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Asset 1005


Threefold rise in complaints to the Financial Ombudsman Services for Equity Crowdfunding.

As we predicted, the 3-5 year time lag for equity crowdfunded business to spend their investment and close down, is now rapidly pushing up the number of complaints to the FOS. Numbers are still small as are the failures but the backlog of zombies waiting in the wings is huge. Like a Fruitbat Rave. 

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It is sort of obvious but people have been pretending it isn't. If you fund rubbish businesses run by mediocre business people, with crazy financials, they will not last. Now in 2018/19 we are starting to see the consequences. Our new platform ECF.Buzz, when it launches in July, will have a database of over 1200 funded businesses. You would be amazed at the number of these that are zombies or going nowhere - but that have not closed. Amazed  - not in a good way. Complaints to the FOS only ever come after a business has officially failed. 

So the 3 fold rise from FY 2017/18 to 2018/19 from 26 to 78, is hardly a surprise to us. We'd be pretty certain that this 78 is made up from Ethos Global, Sugru, Emoov, Recruitive Software, Fantoo, Stamplay and Gartenzwerg . We are now helping investors make these complaints and the FOS do not make it easy. Like Parkour, it isnt something you would try more than once, unless you live in Gaza. It actually makes you want to cry. 

We would not be surprised to see this number go up by ten times or more for 2018/19. Pigs are pigs, even dressed up at the bar. At some stage one of them will fart and give the game away. 

Wednesday May 15, 2019

Hardman and Co’s Brian Moretta in conversation with ECF Buzz Founder Rob Murray Brown on start up investing, equity crowdfunding and what’s a good read.