thrive. Conversely ones that looked solid and safe turning out to be absolutely rubbish / brutal.

Maybe it’s not a long term money maker but there could be an opportunity to make $ in the shorter term with all the hype and speculation via the IPO, although I don’t think right now is a good time for that.