Car crowd funding

[zagatoes30]

Not seen this site or any others like it but I am really pleased to see those involved coming on board to explain how the model works, open conversations such as this are really positive and I am sure it will help the business in the long term wish more would do the same.

Good luck with the venture

 

[MarkMas]

Someone should start a counter-thread, moaning about how classic cars are appreciating in value, but only rich people can get in on the deal as the cars are too expensive for ordinary people to invest in.

Then someone would suggest a fractional-ownership scheme, where you could buy shares in a classic that would be properly maintained, and trade in those shares, or vote to sell the car once it has appreciated. Then other people would be able to spend happy hours pointing out the risks and challenges of this.

Then @Wattie could claim that it's a Ponzi scheme.

 

[TheCarCrowd]

Than

Not seen this site or any others like it but I am really pleased to see those involved coming on board to explain how the model works, open conversations such as this are really positive and I am sure it will help the business in the long term wish more would do the same.

Good luck with the venture

Thank you, appreciate the feedback.

 

[rivarama]

Someone should start a counter-thread, moaning about how classic cars are appreciating in value, but only rich people can get in on the deal as the cars are too expensive for ordinary people to invest in.

Then someone would suggest a fractional-ownership scheme, where you could buy shares in a classic that would be properly maintained, and trade in those shares, or vote to sell the car once it has appreciated. Then other people would be able to spend happy hours pointing out the risks and challenges of this.

Then @Wattie could claim that it's a Ponzi scheme.

Well - if you had spent time on their website you would have seen that there are a lot of gaps in terms of clarity about how this works specifically, and also some of the claims about being regulated by financial government bodies was also quite vague.

I am not sure how you invest your money, but I usually tend to read the fine prints to avoid being stuck (or worse). Fractionally investing in a car isn’t the same as buying a car yourself. The former is about investment strategy and speculation, the latter is about pissing money away by having fun on exciting motors.
Given that Thecarcrowd doesn’t let you drive those cars, but merely just staring at them every once in a while, like you would in a car museum. Thus it equates to the investment side of the hobby.

I think having David take the time to educate all of us is very commendable, and hopefully will help some of us make a decision on whether to invest in his start up or not.

 

[rivarama]

Hi, All client money that is posted into an investment wallet is covered under the Financial Services Compensation Scheme FSCS up to £80k. Once the car is fully funded and the money moved into buying actual shares the investment is then backed by the underlying asset and not by the FSCS.

In terms of regulation we are regulated for Arranging deals in investments which covers the way in which we can outline the opportunities for investment and the details we provide for each vehicle. You may have seen the risk warnings on the website and encouraging all investors to do full research prior to investing. Finally we also have an investor test which ensures all aspects of the investment are understood before we can allow anyone to deposit funds. This is different to unregulated businesses who may advertise false returns, publish doctored data on investments and have little or no governance around how they advertise their investment opportunities or who they allow to apply as their aim is just to get as much money into the fund as possible regardless of the individuals understanding.

The protection is mainly from how we are able to advertise and how we vet and test investors to protect them from investing in something they are not qualified to or afford to invest in. So its a pro-active protection if that makes sense. Please let me know if you would like to arrange a zoom call to discuss.

Thank you for clarifying David.

 

[TheCarCrowd]

I set up the business for exactly that reason. I was lucky enough in my late twenties to have a Ferrari and loved every second of it. Since then i have sacrificed a sportscar to get onto the property ladder and grow a family. I felt like i really wanted to still have a piece of a classic car but just couldn't find any way of doing a part share unless i joined a very elitist and expensive supercar club. The business was founded to give people who love cars the chance to own a piece of one and get closer to the cars than they otherwise could from a very affordable starting point. I wanted to ensure it was done under a regulated structure to give investor confidence as i knew there would be a lot of skepticism around fractional ownership. I hope we can continue to build traction and help people diversify their investments whilst having some fun and getting some good returns. We are growing well with over 500 registered users and 120 plus investors Iand im sure the model will evolve and the proposition take on new strands in the future.

Someone should start a counter-thread, moaning about how classic cars are appreciating in value, but only rich people can get in on the deal as the cars are too expensive for ordinary people to invest in.

Then someone would suggest a fractional-ownership scheme, where you could buy shares in a classic that would be properly maintained, and trade in those shares, or vote to sell the car once it has appreciated. Then other people would be able to spend happy hours pointing out the risks and challenges of this.

Then @Wattie could claim that it's a Ponzi scheme.

 

[TheCarCrowd]

Well - if you had spent time on their website you would have seen that there are a lot of gaps in terms of clarity about how this works specifically, and also some of the claims about being regulated by financial government bodies was also quite vague.

I am not sure how you invest your money, but I usually tend to read the fine prints to avoid being stuck (or worse). Fractionally investing in a car isn’t the same as buying a car yourself. The former is about investment strategy and speculation, the latter is about pissing money away by having fun on exciting motors.
Given that Thecarcrowd doesn’t let you drive those cars, but merely just staring at them every once in a while, like you would in a car museum. Thus it equates to the investment side of the hobby.

I think having David take the time to educate all of us is very commendable, and hopefully will help some of us make a decision on whether to invest in his start up or not.

Thank you. Appreciate the feedback on the how it works not giving enough detail. We are refreshing the whole site and upgrading from the MVP we launched in October so i will look to ensure that all the comments and concerns from here are better addressed.

 

[Motorsport3]

Hi David @TheCarCrowd , alternative investments are very interesting to traditional propositions, particularly if they help diversify risk and provide growth. But as with any new idea a number of questions come to mind.

• Monetisation of the investment (disregarding any dividend) is only by selling shares in the secondary market, not by selling the car?
• Is it allowed to buy/sell shares in the secondary market at prices different than what is implied by the official valuation?
• If a substantial number of shareholders want out making it unlikely for the market to provide liquidity what is the plan. Suspend until further notice or sell the car in question and return money to invesors?
• Are the cars cash purchased or is there leverage in the funding structure?
• In relation to ownership structure. If your company was to be liquidated what recourse would company creditors have on the cars?

 

[TheCarCrowd]

Hi David @TheCarCrowd , alternative investments are very interesting to traditional propositions, particularly if they help diversify risk and provide growth. But as with any new idea a number of questions come to mind.

• Monetisation of the investment (disregarding any dividend) is only by selling shares in the secondary market, not by selling the car?
• Is it allowed to buy/sell shares in the secondary market at prices different than what is implied by the official valuation?
• If a substantial number of shareholders want out making it unlikely for the market to provide liquidity what is the plan. Suspend until further notice or sell the car in question and return money to invesors?
• Are the cars cash purchased or is there leverage in the funding structure?
• In relation to ownership structure. If your company was to be liquidated what recourse would company creditors have on the cars?

Hi, great questions. Ill try to answer each questions in turn below.

• Monetisation of the investment (disregarding any dividend) is only by selling shares in the secondary market, not by selling the car? - The car is fully owned by the shareholders as they own the limited company that owns the car. Twice yearly using the voting system within our platform all shareholders vote on whether to keep or sell the car at the latest guide valuation. It is really up to the shareholders when they choose as a collective to monetise the investment. Otherwise you are correct selling the shares via our bulletin board secondary market is another route to monetisation.
• Is it allowed to buy/sell shares in the secondary market at prices different than what is implied by the official valuation? - No the prices are fixed at the latest valuation. This makes sure it is fair and no one can undercut or over inflate their shares which might lead to dis-satisfaction for the other investors.
• If a substantial number of shareholders want out making it unlikely for the market to provide liquidity what is the plan. Suspend until further notice or sell the car in question and return money to investors? - As its the shareholders that fully own the car and they vote on when to sell it if a majority wanted out they could vote accordingly and as its a democratic majority rules the vehicle would be sold.
• Are the cars cash purchased or is there leverage in the funding structure? - The cars are purchased via the funding structure. As soon as the 1000 shares are sold the funds are moved from the investor wallets into the limited company wallet. The limited company then purchases the car and has a surplus from the fees to pay for ongoing maintenance and storage. The limited company has a nominee register containing all the names of the investors and each investor receives a beneficial shareholder certificate detailing their holding in the limited company.
• In relation to ownership structure. If your company was to be liquidated what recourse would company creditors have on the cars? If TheCarCrowd were to be liquidated the nominee would still own the limited company and the car. In this circumstance we have an arrangement with Goji Investments who hold the asset custody where we have already provided 3 months of ongoing fees to them in order to give time to arrange a sale of the asset at the latest valuation and return all monies to shareholders before winding down the limited company. The shareholders will not incur any fees if such an eventuality occurred.

I hope that helps. Thanks

 

[TheCarCrowd]

Hi David @TheCarCrowd , alternative investments are very interesting to traditional propositions, particularly if they help diversify risk and provide growth. But as with any new idea a number of questions come to mind.

• Monetisation of the investment (disregarding any dividend) is only by selling shares in the secondary market, not by selling the car?
• Is it allowed to buy/sell shares in the secondary market at prices different than what is implied by the official valuation?
• If a substantial number of shareholders want out making it unlikely for the market to provide liquidity what is the plan. Suspend until further notice or sell the car in question and return money to invesors?
• Are the cars cash purchased or is there leverage in the funding structure?
• In relation to ownership structure. If your company was to be liquidated what recourse would company creditors have on the cars?

Hi, great questions. Ill try to answer each questions in turn below.

• Monetisation of the investment (disregarding any dividend) is only by selling shares in the secondary market, not by selling the car? - The car is fully owned by the shareholders as they own the limited company that owns the car. Twice yearly using the voting system within our platform all shareholders vote on whether to keep or sell the car at the latest guide valuation. It is really up to the shareholders when they choose as a collective to monetise the investment. Otherwise you are correct selling the shares via our bulletin board secondary market is another route to monetisation.
• Is it allowed to buy/sell shares in the secondary market at prices different than what is implied by the official valuation? - No the prices are fixed at the latest valuation. This makes sure it is fair and no one can undercut or over inflate their shares which might lead to dis-satisfaction for the other investors.
• If a substantial number of shareholders want out making it unlikely for the market to provide liquidity what is the plan. Suspend until further notice or sell the car in question and return money to investors? - As its the shareholders that fully own the car and they vote on when to sell it if a majority wanted out they could vote accordingly and as its a democratic majority rules the vehicle would be sold.
• Are the cars cash purchased or is there leverage in the funding structure? - The cars are purchased via the funding structure. As soon as the 1000 shares are sold the funds are moved from the investor wallets into the limited company wallet. The limited company then purchases the car and has a surplus from the fees to pay for ongoing maintenance and storage. The limited company has a nominee register containing all the names of the investors and each investor receives a beneficial shareholder certificate detailing their holding in the limited company.
• In relation to ownership structure. If your company was to be liquidated what recourse would company creditors have on the cars? If TheCarCrowd were to be liquidated the nominee would still own the limited company and the car. In this circumstance we have an arrangement with Goji Investments who hold the asset custody where we have already provided 3 months of ongoing fees to them in order to give time to arrange a sale of the asset at the latest valuation and return all monies to shareholders before winding down the limited company. The shareholders will not incur any fees if such an eventuality occurred.

I hope that helps. Thanks

 

[hashluck]

I think a key point is each car becomes a Limited Company

 

[bigbob]

Will you take my timeshare in Benidorm as a down payment?

 

[Phil H]

I think a key point is each car becomes a Limited Company

Each one then being liable for annual returns to Companies House and to HMRC, with assigned responsibility and attendant fees for doing so?

PH

 

[Wattie]

Then someone would suggest a fractional-ownership scheme, where you could buy shares in a classic that would be properly maintained, and trade in those shares, or vote to sell the car once it has appreciated. Then other people would be able to spend happy hours pointing out the risks and challenges of this.

Then @Wattie could claim that it's a Ponzi scheme.

Well,
1.A month or so ago, a car purchase scam was debunked by a “genuine buyer” contacting the forum.

2.This Car Crowd Funding scheme, took an unexpected step to clarity when the CEO kindly contacted the forum to respond and assist.

3. 10 years after I called out the Global Banking/Political Ponzi scheme, not one representative from the Fed, the ECB or the Bank of England has been in touch with the forum to deny it.

Too busy keeping the schemes going I would think.

I rest my case

 

[rivarama]

Well,
1.A month or so ago, a car purchase scam was debunked by a “genuine buyer” contacting the forum.

2.This Car Crowd Funding scheme, took an unexpected step to clarity when the CEO kindly contacted the forum to respond and assist.

3. 10 years after I called out the Global Banking/Political Ponzi scheme, not one representative from the Fed, the ECB or the Bank of England has been in touch with the forum to deny it.

Too busy keeping the schemes going I would think.

I rest my case

Touché Wattie - that’s why we love ya !!

 

[rockits]

Never seen anything like this before and am really struggling to balance the upside/reward/return against downside/risk.

Sorry for the initial negative outlook and response but surely this is just a car crash in the making?

We all know that the majority of the classic car market values have been another asset bubble inflating away for some years. I cannot see much upside left in many models. There could well be some upside in some minority cases but the majority are ripe for a heavy move south. With global economic factors weighing heavily on this I don't see this as a real slap you in the face investment opportunity of a lifetime.

Am I missing something as I see little to no upside and only risk/downside?

 

[slay]

Hi David,

Interesting topic, and an ex colleague of mine started something similar but for famous painting and artwork...

These are all valid questions raised, but none about how carcrowd would derive its profit.

A start up would still need a plan to make a profit, would it’s profit also come from the 5 or 10% commission an investor would pay? I just cannot see how it would be sufficient to cover all costs, regardless how large the economy of scale, I guess there is a break even point and it is not 10 or 20 cars but hundreds at the very least?

Would the revenue derived from leasing the cars out to events be significant enough ? I assume these are only related to static display rather than being driven? Anyone know how much would a say 360 (as David had used it as example) be worth for a day of static display?

In any case, a good way for car enthusiasts to park the money given current interest rate environment, one of the reasons I ended up buying a couple of (I hope) appreciating (again I hope) classic cars, because I believe it would generate a better return than the safety of saving account, and maybe less risky than stocks (but less return). Most importantly, I get to have an excuse to “invest” in cars I like.

I will certainly be interested to learn more

 

[philw696]

A very interesting read and welcome to the forum.
Having owned a 360 Modena good luck with £600 services and a £2K one every 3 years especially if spending most of its time stored.
Just needs an engine ECU die and there's one for each bank of cylinders and you're in for a big bill as I found out.
Good Luck though especially in these trying times.

 

[rivarama]

Never seen anything like this before and am really struggling to balance the upside/reward/return against downside/risk.

Sorry for the initial negative outlook and response but surely this is just a car crash in the making?

We all know that the majority of the classic car market values have been another asset bubble inflating away for some years. I cannot see much upside left in many models. There could well be some upside in some minority cases but the majority are ripe for a heavy move south. With global economic factors weighing heavily on this I don't see this as a real slap you in the face investment opportunity of a lifetime.

Am I missing something as I see little to no upside and only risk/downside?

Dean - this sort of “investment” doesn’t really target people that know the market. Looking at the cars posted on their Instagram, they don’t really target rare cars: not really sure how a 205GTI, 996 turbo etc... will make much money at all (esp at current valuationA and regulations ahead) in the future.

It does however provide its shareholders satisfaction of knowing they hold a slice of a car they might have admired when they were kids.

 

[rockits]

I still don't get it. As a business first and foremost the numbers don't stack up surely. It won't be able to sustain itself but I would be interested to see the accounts, sales, costs etc. to see if it does stack up.

You'd be better off buying a BOTB ticket I would have thought.

If say that 205 GTi doubled over 5 years. Less costs your return is just not interesting if anything.

Say you hired out that Mini @ £300 per day. Less costs unless it was hired for many days or weeks you can't make enough money.

I would love to see what I have missed and be given some real true numbers though as always I retain an open mind at all times.

Seems like a great way to spend 5 years doing something you love at someone else's costs from the outside.