Crowdcube

Sncjw

Hi all

I had an email from seat frog saying they are going to be on crowd cube soon which is an investment site.

I would like some information from people that have used it before. How do you make money from the investment. Seems like an easy way to invest into a company. 

MX5huggy

It is very easy to invest with CC. It’s very hard to make money. The stock you buy is illiquid (has no liquidity) so you can’t sell it when you want as it’s not traded on a stock market. YOu have to wait for them to list on a stock market, be part of some sort of merger or buy out, go bust or a couple other options. 

I put a small bet on Alpkit a company I like, I buy the product share holders get a discount on purchases (for the 1st year) and they “do good things”. I don’t know if or when I might get my money back or make money. They make stuff across multiple outdoor activities, employ people in the UK and overseas, have shops in the right places (expanding) and a great online presence. 

Here are the official risks https://www.crowdcube.com/explore/risk-warning

Seat frog, never heard of it, seem to be some sort of seat upgrade bidding platform? Works while the actual train companies let it, if they wake up and do it themselves seat frog ain’t needed? Probably got a stupid valuation based on being a “tech” company.

Zanderman

Seems like an easy way to lose money to me, as all you're doing is buying a share of something that you can't withdraw from, as explained by MX5huggy above.  And you could lose the money you paid as easily as you might gain.

And anyway. 'investing' with an outfit just because you've had an email from said outfit is not sensible investing.

There is a trend these days for firms to use the mailing lists of their clients (I'm guessing you have used Seat Frog?) to write to their clients suggesting investing.  

This is, in my view, a gross mis-use of a mailing list which is a list of people who are customers, not investment experts.  I always ignore such emails!

masonic

I can only echo Zanderman's sentiments. There have been a number of startups crowdfunding from their customers and it is quite irresponsible given the majority of them won't understand what they are doing.

If you want to throw in a tenner (or whatever you'd be comfortable losing) for a small chance it will be worth something many years in the future then the process is easy. I've made a few such microscopic "investments", which I'd categorise as donations to companies I wish to support.

DireEmblem

Think of Dragons Den.  Crowd Cube is a bit like that, where you get to be the dragon.  If the company is successful, then yes you could possibly make a return in the multiples of your investment, but this would be over the space of many years.

There is also a thing such as EIS.  The short of it is that you can claim 30% back of your investment up to 1m, in tax relief.  Then in the case of the company going bust, you can also reclaim tax relief on the remaining 70%.  So a 40% tax payer, could claim a further 28% of your initial investment back.  Essentially if I have it right, then for every £100 invested as a higher rate tax payer, you are only risking £42, not including losses through inflation or any other means.

Unless you truly believe in the company and are happy to invest with a long term mindset, then at best I would make sure this is only a very small part of your total savings & investment portfolio(<5%), as a return, if any, could take years.

Sncjw

I havent invested in seat frog as they are not on yet. I have put a tenner in serious pig. Ten quid I can afford to lose it.

Dont want to put Down alot when I don't know much about buying shares

redpete

You make money when (if):

• The business is bought by someone else (some of the entrepreneurs have this as an exit strategy); 
• They start paying dividends (seems uncommon);
• A secondary market in the shares is made available (seen it mentioned as a possibility by several but not sure how likely this is).

It could take years for any of these to happen.  I'd say there's a small chance that an investment will give big returns and a relatively high chance that it would lose everything.