Loss-making online house selling classifieds service TheHouseShop has failed in its bid to raise £500,000 on a leading crowdfunding platform that would have valued it at £10 million.
In October the three-year old business opened its attempt to raise the money from investors but after initially raising just over £250,000 the company then ran out of time to raise further funds and decided not to extend the campaign.
The fund-raising efforts initially went well after TheHouseShop offered nearly 5% of its equity to investors and raised significant funds from institutional backers before opening up the crowdfunding effort to private investors.
This is how Crowdcube and many other crowdfunding platforms work. Existing or new backers invest their new cash into a start-up via Crowdcube in the hope of persuading smaller, private investors to also sink their own funds into the project.
Despite an investor open day held two weeks ago, on this occasion the system appears not to have worked and all references to TheHouseShop campaign have now been deleted from Crowdcube.
The company’s honesty in its pitch to investors may not have helped. In an update on Crowdcube recently its co-founder Sebastian Goldberg (pictured, above) said: “2018 has been a year of turmoil for the online estate agents in the UK.
“PurpleBricks lost almost 75% of its share price, easyProperty was acquired by the very agents they were supposed to disrupt, and most recently, online agent Emoov went under.
“It seemed that online estate agents were flying high in a honeymoon period where money was raised easily and the model was being hailed as the game-changing disruptor set to shake up the industry.”