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TODAY'S OTHER NEWS

Emoov collapse forces online rival to scrap crowdfunding pitch

The online sales and lettings platform TheHouseShop has scrapped its £500,000 crowdfunding pitch - and it’s blaming the collapse of online agency Emoov.

TheHouseShop put a pitch on crowdfunding website Crowdcube at the end of last year; prior to the pitch being open to all investors it raised some £250,000 from early private investors. 

Then on November 26 it started a 30-day public fund raising campaign on Crowdcube, which should have been completed at the start of the Christmas break. 

However, the pitch was withdrawn after a relatively poor performance during much of the 30-day public period. 

A spokeswoman for TheHouseShop told Estate Agent Today: “Unfortunately the collapse of Emoov and the resulting negative sentiment and PR spotlight towards Crowdcube became too strong to ignore and we became concerned that it was potentially damaging for us to continue the campaign.

“We have made the decision to finish the funding round privately and we offered anyone who had expressed an interest in the Crowdcube campaign the opportunity to invest privately. We expect to close the round by the end of this month and it looks like we will achieve our target”

The spokeswoman adds: “We got some great exposure and have attracted a lot of new investors which has made the exercise a success regardless.”

Crowdcube and the now-defunct Emoov have been at the centre of controversy over the tactics used by some companies raising vast sums of money through crowdfunding.

Emoov raised approaching £2m on Crowdcube over the summer of 2018. 

However, Estate Agent Today revealed in December that Emoov revised its own valuation from £104m to £51.8m at the end of that crowdfunding exercise on Crowdcube. 

This was an entirely legal tactic - undertaken within the cooling-off period when investors can review their investment and change their mind if they wish - but it raised substantial debate over whether investors had a realistic picture of the online agency’s true position.

TheHouseShop’s withdrawn crowdfunding pitch, which described the firm as having a “scalable business model with diverse revenue streams”, also had a controversial valuation of some £10m, which raised some eyebrows in the estate agency industry.  

Before the pitch was removed from the Crowdcube site, an online questioner raised the issue by asking TheHouseShop: “Can you please explain, you have placed a £10m valuation on a business that has a turnover of £180,000 in 2017/8 and created a loss of £700,000. … That is 55 times turnover, which seems very optimistic.”

TheHouseShop replied: “After consulting with our investors and advisors we decided that a £10m pre-funding valuation was both accurate and fair. The figure is based on the size of the addressable market, the potential return on investment, the products already deployed, the website traffic, our search engine optimisation which puts us on first page of Google for more than 4m search terms and the scope of the platform we have already created.”

TheHouseShop - until 2015 known as The Little House Company - allows individuals to list their properties privately, alongside listings from agents and new-build developers. In 2016 it also took over the Accessible Property Register, a website specialising in promoting wheelchair-accessible homes.

It says it raised £1.75m to launch itself in 2015 and since then has listed three million properties, and had as many as 800,000 visits in one particular month - January 2018.

* Meanwhile it is reported that another online agency - SellMyHome - laid off five staff shortly before Christmas following an apparent slowdown in business. 

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