I got an email from neon saying that they are raising money and as a customer there is there chance to purchase 2-250 shares at 200CHF per share.
Anyone have any thoughts whether this is potentially interesting investment, or not at all?
Edit: there was a thread on this a year ago, I wonder whether anyone bought back then and has any learnings to share? Neon Crowdinvesting
After a first go at it in 2021 (topic Neon Crowdinvesting), Neon is starting another crowdfunding campain.
I had a look at the T&C and am writing this post to spare others the effort.
TL;DR: It doesn’t look great.
The shares being sold are non-voting. To earn money, you need to either (1) find a greater fool who buys them from you, or (2) wait until the company ever pays dividends.
However 4.3) of the T&C implies that the company can buy back your shares for their initial cost of 200F, plus 20F for each year you held them. After 5 years, this corresponds to a 8.5% compounding yearly interest.
Furthermore, 4.4) is phrased in such a way that controlling shareholders could effectively dilute crowdlenders to nothing over time.
And finally, 58% of outstanding shares are preferred shares, and nothing specified which conditions they got. Who knows how the dividend would be shared?
Thus in the end, you’re lending money to a startup who can decide to either pay a <10% interest rate at some point, or maybe not to pay, assuming it ever gets in a situation where it could pay back.
Is the deal as bad as I think it is, or are there constraints on Neon that make the investment attractive somehow?
Some numbers (not that it really makes a difference, given the T&C):
- Outstanding shares: 375’667 divided in:
- 93’336 common Shares, 227’746 preferred Shares, 29’585 non-voting shares.
- this operation would issue another 25’000 shares for 200F each.
- 151’000 clients, about 0.4 client/share.
- 6m revenue, about 15F/share, or about 40F/client (this surprised me)
I always thought that crowdinvesting is some kind of money donation. If you want to support neon in their noble mission, sure, go on. Maybe you even earn something on it. But as an investment… I rather buy overhyped Porsche shares (but I won’t anyway).
There is a FAQ in english:
It seems that last time the value went from 169 to 200chf in 2 years.
As a crowdsourcing it doesn’t seem that bad. They have Tamedia as one of the investors, so I think they are in a kind of good situation. They also say they now focus on profitability and not only growth.
Is Neon’s business model finally profitable? Anyone have an idea about this?
It’s in the faq. not yet but they are going for it now, rather than just trying to grow only.
They decided to sell the shares at 169 CHF last year and this year at 200 CHF. This is to me only because
but let’s keep in mind that as soon as those shares are free-floating they will be quoted at whatever price a “greater fool” is ready to buy a non-voting share.
If you check the neo banks on the market (n26, Revolut, etc), none makes profits and VC heavily injects money into them each year. I don’t think it’s a good investment.
Can one sell the “stocks” they bought for 169 last year?
The FAQ doesn’t say anthing about that. You should check last year’s FAQ if it still exists. The new ones can’t be sold until July 2023. See below
Can I sell my shares?
For the time being you can’t. Your shares are subject to a lock-up period until 30 June 2023 (until then you cannot transfer or sell shares). Do not invest money you need to live.
In this case, it seems to me to be more like a donation than an investment. Without the possibility to vote and without being sure to be able to resell one’s share, I see no interest (except for one’s own conscience and/or the sharing of common values with neon).
You have to call a spade a spade.
Wouldn’t go for it either, neon is burning a lot of money trough advertising and gaining clients. A strong investor is not in sight as Hypothekarbank Lenzburg and TX Group (ex Tamedia) are already invested. Further, they have high standing costs.