MOD Devices continues to grow

Dear MOD Devices users

I am happy to announce that we are now launching a new crowd investment campaign for MOD Devices at the CrowdCube platform.

This campaign is similar to the very successful Seedmatch campaign we launched about one year ago, but the reach of CrowdCube extends much more than Seedmatch, which targets only german-speaking countries.

As a company that is so much rooted in communities, it is very pleasing to be able to extend to the distinguished members of our audience the chance to participate in the business side of our endeavor too. The company had steadily grown in the last years and, as a founder, I am happy to be able to share with our main stakeholders the profits of our business.

MOD Devices aims at shifting the power from individuals to the collective and it makes a lot of sense to us that we also shift the power on the business side of things.

This particular campaign aims at raising the necessary funds to push both products we have launched in 2020. The Duo X, which reached the retail market in July, will be heavily pushed in our core markets. The MOD Dwarf, which has made an unprecedented debut at Kickstarter in February, will get the market introduction it deserves. The responses on both products have been great and we are very excited about putting them on the spotlight.

The crowd investment scheme of CrowdCube is based on a proxied shareholding company - in the form of an SPV - that holds the shares of the many small investors. This enables potential investors to invest amounts as low as 10£ (roughly 10.85€) and still become a shareholder of the company.

The link to the campaign is www.crowdcube.com/moddevices

It is currently open on private mode, meaning it is not yet listed on CrowdCube, but is already available for those who have the link. Investments are already happening.

Please share it with your friend and other people that would like to join our business.

Let’s step onto the future and share the profits of doing so :wink:

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What does that mean?

I gave this a cursory look. In order to view the full details I had to “join” Crowdcube. When I inserted my country as United States, I was blocked from being able to finish registration.
Just an FYI for anyone looking into this.

I also searched a little on Crowdcube themselves as a platform and found pretty polarized reviews, either flag waving fans or dissatisfaction. The average review that stood out to me with some common sense was this:

…Crowdcube is more of a donating to a company you’re a fan of platform rather than a strategic investment opportunity.

From what I can tell no onus is put on the companies to offer any form of investor relations once they have your money. Of the investments I have had one is very good, one is rather good but tells you not to speak to them, and four are just silent - even ignoring requests for an investor update.

The thing is in the grand scheme of things you are small investors with no clout, so they don’t care. They don’t need to care. There is no way to exit these investments (and Crowdcube are clear about these dynamics up front in fairness) but it does mean you have effectively donated money to a company. On the tiny off chance that one day it’s acquired you may get some money back, but beyond that nothing. If they can’t respond to an email, a dividend is very far down their list.

As a platform Crowdcube is fine. I have no issue with the company itself. However it has been a lesson that these aren’t investment opportunities really. Most of the companies don’t see you as investors, you’re either a fan or a chump.

Gianfranco, can you address any of the issues or possibly you already have in your entire pitch. I was just unable to view it in full since I could not sign up to join Crowdcube.

Hi @teknico

Sorry for the long delay. I missed this one.

We just provide a bridge between two communities that are beyond us. The traditional business has a handful of individuals making decisions for the entire population of their customers. We, on the other hand, provide only the media through which two populations interact . What the developers will develop or what the musician will load on his device depends only on them.

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Hi @anrque

Sorry for the bummer about the US restriction. There is practically nothing I can do about it. The only possible way to overcome this is if your investment is higher than the 25k€ threshold, allowing you to do a direct investment.

Regarding the review, it seems to lack a bit of understanding of what it means to invest in a start-up

This is partially right. When you pledge your investment you still need to confirm it once the campaign is funded. At this point you will receive a Term Sheet and, if you do not agree to the terms, you are not obliged to make the investment. Each company defines its own terms and Crowdcube has only a few requirements the company needs to comply with, which is a very good thing. As a founder, the last thing you want if to need to comply with the individual demands of all shareholders as this can easily become a huge problem.
But at the same time, there is an agreement between the shareholder regarding reporting and it is the decision fo the potential new investor to agree on such terms or not.

This is very misleading. You are not making donations because you get equity in exchange for your investment. The issue is the liquidity of this equity. As with any other start-up, you will only see this money back in two different circumstances:
1- the start-up has been bought by a bigger player, which people call an “exit”
2 - the start-up has grown to the point it can start distributing dividends, which makes it not be a start-up anymore.

In any of the cases, the returns are only happening in the future, and if the company manages to overcome the start-up phase. It is risky, but that is the nature of it. Full liquidity is only possible when investing in companies that are listed in the stock exchange.

I hope I have helped to clarify your raised issues.

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Hello,
since no one is replying on Crowdcube forum, I am writing here as well. You offered quite attractive rewards when investing via Crowdcube, you promised there that we can apply discount on MOD Dwarf on Indiegogo as soon as the campaign is finished. Campaign supposed to end in mid November, however there are still no instructions how to apply my discount. Instead it happened that Indiegogo price went up and shipping changed to April. Now it seems I will accualy pay more money and have my Dwarf unit later because of this.
This “discount” will get me just to pretty much the same price it was before you made it more expensive. Technically I am not getting 50 GBP discount as promised, but just 10 EUR discount instead.
I know we are not talking about much money difference, but I am disappointed, when I see this timing. Maybe it is just a coincidence because the Crowdcube campaign was extended, but it feels like pretty unfair trick now. Or did I just overlook the instructions how to apply discount in time?
Thank you for your answer.
with regards
Pavel

Hi @pavel

Thank you for your contact and support.

You did not overlook any instructions. The discounts have indeed not been liberated yet but you’re wrong to feel that you’re being tricked.

The Indiegogo campaign for the Dwarf and the fundraise at Crowdcube are two totally different processes and are not connected in any way. The only relation that they have is that we reward investors with discounts in our e-shop and, due to requests, we extended the discounts to Indiegogo campaign, even though it is not our e-shop per se.

The dynamic of the Dwarf price is fully defined by the movement of the Dwarf project. We have now ordered the pilot run of production - beta units - and this marks the switch of the status of the project from “in development” to “in production”. This switch also means a higher pre-sale price as the risk of non-delivery is now much smalller.

The dynamic of the Crowdcube campaign is related only to the amount of money pledged for investment. In the campaign we have not managed to reach the funding threshold during the time it was live and thus, we extended it in an attempt to scout more investors.

There is no relation or articulation of actions between the fundraise and the crowdfunding of the Dwarf whatsoever.

We have never promised to sell the Dwarf at a particular price to investors. What we offer is a rebate of an investment in the form of a discount, applied to the current price of the product, whatever it is at the moment of purchase. The discounts normally are valid for at least six months and an investor could wait until the Dwarf is on normal retail at 399€ and apply his discount at that point, buying the unit for around 345€.

Now here comes the really annoying part and to which I apologise for the inconvenience. The fundraise consists of pledges that are made while the campaign is live and, once the counter finishes, it would enter the completion phase, when the pledged money is actually paid by the investors.
An investor had pledged to invest 20k€ and backed out in the evening of the closure. The cancellation, in this case, is made manually so we reached the end of the countdown above the funding threshold but the counter dropped down the day after closure, putting us at 93% of funding just before entering the completion phase.

Crowdcube has not been able to come up with a solution for this and hence, we have this awkward waiting time where we do not know exactly how to proceed.

The discounts we are offering in the campaign are very high and can only be financially justified by an investment of the same amount going into the company cash flow. Since Crowdcube is a “all or nothing” type of campaign, we need to wait for it to finish and confirm that the funds are coming in before handing out discounts.

I am still discussing this with them and a decision will be reached already in this first week of January, but I can already anticipate that the most likely scenario is that the funding will be cancelled as we did not reach the 100% funding and Crowdcube will not want to risk moving into the completion phase with only 93% of funding. Contractually speaking, we would only need to reach the end of the completion with 90% but there is an 5% average of drop-outs in this process and thus, the risk of not finishing above the 90% are quite high.

If that is the case, we will come up with alternative discount solutions for those who have pledged, but conditions will not be the same because the discounted amount is not coming into the company in the form of investment and such large discounts can become prohibitive. I hope you understand.

I apologise for any confusion this might have caused. Both processes - crowdfunding and crowd investment - are very dynamic and can be quite tumultuous. We unfortunately are not in control of all its variables.

Best regards

4 Likes

What a beautiful example for Murphy’s Law! Great story; I feel sad for you (and and the investors), but your writing ist definitely entertaining. Would it help to increase the our investments to lift the funding over the 100% mark again? I would love to invest in moddevices!

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Thanks @eggsperde

As I repeat for 5 years now, your support is very refreshing and highly appreciated :wink:

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Same for me. It certainly does not feel like five years, @gianfranco! :grinning_face_with_smiling_eyes:

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Thank you for your answer.
I understand that it is difficult to manage both of these campaigns, it is just displeasing that almost two months after supposed end of Crowdcube campaign there is still no result. I understand you cannot do much about it. It is just unfortunate that because I wanted to support you in Crowdcube campaign as well (ok, it was also in exchange for offered reward that was indeed extremely convenient and tempting in case of success of the campaign), I will actually pay more money and get my Dwarf later than previous pre-order batch. But this is just from my pure buyers/ wannabe tiny investors point of view.
However there is also my supporters point of view. Here I feel sorry for you about these unfortunate circumstances of this investor campaign. And as fan of your work I do not really mind paying little more than for the batch I already missed and I wish you smooth and successful proceeding with your projects. I am just little sad, that I will wait longer, since we are all looking forward to alredy have the Dwarf, aren’t we? Or is it all units again delayed, even the previous Indiegogo batch?
with regards
Pavel

And that second week of January is over as well. Any updates? :upside_down_face:

Hi @pavel

Yes. It has been confirmed that the campaign is cancelled.

I don’t know why Crowdcube has not followed up with the investors yet. It shall have already been done.

I apologize for the frustration. It is very awkward for us too.