I am expecting the answer to be basically no but I am really desperate to know if there’s anything I can do to try to claim some of my money back it might not sound like a lot but in total I have invested £25,000 in about 12 companies in the period 2014 to 2015 on the platform crowdcube. Only one of them Brian bond has returned the £2,000 invested. That was a Bond. Another Bond and with square pie by which sounds like a stupid idea now did not return the bond and I thought it was safe. All but two now of the companies have bailed out with various excuses saying they really tried etc but they’ve all been paying themselves salaries some more than others. One yorkshire-based cafe chain called filmore and Union is still operating but is sold a few branches to a different company and of cold sent me a message to say that they liquidated or gone bust and I thought that was one of the more successful ones I am very disillusioned with the hole crowdfunding idea and I think it’s a major scam unless you are really lucky or really know what you’re doing you’re going to lose your money get it back without any return if you’re lucky I believe so is there anything I can do do such as trying to find other people who lost money on the same websites to try to get my money back? Or was it or written on the small print when it says you may lose your investment it seems like this should be illegal they are stating that they will return 5 times your investment in 5-years and there’s no evidence that this would ever have been possible or achievable. It doesn’t seem that crowdcube is is feeling liable for the statements produced on its website. I may be gullible but I was under a lot of stress at the time I invested I had £10,000 in an ISA account and almost zero interest on it it. So with these tax returns promised on startup companies I thought I couldn’t lose I never expected so many to go bust sorry for the long post but I believe that many companies are looking for free money and they know that they don’t have to pay the money back to honest small time investors like myself and they have no qualms about declaring bankruptcy or going into liquidation it should be illegal in my opinion but there’s nothing I can see in the Press that is saying that this is a major problem full stop any advice or feedback would be appreciated. I’m happy to share the list of companies I gave money to. they’re not Investments its just giving money away
Hit the nail on the head here.
As far as I can tell 99% of them are business already doomed to failure. Part of the problem is that their in crowdfunding sites and you have to ask yourself a simple question. Why? If their on a crowd funding site and have no other major investor then it’s likely the only reason they are there is because they couldn’t get funding from any legitimate source not even a bank loan. Which means they’ve gone well beyond high risk, they’re just failures in waiting. That’s my thought at least.
I’m not aware of any other way to gain money back apart from what @Alderms suggested.
If the companies have all gone bust then I’m unsure if you could look at any other avenue to regain any money… maybe someone else knows more. You could go after the owners directly perhaps but honesty I’m not sure how successful that would be or if the fact the money was put through a crowd funding ‘investment’ site basically screws you.
It’s a lot.
Thanks for your reply
There is a method of claiming money owed to you and I don’t see why I shouldn’t be be able to do this if certain companies are still in operation such as filmore and Union. However I’m reluctant to waste more money even if it’s just a £100 filing a Statutory declaration through the courts I can’t seem to get a an answer ASDA whether I’m likely to get any luck from it. I think the point is you have to take action before they go into complete liquidation.
To be fair I have been looking through my emails and investments I actually still have 6 company still operating but but 11 I’ve gone into liquidation or are threatening to to some of them were obviously small companies but I still didn’t want to just give money away to help a few scientists because you the Hobby for a few years. Top so the remaining 6 are mainly promising 326 x returns and does they are currently operating apparently successfully I may be able to get my money back but whether it’s worth the stress and worry and disillusion well it’s not unless I get a significant profit. I think the lesson I’ve learnt is don’t go for Small companies just because they seem ethical or well intentioned. They should be actively operating not making promises that they are one step away from having a marketable product because that’s just rubbish in most cases
Ouch. Startups fail a lot. And no, there’s basically nothing you can do as a small shareholder. Shareholders are last in line when it comes to company failure. Generally, there is nothing left.
Maybe you can add your list of failed companies to the Crowdfunding graveyard thread. It’s 100+ posts long.
I never invest in restaurants. Peter Thiel uses them as an example of an industry to avoid due to its highly competitive nature.
I also found that crowdcube is particularly poor in this regard as they have no secondary market I can find. They keep talking about one but never seem to get there. Seedrs at least does provide a secondary market so you have a chance of selling to another investor if you wish.
If you filled in EIS forms when you made the investment you can claim some of it back as loss relief
When I look at the businesses on Crowdcube, I try to imagine them as a large successful business in a few years, most of the time I just can’t image that happening. 95% of them are doomed from the start. I’m very picky about what I invest in, and so far I’ve had one successful exit and all of the rest are still trading. No failures yet
Great book and reading it again at the moment. Never would invest in a restaurant and the book definitely hammers it home.
Book is zero to one by Peter thiel btw
I love the short chapters. It helps me retain the info better for some reason
You’re on the money there
£25,000 does sound like a lot in total, and if you’re desparate to get some of it back, it must be significant to you. If that is the case, my question would be, though, why did you ignore the warnings Crowdcube gives you to limit your investment in crowdfunded companies to no more than 10% of your net assets?
Crowdcube also do warn you that by agreeing to their terms you" accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money", and that’s right up-front in the investor category description, not buried at the bottom of small print in the terms and conditions.
I’m sorry you’ve lost all that money, it’s an awful situation to be in. But you’re not going to get it back. The only thing left that I might try if I were in your shoes would be to write to the financial pages of newspapers like the Guardian, to see if you could interest them in writing a story on the dangers of crowdfunding.
Headline - Investor loses investment
Hi Fran, Sorry to hear about your losses.
I’ve had losses too in equity crowdfunding. Fortunately, I was able to minimise it due to tax reliefs and with the help of an accountant.
When you invest in EIS/SEIS eligible companies may be able to get the following tax reliefs.
- 30% on EIS
- 50% on SEIS
I hope you claimed these tax reliefs from HMRC.
What if the company goes bust?
You can claim up to 45% loss relief on the investment less the tax relief previously claimed.
Example 1: SEIS
£10K invested in SEIS company
50% Tax relief on £10,000 = £5,000
45% Loss relief on £10,000 - £5,000 = £2,750
Overall, your total loss is only £2,250 of the £10K investment due to tax and loss reliefs.
Example 2: EIS
£10K invested in EIS company
30% Tax relief £10,000 = £3,000
45% Loss relief on £10,000 - £3,000 = £3,150
Total loss is only £3,850 of the £10K investment due to tax and loss reliefs.
Fran the best thing you can do is to not lose any more money. Accept that investing isn’t,t for you put it all behind you.
The Filmore and Union you invested in is no longer in operation. They took your money, they spent it, and they ended up owing money to suppliers/staff/HMRC (I assume) that they couldn’t pay. So the company you invested in went into administration.
Someone else then bought them. The proceeds from the sale go to pay off creditors first (suppliers/staff/HMRC). Only after that would shareholders get anything. There typically isn’t anything left.
I disagree. To stop investing after you’ve made a loss just means you stay a loser. For those that lost money in the financial crash, the best decision would have been to get back in.
That said, equity crowdfunding is very risky and illiquid and it’s not something that anyone actually needs in their portfolio.
Whether that’s a lot depends on how much of your investable assets it represents. The Freetrade community has a wide range of answers as to how much they put into crowdfunding.
I personally have 13%, but won’t be putting any more in until that figure is nearer 10%.
Thought you invested in square pies
As others have said, you could read up on EIS. Some of the shares may have been eligible. The crowdfundings that I’ve invested in have all had EIS status.
Thanks very much for your reply. Yes I did did I apply for the scis and EIS tax relief when I was working back in 2014 and 15 but I think I used up my maximum tax relief in those years. I then stopped paying tax in 2016 when I was on maternity leave and haven’t paid tax since. I don’t really understand how I could claim back on the losses so in your illustration is it too late for that now? Also if by chance I do get get significant amounts back like 5 or £10,000 as it’s still promise by the operating companies would I be able to to claim this not as income but as simply return or dividend of money I partied with some time ago? I don’t understand any of this this aspect of it and don’t have an accountant
I don’t know if there’s a time limit on loss relief. It’s best to find out from hmrc.
You may still claim back those losses assuming those companies went into administration. You can complete a self assessment form and complete section SA108 33, 35, 43 and 44 and add your capital losses in the footnote - list all SEIS/EIS companies that went into admin and capital loss against it e.g. capital loss calculation is investment minus tax relief.
With £25K less £2K on bonds, you could be looking at £7K loss relief on EIS alone?..
Thank you i will try this
I Wonder Why crowdcube are not helpful enough to let me know that in their brief emails. I have the time crowdcube don’t even know when a company is going into administration as they haven’t been informed
Hello I’m not sure I was clear in my original email. I’m not working at the moment and not paying taxes therefore I don’t think I can claim any additional loss relief as all my tax has been refunded in those previous years and 2014 to 2016 I believe
You should look into whether the S/EIS shares can be transferred to your spouse, who may be able then to claim loss relief.
This suggests it can be done - https://library.croneri.co.uk/cch_uk/btr/321-750