Crowdcube denies cover up of failed management company

Rebus Investment Group went into administration in January, despite having raised £816,790 through Crowdcube in March 2015. The crowdfunder has said that investors were aware of the company’s financial position.

“It has been suggested in the media that the Crowdcube pitch was used to cover up cash flow issues at Rebus. This is simply not the case,” Crowdcube said in a statement.

“Verified financial information about Rebus was provided on the pitch, including cash flow and financial statements, as well as an additional warning that made clear that the company’s business model meant it had variable cash flow. Crowdcube has a team of legal and compliance professionals dedicated to this and ensuring that all pitches on the platform are fair, clear and not misleading.”

Rebus had two meetings with ReSolve in May 2014, a corporate finance advisory unrelated to the crowdfunding firm, to discuss potential funding options prior to its raise on Crowdcube.

The crowdfunder said that though it was unaware of these meetings, it is normal for businesses to explore different funding options in their early stages.

It added: “As many entrepreneurs and investors will appreciate, raising finance is difficult and not every conversation with an adviser or investor will result in an investment. Disclosing details of previous fundraising attempts is not standard practice even in traditional fundraising.”

Crowdcube said investments are known to come with risk and said it provided full disclosure on Rebus’ profit and loss, cash flow and balance sheet from May 2013, which was clearly displayed on the company’s pitch for all potential investors to view.

“We would like to assure investors on Crowdcube that as a company that is authorised and regulated by the Financial Conduct Authority, we approve every pitch on Crowdcube as a financial promotion before it is published,” Crowdcube added.

It said that all claims made by the business are reviewed and verified and that due diligence is carried out on the company, its legal structure, financials and directors.

“It is worth noting that as a result of our stringent due diligence processes, around 90% of the businesses that apply to Crowdcube don’t pass our vetting and therefore don’t make it onto Crowdcube.”