Chatting to a mate who owns the UK's premium craft beer distribution business our conversation turned to an innovative brewer raising money via crowd funding.
While we agree on this brewer's fantastic products our views divided over the merits of its crowd funding offer. I'd allowed my head to be turned by the brand (and it's delicious beer) rather than looking at the return on investment (or not) being offered. My mate, an industry expert, knew the context, history and likely returns on offer so could take a considered view on a possible investment: don't.
This week it was announced that cycle clothing brand Vulpine was being moved into administration. This surprised me as, only days before, I'd been reading about its latest crowdfunding attempt on a leading crowd funding website. All talk was positive, the narrative was enticing, backed up by a stellar track record of brand building including using Olympic hero Sir Chris Hoy as a brand ambassador. From what I have since read it was a surprise to many others too - unless you happened to an expert in the cycle clothing and apparel business.
Now, it has emerged that the fundamentals of Vulpine's balance sheet were far less rosy with the previous crowd funded money - a tasty £1 million - already gone having been spent on stock and director salaries - instead of investing in growing the business.
In a few clicks and a passing glance at the legal disclaimer it is possible to join the hip crowd and become an angel investor or grab a share of a fledgling start-up business.
While crowdfunding businesses and platforms showcase brilliantly the glossy brand shop front of start-ups in every conceivable industry, they do little to provide the hobby investor with a true picture of the health of the business.
That Vulpine was discussing administration while at the same time allowing crowdfunding investors to back them may not be illegal but it seems pretty immoral to me. In its latest crowdfunding efforts it was valued at £6.5million yet now offers little more than £250,000 worth of stock to be sold at knock-down prices. It begs the question: is crowdfunding the next big financial mis-selling scandal?
It certainly makes Vulpine my mis-communicator of the week.
Mis-Communicator of the Week is written by Edward Staite.
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