I know that Seedrs normally have a salary cap that is in the investment agreement for I think 3 years and after that I guess the founder can take what they want especially if they are over 51%. Its probably a flaw to be honest given how we have seen most companies take well over 3 years to make meaningful profit so the cap I think would be more sensible if extended to say 5 or 7 years with a link to profits so that if they do make money there is a bonus element based on results. If you are over 3 years in and past the Seedrs cap clause and running low on cash there may be a temptation for some to empty the cookie jar. Given the failure rates we all see at early stage I think thats a risk that the nominee should cover.
It would be interesting to see how the 600k annualized compares to the amount that Seedrs agreed for the first 3 years
This looks a bit strange to have so much taxes and social due for 6 employees. Maybe VAT and PAYE/NI , but if I was a shareholder or nominee I would be asking for an explanation and if the company was compliant with filings and payments to HRMC. I think that generally, HRMC look at filed accounts when looking at overdue payments to see how solvent/insolvent a company may be so if a company omits any liabilities that are significant it may affect HRMC judgement and how they deal with a company. Of course, a general comment and not suggesting that this may be the case here
I think that they have got in a pickle here. If the company is doing a buyback then it will need retained earnings and have the ability to pay liabilities due within 12 months. Given that there is say 2m of backpay to be accrued and that would go against retained earnings then I don't see how there can be anything there to make a share purchase. I am sure that with their collective legal expertise at Seedrs they will have pointed this out that it may not be legally possible. Would probably also mean that the company was potentially trading whilst Balance Sheet insolvent with those off Balance Sheet commitments and if they were not noted in the accounts sent to shareholders, if I was a shareholder I would have some issues relating to disclosures. I assume that the nominee was receiving the accounts that shareholders are entitled to under the CA and not just a CH abbreviated filing. Presumably, the nominee also approved minutes etc for the loans and debt as that would normally be one of the items that requires shareholder approval especially when from a related party to the majority shareholder
I remember seeing them present at a pitch to Monaco Venture Capital Association probably 4 or 5 years ago and I liked the concept as the debt being packaged did seem a lot lower risk than the normal P2P stuff but I didn't get the feel that they had too many marketing plans and they felt that the product was so good and novel that punters (I suspected they were thinking cityboys with a fat bonus cheque) would pile in as a way of using sleeping money.
I think the point you make of the salary expectations of employees (and maybe founders ) in this sector make it hard to make money unless the AUM ramps up pretty fast as they are always building infrastructure and associated costs to run the big AUM and when that is delayed the burn can be horrendous and the employees lose interest as they can't see bonuses a capital gain in the headlights
From a Crowdfunding point of view though it probably a better bag to be holding than 90% of others with some value