I came across this particular project – Increase of Working Capital. As per the project description, the borrower is Orange Square Transport Ltd and Crowdestor delegated a person as board member who was in charge of all strategic decisions of the business. Currently, this project is 90+ days delayed and the borrower company has made a promise to pay by the beginning of March. But, will they actually pay?
The borrower company appeared to be in trouble long before Crowdestor gave any updates. So, I investigated to see who is this mysterious Crowdestor person on the board of Orange Square Transport. The findings were quite shocking.
Lets look at the company information submitted to the government. The mysterious Crowdestor board member was none other than Jannis Timma, CEO of Crowdestor. In fact, he was the director of this company from Oct 1, 2018. He also became a person of significant control on Jun 12, 2019. After managing this company for 1 year 2 months, Janis raised funds for his own company in Crowdestor platform in Dec, 2019. A total of 123,149.00 euros was raised.
Things became interesting in Apr 27, 2020. Janis was terminated as a director. Other remaining directors do not appear to have any relationship with Crowdestor, which means that Crowdestor lost control of the company in April itself. Why were investors not informed? Why did Janis hide this important information?
The finances of the company also doesn’t make any sense to me. The 2018 financial report shows a profit of 2,532 pounds. The 2019 financial report shows a profit of 27,709.00 pounds. Page 5 of report notes ‘Loan from Directors’ worth 75,891 pounds. This particular report was approved by J. Timma on Feb 1. Later the company amended the 2019 report after J. Timma left the company. The amended report actually shows a loss of 61,232.00 pounds and page 6 makes note of a loan to Janis Timma of 102,204.00 pounds. So, unless I am mistaken, it appears that the money raised on Crowdestor was transferred to Orange Square Transport and then transferred to Janis Timma. So, Janis Timma took the money and then quit the company? This kind of transaction looks like a red flag.
I have no more words to describe this strange and possibly unethical transaction from Crowdestor. This is a case of huge conflict of interest and a big red flag for anyone invested in this platform. They only started doing updates since December, pretending everything is okay from their end while blaming downturn in UK market for company’s bad performance. The reality is that the money is with Crowdestor since 2020 and this has got nothing to do with the borrower anymore.
EDIT: As per Crowdestor’s latest update, the borrower company’s operation has been suspended. It appears Crowdestor is eventually planning to default this project through voting.
Disclaimer: I am not a real estate expert nor a financial advisor. This is my personal opinion and I can be very well be wrong.