Is there any way to get my money back after multiple crowdcube investment failures since 2014?

ToptionHan
I am now divorced… but will try to look into this option

Regards
Francesca

This has been a recurring theme with some people I know offline as well. What entices people who do not have investing knowledge or experience to go deep into (crowdfunded) private equity investing? This is normally sophisticated investor territory, and even for a sophisticated investor it’s a minefield.

I used to tell people that if you have a crowdfunding private equity portfolio and can’t even calculate its covariance, you have no reason to be there unless you’re asking for trouble. I know it sounds like gate keeping, but seriously, there are “easier” and “better” understood investments for retail investors who don’t know about economics, finance, and security analysis.

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This is an interesting discussion area.

I’m interested as to whether others have in general had bad experiences.

So far I’m sitting on a bunch of companies that are almost entirely still trading, done some raises at higher valuations but still far from an exit.

I have 1 failure out of 14 in 3 years so far. My concern is more “getting an exit” than losing ALL my money …

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I haven’t, thankfully. (Yet.) I’ve looked at plenty over the years, but only ever actually put my money in to two (Freetrade being one of them, natch).

Of the ones I decided against putting money into, looking back at them now I would say that for 90% of them I dodged a bullet (hello, Sugru, among others), 9% of them are still too early to tell, and the other 1% would be Brewdog (still think as an ‘investment’ they don’t add up, but looking at them as a ‘fanclub’ is another thing).

I find the question I always ask myself when looking at a company asking for crowdfunding is “Why are they crowdfunding?”. Or to put it another way, “Why aren’t they getting any tasty, tasty, VC monies?”

The answer is invariably “because something doesn’t add up here”, and so I pass.

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I’ve put a relatively small amount (a couple/ few hundred quid) into quite a few. My approach was that many will fail, some will chunter on but not be up to much, but one or two will hit the big time. Some have failed, many have not failed as such but have not progressed, and a few are doing really well. On paper, at least, I’m up, and after tax benefits I’m way up. Fingers crossed on a few gems but I’ve not bet anything I can’t afford to lose.

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Although almost correct (45% of £5,000 would be £2,250 hence the loss is £2,750 :wink: ), it is important to note that the actual “loss” (in case of a liquidation it is the amount invested less 50% [30% for EIS] originally claimed) is essentially deducted from your income (£5,000 in the example @adavid has suggested).

If you are an additional rate taxpayer (£150,000 of taxable income or over) then you win the whole 45% relief since the slice that otherwise would have been taxed at 45% disappers. If, however, you are a basic rate taxpayer, your loss will only be reduced by 20% as it is all you pay in income tax (40% for higher rate respectively).

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Thanks for your calculations. Mostly i paid 30% i think. But i don’t know how to claim a loss as my tax refunds were all used up in the years i was investing. I think about 3 years altogether then i stopped paying tax in 2016. I am divorced so can’t claim against a spouse

Regards
Francesca

7 of my 19 Crowdcube investments have now failed in one form or another - 2 CVA, 3 ceased trading and purchased by other companies, 1 where the founder had serious medical issues and 1 reorganised to the point where the share value is minimal.
Am still unclear as to whether EIS loss relief is applicable in the event of a CVA (i.e. UK Building Products “Gripit”) or ceasing trading and purchased (such as Sugru, Hopstuff and Filmore Union)

Great post but regarding BrewDog I think that all depends which round you entered. I was fortunate enough to get there in pre the TSG 22% stake and the 5/1 share split. Now if you’d gone in at the beginning you are looking at x50 return, although via the annual share trade day that’s probably more like x25/30, which is mainly early investors derisking. I personally think the future for for BD is extremely positive (well of course I would say that right) :wink:

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Without sounding insensitive, it does concern me the questions that are asked by many crowdfunding investors. Clearly not reading the pitch/terms/conditions/risks associated with this type of investing. Don’t get me wrong I’ve made a few mistakes across the 100+ investments I’ve made over the past few years but whether you are investing £10 or £10K you need to do your homework. My advice would be start very small (easier said than done when some of pitches talk about x50-100 returns) and then only increase the investment amounts once you have built up suitable knowledge of what to look for and you are comfortable losing the lot or having you £ locked in for multiple years. Even then it’s still a gamble but at least a slightly more calculated one. Good luck all. After all these years I’m still learning every day.

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To be honest just seeing them claiming that that would start setting off warning bells for me. It might be possible in rare cases but these would be the exception

Same. I’ve got the mantra of invest in good businesses, not good promises with Crowdfunding.

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Hi
I think it’s a waste of government money to be honest funding some of these EIS companies and I also believe it the way that crowdcube promotes these companies should be of these companies should be cracked down on in some way.

The way that the small companies have not returned money even though they could have made some attempt to do so is what upsets me they seem to spend everything until there’s nothing left.

I invested in the following companies which have been liquidated filmore and Union which is still operating in some branches and I want to know if I can claim money from another branch.

IO light

savvy foods

innovation makers.

Psonar.

Square pie bond.

And a few 1000 in the shaving company Cornerstone which is operating and was claiming had 17000 members and advertising a lot the last couple of years. They’re continuing to operate and offering 3 for 2 on the products but claim they will not be able to give a return. they seem to have no obligation to return the debts that’s what irks me

Do you think we can claim money from filmore and union through a statutory form for money owed? There are branches still operating

Regards
Francesca

As I explained earlier, the answer is no. Is there any way to get my money back after multiple crowdcube investment failures since 2014? - #17 by Han

It’s not debt. It’s equity. Only the bonds you held are debt.

In a company failure bondholders have a higher priority than holders of equity for repayment. But even the bond holders are not likely to see any return.

Here’s the Square Pie Administrators report. Bondholders got nothing.

https://beta.companieshouse.gov.uk/company/03605922/filing-history/MzI0MzczNDc3NGFkaXF6a2N4/document?format=pdf&download=0

But you’re not owed money. Statutory demands are for when you’ve loaned money or provided products or services that haven’t been paid for. It seems as though you have equity, and if the company is effectively worthless then they owe you nothing. You could pursue them for fraud in their pitch, but if you issue a statutory demand it will be thrown out at best, and at worst you will have to pay their legal costs for having it set aside.

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I was not aware that Iolight had liquidated! Last update from them by email in July 2019 and no update from Crowdcube as usual. The website is still active but will check further
If they have it will my 8th Crowdcube fail

Steve do you mind me asking - 8 out of how many? And what’s the average time to fail from investment?

8 out of 19 (although I believe Iolight is still operating). Would need to do some more analysis of the average time but suspect 2 to 3 years.

Hi
Sorry for any confusion I posted the iolite has been liquidated but I made a mistake I had a positive email from them in July although they are still selling a very small number of products

Regards
Francesca

Hello han
you helpfully replied to me recently about my crowdcube Investments failing. I find it quite strange that I have received an unreadable red background email from filmore and Union about Veganuary in the restaurants. if this group is still operating can investors like me not file for money to be returned please? I know I’ve previously been told I can’t claim but if the company is still operating or under the same brand name truly they are not liquidated there is no contact details available for the company which is suspect, but I believe that they sold off some of their cafes and restaurants to a different company

Thus is part of the email

OUR NEW VEGAN SMALL PLATES

Since 2014, Veganuary has inspired and supported more than half a million people in 178 countries to try vegan for January - and beyond. This January, we thought we’d give it a go! ⁠

We’re launching 5 new Vegan Small Plates at Beverley, Ilkley, Wetherby, Redbrick and John Lewis Newcastle. Until the end of January you can choose 3 small plates to enjoy for just £12.

Regards
Francesca