That’s not good

Since 2016, when it started publishing accounts in full, Farmdrop made total cumulative sales of £23.3m and operating losses of £33.9m.

But:

The company raised about $41m (£30m) in capital over almost 10 years,

How could this be? The Sage of Ely has just assured us that near all investment is made via bank loans!

5 thoughts on “That’s not good”

  1. I don’t understand people accepting losses in a business like that for a decade. There’s some big complicated businesses that need a lot of years of investment, like SpaceX or Uber, but a website and some deliveries is something you can get started with very little money. Rent some vans, get a Shopify website, spend some money on branding and PR. If it’s not starting to make profits after a couple of years, it probably never will.

    I know people who run online wine businesses and it’s a husband and wife operation. Paid for some branding, have a Shopify website. Booze in a bonded warehouse.

  2. I guess that they were going the Amazon model, it took years before that organisation turned a profit. In the meantime Bezos was building his own personal rocket ship.

  3. I suppose whoever running it was too emotionally invested in it to make the hard business decisions necessary.

    Don’t these people make business plans ahead of time? For their investors if not for themselves?

    I’v read the blogs of a few serial entrepreneurs and a lot of the time these people have put everything in place to make a profit before having to invest any capital.

  4. If they have losses of £33m on sales of £23m, doesn’t that mean their input costs are £56million? Yea gods! How can you trade with costs twice your income?

  5. Bloke in North Dorset

    It attracted the backing of Zoopla founder Alex Chesterman and Atomico, a venture capital fund set up by Skype co-founder Niklas Zennström, as well as former Saracens owner Nigel Wray.

    One of the start-up’s cornerstone investors, meanwhile, was Wheatsheaf Group – a division of the Duke of Westminster’s Grosvenor Group – which took a chunk of between 25pc and 50pc, according to Companies House filings.

    I guess they only talk about the sunk cost fallacy and don’t think it applies to them.

    I couldn’t help a smile of schadenfreude when I saw Nigel Wray’s name in there.

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