The startup Cowboy has been forced to end its crowdfunding campaign. After a start that surprised even the founders themselves, the startup has to adapt its information leaflet at the request of the FSMA, the Belgian financial regulator.
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Risks involved in investing
After surpassing the $4 million (€3.6 million) mark raised via the Crowdcube platform in just two days, the e-bike startup’s campaign has come to a halt. In an e-mail sent to the community, Adrien Roose, CEO and founder of Cowboy, explained that the information notice needs to be rewritten.
This notice is intended to inform potential investors about the risks associated with the investment, the shareholders and the possibilities of future resales of the shares. It seems to be problematic from a legal point of view, according to the laconic communication of the startup. In reality, the startup had no choice. It was the FSMA, the Belgian financial regulator, who asked the startup to stop the financing campaign.
The main problem between Cowboy and Nominee partnership
One of the problems lies in the relationship between Cowboy SA and Nominee, the parent company of the Crowdcube platform, which hosts the crowdfunding campaign. This relationship clearly needs to be clarified, as well as the future relationship between the Nominee and the investors.
If the FSMA was not consulted beforehand by the startup, it is simply because it is not obliged to do so, since its campaign had a target of less than $5.5 million (€5 million). It was therefore not required to publish an investment prospectus either, but simply an information memorandum aimed at future investors. The memorandum published by Cowboy contained numerous shortcomings and did not comply with Belgian legislation on several points.
Pending this new version of the Investment Memorandum, the Equity Drive is suspended until further notice. “No new investments will be accepted until then,” the startup’s email to potential investors stated.
First crowdfunding campaign
The startup’s founders explained that the FSMA has asked to consult and verify the information memorandum to check its terms. This is the first campaign carried out on Belgian grounds by the Crowdcube crowdfunding platform, which may explain the FSMA’s request for verification.
For its part, the FSMA confirmed that it had intervened in the case and simply explained that this type of verification is always not done beforehand, without giving any further information. The Belgian regulator is not in the habit of commenting on ongoing cases.
The participatory fundraising campaign can resume once the information note has been corrected by the startup.
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First published in L’Echo, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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