Crowdfunding due diligence should not be limited to investors
16th February 2016
Law firm Moore Blatch is warning that it should not just be the investors that carry out comprehensive due diligence before supporting a crowd funding backed company. It is also advising the clients to undertake similar checks, especially where high value goods or services are involved, as Rebus clients stand to lose around £1 billion if they don’t act swiftly.
One hundred investors recently lost, in total, over £816,000, ranging between £5,000 and £135,000 each. However, Rebus’ 1,700 clients could stand to lose a total of £930 million, according to Rebus’ website.
The firm has set up a triage service for former clients of Rebus whose claims risk missing the 6 year limitation period for qualification.
Mark Osgood, partner, Moore Blatch, said: “Crowdfunding is a great way for companies to raise money and for investors to reap the rewards of being in at the beginning. However, crowdfunding can also carry greater risk, and often that risk is not just borne by the investors. When Rebus entered administration the implications could be just as grave for its clients as typically they stand to lose, on average, £100,000 if their cases miss the six-year limitation cut off. Our advice, whether you are an investor, supplier or using the services of a crowd funding backed company, is to do your due diligence and properly assess the risks of failure.“