When it raised more than £1m on crowdfunding platform Crowdcube in October 2015, Vulpine Performance seemed to have the wind behind it. The cycling clothing brand had shot glossy promotional films in Italy and Norway, struck a collaboration with the Olympic gold medallist Sir Chris Hoy and said it was on course to break even.
Less than two years later, it is about to collapse. Two partners from accountancy firm RSM are due to be appointed administrators tomorrow, with the likelihood of losses for about 600 shareholders, including several well-known angel investors. It has prompted one early backer to describe crowdfunding websites as “a ticking timebomb”.
Vulpine was set up by Nick Hussey, a former film maker, in 2010. A keen amateur cyclist, he said he wanted to escape the “snobbery” of the professional sport and create a brand that would appeal to casual riders.
Over the next few years he raised £1.1m in seed funding from backers including Philip Jenks, a founder of the publisher Harriman House, and Simon Hulme, a serial investor in start-ups. Several people who put in money said that Hussey, now 43, was enthusiastic and persuasive.
An investment banker said: “Everyone bought the cycling thing and everyone got that it was a lifestyle brand with a trendy look — you get off the bike and go into the pub.”
However, according to several early backers, Hussey insisted on spending large sums of money on marketing and refused to rein that in when challenged. Vulpine also struggled with retail basics, they said, often ordering large amounts of stock and then being forced to discount it aggressively, eroding the brand’s desirability. There were also some problems with late deliveries from Chinese factories, they added. Hussey said: “I am unable to comment during the administration process.”
Jenks and Hulme resigned from the board in frustration in 2015, followed by several other independent directors. In October 2015, Hussey turned to Crowdcube with the aim of raising £500,000. Although at the time he said it was an opportunity for fans to invest, a source said Hussey had “exhausted” his existing investor base.
Vulpine had announced its deal with Hoy earlier that year, and demand was so strong it raised £1m in a week, with at least one investor putting in £50,000. The fundraising valued it at £5m.
Vulpine burned through the money and failed to hit its sales targets. It remained loss making and tried to raise a further £750,000, at a £7.5m valuation, last month. This time it failed and was forced to call in administrators.
Hulme said: “Vulpine had failed abysmally to deliver what it had promised investors in the first round. To me, crowdfunding looks like a ticking timebomb.”
Crowdcube said it had complied with regulations and that, “whilst the failure of any business is disappointing, equity crowdfunding investments are high-risk and unfortunately not all businesses will provide an exit for shareholders.