Online estate agent Emoov failed to tell crowdfunding investors it was losing £3m a month before its collapse, a Sunday paper claims.
The findings of the failed agency’s administrators - reported by the Mail on Sunday - show that the firm lost £15m in the five months to September 2018.
This was the period following its three-way merger with Sarah Beeny’s Tepilo and online lettings firm Urban. This deal was said at the time to have cost £100m.
During last summer Emoov raised around £2m in new investment through the Crowdcube crowdfunding website; the Mail says investors were not told of the losses.
The newspaper says this morning: “The latest revelations about ballooning losses raise questions about whether potential investors should have been given more information on Emoov’s financial performance.
“Some investors are now threatening legal action, claiming they were misled during the crowdfunding round.
“Unlike the in-depth prospectuses compiled by companies that are seeking raise money on the stock exchange, crowdfunding sites do not require firms to give a transparent view of their finances and recent performance.
“Emoov was sold by its administrators James Cowper Kreston last month for just £232,500 plus VAT to Mashroom, a new peer-to-peer lettings website.”
In December Estate Agent Today revealed that Emoov revised down its company valuation from £104m to £51.8m at the end of its summer crowdfunding exercise - a tactic that was described by Crowdcube as legal.
However, this morning the former chief executive of Emoov, Russell Quirk, said the story was “poor reporting” and insisted the timescales meant the allegations could not be accurate.
He told EAT: “The crowdfunding campaign was in July ... Just one month after the Tepilo merger. How on earth could we possibly have declared ANY financial information about the ‘losses up to September’ in July - three months hence?
“We’re not fortune tellers. We were not able to predict something that hadn’t occurred yet and was, even if the numbers quoted were accurate - which they weren’t - three months away.”
Quirk said this error over timing “trashes the credibility of the Mail story completely.”
You can see today’s Mail article here.
Crowdcube has been asked for its comments.