I hate these secondary sales for these over-hyped businesses. Makes crowd investors feel special but the share holders are using this route as institutional and VC money doesnāt want their shares.
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You pay for access, but the premium does not justify that at all. Comparable businesses crashed 50%+ from peakā¦
Whatās also tricky is that the secondary rounds donāt come with any discussion forum nor additional information from the company. All you have is the public account filings, which are very sparse.
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Wombat Invest have a new round on Crowdcube [Wombat Invest successfully raised Ā£1,000,000 Jul 2022.] at a Ā£23M valuation.
They have stated in the pitch that they have ā230k app users and growing 15% MoM on avg. with 22% organic growthā.
In the FAQ section they have: āWombat Invest Ltd define users as anyone who has downloaded their app.ā
This could be interpreted to mean that their number of users can never decrease as you cannot un-download an app from the store.
So they might be including in the user count: someone who downloads the app and never signs up, or even someone who does signup and subsequently closes their account. If this is true, the 230K user count in my opinion is really misleading.
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Any business using downloads as a KPI is one to avoid as you can easily buy check download traffic.
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Iāve just tried the app and had a look at the deck. Lots to like:
- UX is good
- Reviews are excellent
- VC backed
- Credible investors/advisors on board
- Sensible valuation
- EIS
The founding team are very green (no track record to speak of). But given what theyāve built so far , they must know what theyāre doing. I donāt like their monetisation strategy - freemium model. This will likely go the way of all other social apps - build a user base (burning buckets of cash) then bolt on an ad platform.
So thereās good upside (their ambitious user projections could be conservative), but an exit is way off and signifiicant dillution is likely.
Overall, I think its filling a gap and worth a punt. What are your thoughts?
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The only investment I have worth talking about is small robot company. There next funding is private. Unlike a lot of companies on crowdcube they answer questions on the discussion board mostly the same day. Constant updates. Lots are video where you can ask questions. Itās a farming company with lots of farmers paying to be first in.
First robot goes round field noting down where every plant is (wheat only at the moment). Next robot will go round the field killing the weeds, either spot weeding (roundup I assume at least a 95% reduction in usage). Or using rootwave which uses electric shock to kill the weed down to the roots. The weedkiller they use at the moment for black grass is beginning to fail. If the problem isnāt dealt with harvest will eventually fall possibly 50%.
Also had a electric car company lost about Ā£800 on that and have about Ā£1400 in small robot company and a few Ā£50.
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Agree with you on SRC, their comms are very good, they seem highly regarded in the industry and look like they have an exciting trajectory ahead
The only question they are not keen to give an extensive answer to is, when will my Ā£1,400 investment be worth Ā£1,000,000. A bit disappointed they canāt answer that simple question!
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The Bolt secondary on Crowdcube is a bit of a disaster.
Isnāt this good as it shows that the crowd wonāt buy in at any price?
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It shows the Crowd arenāt complete imbaciles. But that Bolt valuation is one the most egregious Iāve seen.
Yes,I agree
Anyone looking at Penfold?
utterly unconvinced. A decade ago theyād have been bringing something new to the market, but PensionBee paved the way and so thereās nothing meaningfully unique about Penfoldās product.
PensionBee, as a comparable, has close to Ā£3bn in AUA and generated Ā£12m in revenue last year. Penfold are valuing themselves at Ā£40m in this round (~50p per Ā£ of AUA) vs. PensionBee which is valued at Ā£170m (5p per Ā£ of AUA). You could invest in PensionBee today, at 1/10th of the valuation on an AUA basis, with all of the benefits you gain from investing in a public company (like liquidity, audited financials, demonstrable revenue generating ability). Given that AUA is the revenue driver for these businesses, it seems very difficult to value Penfold at 10x PensionBee (on an AUA basis). Penfoldās fees and PensionBeeās fees are basically equivalent.
Iām all for demystifying pensions and think that anything trying to make pensions more accessible is a good thing, so Iām all for Penfold as a business and I hope they succeed, but as an investment, I cannot come up with a justification. Thatās the sort of valuation youād expect to see if there was huge upside potential, but whereās that going to come from, when generating >.5% of AUA in revenue is basically impossible?
The key difference between PensionBee and Penfold is the B2B customer acquisition angle which sounds compelling butā¦ is it? There is overhead associated with administering a pension scheme on behalf of a company ā hence it is attractive for these companies to outsource to Penfold! ā and if the companies are not generating enough AUA from their employees, it could be a very expensive customer acquisition channel for Penfold that doesnāt actually deliver a positive return. A single customer with a pension of Ā£100,000 is worth more to Penfold than 100 customers each with Ā£1,000 in their pension, especially if those customers are through an employer pension plan which Penfold are burdened with managing.
I highly recommend looking at the PensionBee annual report for 2021, it contains some very interesting insight into their acquisition strategy which should hopefully provide some value when considering Penfoldās proposition.
I hope they succeed, but theyāre horrifically overvalued, even considering the EIS benefits.
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Thanks for the analysis. I agree with your points.
Iāve invested twice in Penfold great team and great product. They are going to continue growing and eventually I can easily see them being acquired.
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Exit opportunity for VitaMojo investors. Ā£1.15/share. Not worth it IMO.
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Indeed - only if you need some liquidity I reckon. Iām holding for the long haul and hopefully be handsomely rewarded as they put the $30M war chest to work. Itās a gamble worth taking for meā¦.
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I have said consistently from day one VitaNoJo
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Oh great Juno please do share your factual wisdom as to why or is it just a random statement? Itās fine if it is but would love to know your reasoningā¦
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