Equity crowdfunding platform Crowdcube is taking legal action against Student Rents to recover investors’ money after a UKTN investigation revealed the Scottish proptech startup fabricated details in a pitch deck.
Crowdcube said it is “in the process of fully refunding” the 170 investors who participated in the funding round.
The crowdfunding platform added it has conducted a “thorough investigation” and is launching legal proceedings against Student Rents and its directors, Grant MacCusker and Jamie Stewart, to recover the cash.
Crowdcube said investors on its platform invested £23,173 into Student Rents, a company that claims to be the “Uber of student rentals”.
According to the Student Rents Crowdcube page, the company raised just over £466,000 in a round that closed in January. UKTN has asked Crowdcube for clarification on the different stated amounts.
“No Crowdcube investors will lose money as a result of this company’s fraudulent actions,” a Crowdcube spokesperson told UKTN.
They added: “We are deeply disappointed that this situation occurred. We take the safeguarding of our investors’ capital extremely seriously and have stringent due diligence and compliance processes in place to protect against misleading claims and evidence.”
Earlier this month a UKTN investigation revealed that Edinburgh-based Student Rents listed three fake employees, using stock images, on a Crowdcube investor pitch deck.
That followed a separate UKTN investigation that revealed MacCusker, founder of Student Rents, fabricated a buyout of his other venture, a proptech company called Letting Cloud, by US short-term rental giant Airbnb.
Student Rents appointed 19-year-old Stewart, who is MacCusker’s son, as CEO last month. Last Friday MacCusker resigned as director from Lettinglord, the legal name of Student Rents, Companies House filings show.
Neither Stewart or MacCusker responded to UKTN’s request for comment.
The fraudulent crowdfund raises questions about Crowdcube’s due diligence process, with accountants telling UKTN that there were also red flags about Student Rents’ financial projections.
The company raised at a £4.5m pre-money valuation, despite Companies House filings showing it had tangible assets of just £13,813.
Crowdcube, which launched in 2009, said it has raised $1.5bn for 1,300 companies across Europe.
“We are confident that this was an isolated incident involving sophisticated forms of fraud and have every confidence in our due diligence processes, which we regularly review,” Crowdcube added.
“We appreciate the trust that our investors place in us and will continue to work tirelessly to maintain that trust.”
The post Crowdcube sues ‘fraudulent’ Student Rents to recover investor cash appeared first on UKTN | UK Tech News.
