The controversial description of online agency eMoov as being valued at £20m - even though it currently does not even make a profit - has been justified by its chief executive Russell Quirk.
In an interview in Business Matters Magazine Quirk explains that his description of the company’s value, made in its latest crowdfunding pitch for additional investment, reflects hope rather than actual value.
“With disruptive businesses, it’s much more about aspirational value” he says
“We are only scratching the surface of an industry worth £5 billion a year. If we and others like us [online agents] crack it, and there are four or five big payers like we think there will be by 2020, you can imagine what our value might be” Quirk says.
“To give you an analogy, if you build a house, you have to buy the land, the bricks, the tiles, the bathrooms, and kitchens. Before you can realise the value of that house, you have to lose money. That’s exactly what it’s like building a growth business. It’s about the likelihood of what the potential value is” he adds.
He says AirBnB has recently raised $1 billion of funding yet it loses about $150m a year. “But their valuation is now over $20bn and lots of ‘clever’ people have put a lot of money into it” says Quirk.
eMoov’s crowdfunding bid is for £1m but after a promising start - it raised £469,000 within 24 hours and £535,380 over the full three day Bank Holiday weekend - more recent investments have been sluggish.
As of early this morning, it had raised a total of just £690,000 with 22 days left for investors.