What if Crowdcube went into administration?


#1

I am curious to know what would happen to our Freetrade shares held with the Crowdcube nominee should Crowdcube itself fail and go into administration?

Why do we need the Crowdcube nominee at all, can’t Freetrade hold their own shares themselves in their own nominee account?

Cheers


#2

I know some are in a nominee structure but I don’t think the Freetrade ones are.

Even if they are, I’m sure there’ll be some transition to make it right, although might cost us.

By the way are you basing this off CrowdCube’s increase in losses from £5 million to £5.3 million?


(Vladislav Kozub) #3

Interesting why you raised it, Experian agrees with you…


#4

I had read an argument that Crowdcube was not doing well and so yes this motivated me to ask the question/


#5

All startups are risky :slight_smile: What does it say for Monzo, Revolut, and Freetrade…

I heard CrowdCube might be raising funds again this year. They are moving in the right direction for all their metrics. Even a 300k increase in loses is not much given the progress they made.


(Vladislav Kozub) #6

Monzo - 25, High Risk
Revolut - 15, High Risk
Starling Bank - 97, Very Low Risk
:freetrade: - 87, Very Low Risk

I took Starling for comparison to show that startups are not always identically risky even within the same sector.

P.S., Freetrade’s score is not yet affected by the ~£3m raise so quite likely to rise later.


#7

Thanks. Their scoring doesn’t make sense to me.

I would rate all of them as high risk at the moment.

Monzo & Revolut have more users than Starling Bank. Like multiples from, 7x to 20x.


(Vladislav Kozub) #8

Experian score is driven by current financial situation, which is better at Starling and Freetrade. It does not evaluate your growth potential and current market share so not the greatest analytical tool.

Just a very rough indication of financial stability, whereas Freetrade and Starling with their cash are deemed more sustainable.

For instance, most of the legacy financial services are at straight 100/100 purely due to their revenue and balance sheets (except TSB with 73)


(Calum McWhir) #9

In the context of Freetrade shares only, not a great deal. All that truly matters in my opinion is the content of my shareholder register. In this way, we do not utilise the Crowdcube nominee system (which incidentally I don’t know much about).

This has been covered elsewhere but if a B shareholder was to sell their holding, it wouldn’t have any legal effect unless it was notified to the company and we approved of it (as governed by the company Articles). For the same reasons, CC folding would not affect our internal register which is the source of truth as to share ownership.

The above is not to say CC going out of business wouldn’t affect you or other holdings in another way. Struggling to identify any of the top of my head, though.


Who manages my Freetrade shares?
(Calum McWhir) #10

I’m no analyst but likely a very crude analysis of assets and liabilities with an arbitrary grading. It might mean something to some, but nothing to me!


(Vladislav Kozub) #11

Not fit for all purposes, but it certainly helps if you want to contract a provider for service provision but do not have time to evaluate their financial stability. Simply check the score and if it is below 50, likely that you would be better off with another company.


#12

At this time do we know how well financially Monzo are doing?

Does Experian have info we don’t?


(Vladislav Kozub) #13

Experian only collates their Companies House reports and gives their “expert” opinion. All they see is that the loss increased from £1.6m to £7.9m. However, due to the Balance Sheet increse from £0.5m to £18m, their score is closer to “Below Average” risk than above mentioned Revolut (these guys’ net worth was only £3m with same as Monzo’s £7m loss).

But Revolut still have not published their 2017 report which, according to them, has achieved a breakeven point (for a day maybe).


#14

So your share holder register has our individual names and details and not everyone just lumped under Crowdcube Nominees?


#16

I think I understand my own confusion. My Monzo shares are held in nominee, therefore I thought all Crowdcube raises were handled the same but Freetrade does not use Crowdcube nominee at all and has it own share register?

p.s. I need to ask this question to Monzo!


#17

Yes. Your name is in a specific Company House submission ( can’t remember what it’s called ).

Monzo is using a nominee structure, so the Company House filing will just say Crowdcube…but Monzo have the details of who is a share holder as well. Plus your certificate and email from Crowdcube, paper trails on a long way.


(Calum McWhir) #18

Yes.

Confirmation statement.

While pretty much all true this would seem to pose more of a problem on the face of it if CC did go out of business (or the nominee company, more specifically) for potentially the same reasons as the Beaufort Securities case. As I’ve said above I’m not familiar with their nominee arrangements, so I would recommend speaking to the relevant parties and of course doing your own research. But - the legal owner is the legal owner, regardless of any implied beneficial ownership by a nominee structure, and this will have some effect in any administration proceedings.

[In the event I’m materially wrong on this I will amend the post accordingly.]


#19

The Monzo shares are held for you in trust by Crowdcube nominees which means they belong to you, not Crowdcube - so in the event of their bankruptcy the shares would still be yours. Here’s a link with further info. http://monevator.com/nominee-accounts/


#20

Not to complicate matters but CROWDCUBE LIMITED owns CROWDCUBE CAPITAL LIMITED which owns CROWDCUBE NOMINEES LIMITED.

And I, amongst others, directly own a small part of CROWDCUBE LIMITED

Joking aside, Callum hit the nail on the head when he said


#21

Sooo … you’ve got my shares have you? hmmmm … :scream: