News blog
EIS Crowd 21 November 2016
- BY: Andrew Hore |
- POSTED: 21/11/2016 |
Research by AltFi Data (Where are they now? 2016) shows that the vast majority of crowdfunded companies in its sample, which covers 2011-2016, are still trading.
In the three years between 2011 and 2013, 73.6% of the companies that raised money via equity are still active, although one company that raised money in 2016 has already gone bust. The valuation estimates show an overall positive return in each year, with or without EIS and other tax relief, but this should be viewed with caution.
There were 751 companies that have been involved in 955 fundraisings during the study period. These raised money through six platforms - Crowdcube, Seedrs, SyndicateRoom, Code Investing, Angels Den and Venture Founders. The information about the companies is based on Companies House records and surveys of the companies’ themselves. The average age of the companies raising money was three years.
There have been five exits by companies raising money, while 88 companies appear to have gone bust or ceased trading - this does include companies that are in administration so there is a small possibility that they could come out of administration. A further 79 appear to be in financial difficulties.
Of the rest, 216 companies have subsequently raised additional money at a premium to the original issue price, while 34 have raised money at a lower price.
This leaves 533 companies that are still trading but have not raised additional money through share issues, or have done so at the same issue price. These are deemed to have an unchanged valuation but in reality there is probably a mix of performances.
In 2013, nearly two-fifths of funds were raised by companies that have gone bust or are in financial difficulties - up from one-quarter in the previous year‘s survey. At the moment this is the worst year, and it compares with less than one-fifth of the money raised in 2014.
This research will become more and more useful in the future as the sample size increases - 2013 and 2014 are the only two statistically significant years on their own. AltFi says standardised information across platforms and independent verification will make it easier to assess crowd investments.
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On Wednesday 23 November, a Tech Investor evening is being held at 5.30pm at Smith & Williamson, Moorgate, London.
The companies include MotionLED, TG Matrix, Urban Intelligence, miSPORT, Nous Global Markets, Collective Clarity and Earth Miles.
MotionLED Technology supplies outdoor advertising media that displays images based on the movement of the viewer, with the transport sector the main target.
TG Matrix has developed a platform that can match transport requests with carrier capacity with the best match based on price and carbon footprint.
Urban Intelligence is a start-up business that is developing technology and services that help to prepare planning applications.
miSPORT provides online golf coaching via a free platform for golf businesses, clubs and publications. These organisations can generate income from adding value to the services.
Nous Global Markets is a fintech and gaming start-up that has developed TIQL.co, a micro-trading platform. Nous wants to make it easier for individuals to access financial markets safely.
Collective Clarity develops artificial intelligence-focused software that can be used by financial organisations for use in assessing investments and monitoring them.
Earth Miles has developed an app that rewards physical activity - walking, running and cycling - with healthy retailer awards. Users are offered special offers, discounts and freebies.
Cleantech Investor is holding an event on Big Data & Transport at Merks & Clerk in Covent Garden, London (https://cleantechinvestor.mitingu.com/big-data-1/in/uil?m=75na) on the evening of 22 November. This is the first of a series of events assessing the applications of big data in a number of sectors. A number of speakers will cover areas, such as urban informatics and disruptive automotive services, followed by a panel discussion and networking drinks.
Social Stock Exchange is raising up to £2.75m via a crowdfunding through MyMicroInvest Finance and could raise up to £5m in total depending on the level of investment by professional investors. The pre-money valuation is £4.47m. A minimum of £250,000 needs to be raised via the crowd and £261,800 has already been invested. Belgium-based MyMicroInvest will subscribe for up to £2.75m of participatory notes at £100 each - equivalent to 40 shares at 250p each - and it will charge a subscription fee of 5% to investors. A further £750,000 has been raised by professionals. This is not included in the crowdfunding figure.
In the year to July 2016, Social Stock Exchange generated revenues of £477,000. In the year to December 2017, Social Stock Exchange believes it can generate revenues of £1.66m. Social Stock Exchange has made cumulative losses of £3.5m between incorporation in 2007 and July 2016 and it requires the minimum subscription level for working capital. There are also plans to further develop the impact reporting methodology to make it more scaleable.
Additional funds raised will be put to use for marketing and brand development and the launch of local versions of the exchange in the UK and in Europe. The first offshoot will be in Liverpool and each UK exchange is expected to cost £500,000 to set up, with Scotland, the West Midlands and Manchester likely sites, while European versions could cost up to £1m each. These funding requirements are spread over three years.
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AIM-company focused crowdfunder PrimaryBid is offering investors’ the chance to become involved with broker-led placings rather than just bidding for shares in a particular company without any guarantee that the company wants the funds.
PrimaryBid will notify any registered user who is ‘watching’ a particular company when a broker has approached the crowdfunder as part of a book build for a placing. A user can choose to participate and will immediately have to pay the amount of the investment by a debit card.
PrimaryBid has simplified its registration procedure and investors can bid on companies - for non-broker-led financings - without making a deposit. A new smartphone app is due to be launched and this will enable applications for broker-led placing direct from a phone. So far, PrimaryBid has raised £4m for AIM companies via 14 fundraisings.
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Another crowd funding platform, SyndicateRoom, is trying to provide additional capital for quoted smaller companies by launching its own AIM WatchList, that will enable its members to pledge capital to a company on the list. Each member of the WatchList has an experienced professional as a Watcher.
Members can pledge money at a required discount and SyndicateRoom will aggregate the demand and approach the company, which chooses whether or not to accept the funding at those terms. The pledges are binding and SyndicateRoom says that it will obtain the best possible transaction and best terms for members. These pledges are made even before a company has decided whether it wants to raise money.
The companies on the WatchList provide existing financial and corporate information and have potential access to, and an indication of, additional funding with little additional cost.
All of the companies have been trading for a number of years and are generating revenues. The WatchList includes automotive testing systems supplier AB Dynamics and 3D x-ray technology developer Image Scan, where Charles Breeze of Larpent Newton is the Watcher, and utility infrastructure services provider Fulcrum Utility Services and touch screen products manufacturer Zytronic, which Chris Boxall of Fundamental Asset Management is the Watcher.
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