Updated: 5th February 2016
A claims management company called Rebus that attracted investments from dozens of different sources via a crowdfunding platform has been entered into administration.
Rebus represents one of the largest failures of a crowdfunded company yet seen in the UK, with the internet-based funding mechanism becoming increasingly popular around the country and in many other parts of the world.
The company is understood to have attracted backing from more than 100 investors, who could now stand to lose whatever amounts they committed.
A total of £800,000 was invested into Rebus via the Crowdcube platform, with 29 members of staff having been employed full time by the business.
The idea underpinning Rebus’ business and its appeal to potential investors was that it would seek to pursue claims made against companies that mis-sold complex investment and who offered what were later deemed to be tax-avoidance schemes.
“Rebus seeks to bring hope to ordinary investors who have been misled into buying flawed complex financial products and solutions,” its pitch on Crowdcube claimed.
The same pitch also projected that Rebus would be able to post £12 million worth of profits by 2017-18, with backers told to expect returns worth between six and 10 times their initial investments by the end of that financial year.
It’s is estimated that Rebus succeeded in retrieving £136 million for its client companies between the time of its founding in 2009 and its recent entry into administration.
The company first appealed for financial backing via Crowdcube in March 2015 having posted pre-tax losses worth £1.4 million for the year 2013-14.
“Whilst the failure of any business is disappointing, not all businesses will succeed,” a statement from Crowdcube said after it was confirmed that Rebus had entered into administration.
“Investors on Crowdcube can be assured that we are committed to ensuring transparency and have rigorous due diligence processes in place,” it said.
Asked what the company’s difficulties might mean for the UK crowdfunding sector as a whole, Stian Westlake from the London-based innovation charity Nesta told the Financial Times: “The sector will stand or fall on whether this happens to often.” Real Business Rescue provide director advice online, over the phone, or in-person at one of our 78 UK offices or a place of your convenience.