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Accounts are due out this month and will hopefully reveal some facts about odd filings at CH. No activity on Twitter for over 12 months and no website open to non members. We had heard they had been sold but little evidence of that.
Hope you are ok out there guys. Mooooooooooosssssssssssssssssse.
UPDATE - Andrew Gardiner was good enough to explain what happened at Property Moose - see below -
The company you refer to is DFI Financial Services Ltd. This was originally Crowd Fin Ltd and conducted the funding round on CrowdCube. We did this once in 2014 and not twice.
We have subsequently conducted 5 further rounds of funding with VC and institutional investors. Part of that, was to create a revised group so the holding company is now DFI Group Ltd and the Crowdcube shareholders have shares in DFI Group through a share for share exchange. DFI Group holds 100% of the share capital of DFI Financial Services. This was done a number of years ago to remove the regulated business from our "topco" to reduce risk on shareholder exposure. Everyone was treated the same, contacted by email and letter and the shares were swapped 1 for 1 with clearance from HMRC. A large national law firm dealt with this for us.
The Property Moose model did not work after 5-years of trying and us raising c.£2-2.5m of funding to grow. We had many members but the structure of the single SPVs and the introduction of MIFID II and the risks that posed caused it to not be commercially viable. The movement in the property market and uncertainty around Brexit also didn't help.
We spotted this back in 2017 so spent the next period ensuring that we protected investor capital and gave them a solution that put them in the best position possible which was to suggest the set up of the fund that they would own. This was not a decision we could make, we made the suggestion and under our investment structure, property shareholders voted and a decision was made by at least a 75% majority. c.99.8% approve the transfer to UKDPP. UKDPP is a registered fund with the FCA and is 100% owned by the shareholders with its own team and cash-flow. It has diversification over 109 properties and means that there is no "platform risk" as with crowdfunding as it is completely stand-a-lone and a plc.
That meant the end of our BTL business but it was by far the best thing to do in the interests of our members which is our primary concern in respect of the platform. Although a negative for DFI, the suggested approach meant that DFI no longer continued to chase a model that did not commercially work and could have put us in financial difficulty if changes weren't made. As well as being in the best interests of our members, it is also the best option for our shareholders. This allows us to pause, retain the capital we have left and then look at the best ways to maximise shareholder value.
The current PM investments that remain are being exited as the terms come to an end/projects complete. At that stage, we will be looking at the platform and re-launching it or assessing the best option for shareholder value then. You mention we have no website, that is not correct but you are not a member so you can't log in. It is just closed to new people and only their for existing members to monitor their investments.
The aim since identifying the issues with the model was to slash costs, protect members and put us in the best position to then look at re-launching on an updated basis with something that works. Since then, we have cut our cost base by 10x and are in a very strong position financially to meet our strategic aims.
We update our shareholders as best we can when events occur and I am expecting to send our next update out over the summer. These are sent via email.
I have looked at your blog and note your comments that we did not give people much time to vote on the transfer to UKDPP. This is incorrect and I would appreciate it if you corrected the false statement. The first email with the vote was sent in July 2018. The final decision as to which option people voted for was then open until the valuations were conducted which gave until 1 January 2019 for batch 1, 1 March 2019 for batch 2 and 1 May 2019. As you can see, we gave 6, 8 and 10 months for people to consider and make a decisions so I do not think it's fair for you to make your statement that we did not give enough time.
In summary, we continue to focus our efforts on securing shareholder value. We have a family office, a EU funded VC and a regulated wealth management group as institutional investors as well as management and the Crowd Cube shareholders. A lot has gone on since 2014 in the market and in the macro-climate. Who could have foreseen the changes in government BTL tax laws or Brexit and the continued uncertainty that brings and the impact on VC funding. Unfortunately, the SPV business model did not work but rather than risking investor capital by introducing platform risk or risking shareholder investments by running a model that didn't work, we took, what I believe, is the mature and sensible approach to take positive action, make changes and live to fight another day.
Thursday June 13, 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.