The sale of Feedr should be a thing of celebration but it is not currently as some Crowdcube investors are questioning the supposed Return on Investment.
An investor I know personally is disputing the claim by Matt Cooper that investors got 2.8x returns as He only got 1.768x return on investment which is 1.69x after fees.
His calculations:-
share price bought at £1.34
sold at £2.37!
2.37/1.34 = 1.768x
but in fact after fees I received 1.69x only
£19.5m / £4.5 = 4.33x
Where
£19.5million (His conversion) = sale price in Dollar terms was $24million
4.5million = preMoney
I think there is need for full transparency. I did not invest in Feedr so I do not know what is going on only sharing the information given by my investor friend.
As for the information on 2.8x it was Matt Cooper of Crowdcube who posted it on LinkedIn in a congratulatory message to Damien Lane of Episode 1.
So is it 2.8x or 1.79x or 4.33x?
Another point raised by my source 😄😄😄was the promise of 8 - 10x during their raise. Was the Feedr team rushing off the sale to early or too optimistic in their projection? I
Feedr investors this is your day in the sun!
Congrats to your pal! Awesome that Crowdfunding has had two exits in a month. On the flip side, sorry to hear about the possible screw-over. I'm not an investor, but i'm hearing similar tales from friends and acquaintances.
I think a plausible answer is that Matt is omitting any fees (note: there were no Crowdcube fees to investors at the time), but including EIS relief in his calculations, i.e. he's accounting for the fact you get 30% 'cashback' on your initial investment. But even then, the numbers don't *quite match up.
quick rundown: 2.37 / (0.7*1.34) = 2.5 ~=2.8
On the discrepancy between exit valuation and returns, my immediate reaction and only logical explanation is that dilution and VC terms are at play (There was VC investment at the same share price as crowd but with liquidation preference also, according to Companies House) . I obviously don't have all the facts and I could be wrong about any of the above; A waterfall analysis (how much did the VCs get?) would shed a lot of light on the situation imo.
Edit: Again, according to Companies House, VCs bought a tad more shares than the crowd, but at the same price, possibly nicely explaining how CC investors got ~£8m of the ~£19m total payout, with VCs getting the remaining £11m; doesn't seem terribly far off?
This is why my pal and others raised questions.
Ah, hopefully Crowdcube will shed a bit more light.
I'd be surprised if the VCs share alot on their returns though, they tend to be quite secretive about these kind of things in my limited experience.
Anyway, hope your mates hear back.
Thank you for this. I sent your response to