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Emoov founder hits out at Sarah Beeny’s Tepilo as crowdfund investors threaten legal action

Crowdfunding platform Crowdcube has come under fire from investors after online estate agent Emoov collapsed just months after a successful funding round.   

Emoov went into administration last week after reportedly ‘running out of money’, just months after completing a crowdfunding round on the platform in which the business was valued at £104million.   

Emoov’s latest crowdfunding bid raised £1.84million from 1,064 investors.   

The platform has reportedly received over 20 formal complaints over the Emoov pitch, with some investors considering taking legal action, according to The Times.

Online estate agent has called in administrators after not posting a profit for nine years

Crowdcube told trade magazine Estate Agent Today last week that Emoov had revised down its valuation to £51.8million from £104million at the tail end of its last funding round.

This was done within the ‘cooling off period’ in which investors can still change their mind.

But investors are still angry over a perceived lack of due diligence on the part of the crowdfunding platform.

Luke Lang, Crowdcube co-founder, told This Is Money: ‘It’s always disappointing when a business doesn’t succeed, but as we underline on our platform, there is a very real risk when investing in startups and growth companies. 

Russell Quirk, former Emoov founder and chief executive

Russell Quirk, former Emoov founder and chief executive

‘As always, the company’s pitch was reviewed according to our due diligence charter, and approved as a financial promotion.’ 

The collapse came just six months after a £100million merger with TV property star Sarah Beeny’s Tepilo.

Founder and chief executive Russell Quirk said at the time the business would be looking at an IPO ‘in the coming months’.

But following the collapse last week Quirk now claims that money pledged from investors of Beeny’s firm has ‘not been forthcoming’. 

‘I guess that we’ve run out of money is the short answer,’ Quirk said in an interview for the This is Money podcast.   

‘We have raised quite a lot of money over the years, and did a deal in the summer with one of our competitors to come and merge so we could be even stronger and a clear number two to [rival online estate agent] Purplebricks.

‘Without putting too fine a point on it, the deal was constructed around a certain amount of money coming into the business. 

TV property star Sarah Beeny started up her own online estate agent Tepilo, which merged with eMoov earlier this year

TV property star Sarah Beeny started up her own online estate agent Tepilo, which merged with eMoov earlier this year

‘Unfortunately not all the money that was pledged arrived. As a consequence we were short. 

‘I’ve gone out to try to raise more money a number of times but the investor climate has changed quite considerably over the last few months.

‘We need growth capital to fuel the business on a month-by-month business, and we’ve literally run out of cash and we’ve had to voluntary call in the administrators.’   

Beeny stepped down from her directorship of Tepilo last year but still remained the pulic face of the business.

On the Tepilo Twitter account, it still says ‘Sarah Beeny’s Tepilo’ with her picture plastered over the page.  

Beeny’s agent was contacted but did not respond to requests for comment.    

Customers shouldn’t lose their money, says Quirk

Customers took to Twitter to vent their frustrations after the business’ collapse last week, many of which had paid an £895 upfront fee to rent their property.  

Purple Bricks chief executive Michael Bruce tweeted that his firm would ‘do what [it] can’ to help Emoov customers, but so far no further announcements have been made.

When asked whether customers who paid upfront will be able to get their money back, Quirk said: ‘The administrator will have to answer that question.

‘It looks likely it will be transferred to somebody else who will then look after those customers.

Purple Bricks founder Michael Bruce said his firm would do 'all [it] can' to help customers

Purple Bricks founder Michael Bruce said his firm would do ‘all [it] can’ to help customers

‘We had about 4,000 properties on Emoov and Tepilo, half of which had sold. Out of the other 2,000, the majority would have offset their fee, or would have chosen to pay by the end, or would have paid by credit card who could get refunded. The majority will be protected.

‘My absolute focus over the last few weeks has been staff first and customers, and of course shareholders and so on. The administrators say they look after the creditors first. 

‘I have great sympathy for the creditors, and I apologise to the creditors for the situation we’re in, but it’s the staff and the customers that I really feel for and have been my priority.’

What went wrong for Emoov?

In April Emoov reported net liabilities of £583,824 for the year to 30 April 2017, up from £275,896 the previous year. 

The group had been loss-making since it was founded in 2009, and had expected to post a profit by 2020. 

Founder Quirk said in an interview following the merger that the business could be capitalised as £500million to £700million in the next two years.  

In June the digital estate agent made an audacious bid for Countrywide, which wasn’t accepted. 

Investors and customers both took to twitter to voice their anger after the Emoov collapse

Investors and customers both took to twitter to voice their anger after the Emoov collapse

‘There are things I could have done differently, hindsight is a wonderful thing,’ Quirk says.

‘You make decisions in the now. The board and the senior shareholders I can’t remember ever having a dispute.

‘We decided we would spend money on Google Ads and TV and radio, and technology. We’ve spent £7million of the money we raised on a technology platform. We’ve done all of those things and it’s ended up not working out. 

‘And I’ve hired the wrong people and things haven’t worked out. It’s been a big test and learning experience. 

‘Ultimately we could have done things differently, yes and no, but I don’t think in hindsight we would have done because we wanted a big exit.’