Investing in Etergo seems to be one of my first big investment mistakes. I know that VC investing has a risk as great as the reward, but I hoped that I was doing a good deal with this investment; instead, I had a 95% loss for my 13350 shares.
How did I manage to lose 95% investing in Etergo
To put it short, I bought 13350 shares at a price of 0.33 per share via a direct crowdfunding done be Etergo. Last, I checked they were values at 0.41 per share and in under 1 year, they were bought at a price of approx. 0.017 per share.
What happened? It seems that the company was close to bankruptcy and they mainly blamed it on COVID-19. This is why they had to sell the company in order to avoid filing for bankruptcy.
I could not see any cash problems anywhere in the prospectus, nor the intent to sell, but it seems that since July 2019 they were looking into selling to several companies, but the disease only left them with OLA Electric.
The small share price seems to relate to the fact that the company had a lot of debt, based on what I found online, OLA insisted that the two founders should not renounce on any pretensions on their shares, but they offered them an employment contract.
Why did I actually invest in Etergo
I was attracted by Etergo due to their product, it presented well, it had a buzz around it and presales have started. Nobody in their right mind would start presales when they are not ready to actually deliver something, at least nobody that has a good intention. At least this was my train of thought.
The reviews I found about them on Glassdoor were not that good, but I did not mind the comments that internally the company is a dictatorship. For other companies, this got things done until they launched. This was another miss on my side; I should have been more cautious due to this.
Previous investment rounds and other investors also increased my confidence, as they invested earlier, had a better due diligence than I did. For example: Seedrs and the other investors listed below.
I received a notification from them that they will sell my shared and give me my proceeds. I refused the sale in writing via email and there is a group of pissed off investors that are trying to understand what happened. Was this bad management or was this a lie.
I am not sure of the background, but a proper investigation needs to take place and I am willing to support that action. It seems that for the 2019 investment round, we were sold some lies or the prospectus intentionally omitted certain facts.
This is my train of thought and I am waiting for such an investigation to take place. If I am wrong, then I have to accept my loss and that is it. I will just have to say, that it cost me 4500 EUR to write this article. For now, it is time to be patient, learn from this and follow-up with a proper investigation to understand what happened and how to improve and not make the same mistake again.
What did I learn from this
The main lesson that I learned is that I must listen to my wife. When I bought 13350 shares, she was pissed that I did not stop at 10000 as we originally discussed. This is something that I will not repeat in the future. I know I was caught in the potential and future return for this so-called “Tesla of scooters”, but I have to learn from this experience.
The second lesson is that my own due diligence is not good enough. I read the prospectus, it looked good, it had a lot of information, but it seems that it lacked the latest figures on cash burnout and I did not understand the concept of convertible loan.
In addition, the third lesson is that I am not comfortable losing 95% of a 4500 EUR investment. I have other high risk/high reward investments that are based on a better due diligence and for which my overall investment in 10 or more companies is under this amount – just check out the experiment for 10x stock gains. This is why I will reduce my single investment budget of a VC type of investment to 1500 EUR. I hope that my Carwow investment will have a better faith. For more just check my portfolio.