Waves' £510k of crowdfunding was NEVER paid

Thursday 28 June 2018

Waves never received the £510,429 it raised through crowdfunding, it has revealed - resulting in a gaping hole in finances for this year.

The money raised via an online investment platform was eventually returned to the investors after the crowding funding company's due diligence checks were voided by a Judicial Review into Waves' business model. On the crowdfunding site, Waves said it had previously raised its first £500,000 in a seed investment round.

The revelation comes as Waves earlier this week announced it was cancelling all flights until 1 September - following a previous suspension in June. It now plans a 'relaunch' in September.

Its crowdfunding campaign was run on kickstarter-equivilent, Seedrs. They take the money upon interest and put it into a third party bank account. When the JR kicked off, Seedrs and Waves agreed that it was not appropriate for the airline to receive the money until it was resolved, even though the money would usually be transferred a month after the campaign's completion.

And when the review did resolve earlier this year, Waves were no longer allowed to sell single seats on their aircraft. Seedrs and Waves concluded its business model had changed enough that the two months of due diligence done before the campaign started was now void - resulting in Seedrs returning money to the investors.

Nick Magliocchetti, Waves' CEO, said they were still allowed to contact the investors they personally knew of, but in the end, they received "very little" of the £510,000 pledge.

Waves raised "very little" of their original crowd funding total after the money was returned.

"Fundamentally the Judicial Review scuppered our crowdfunding campaign, all our money was returned, and even after we contacted the investors we knew of, we got very little of the money we had raised," he said.

Waves have consistently spoken about having a fleet of three aircraft, however started with just a single Cessna Caravan. In its crowdfunding campaign's advertising, it said it had "secured two aircraft worth in excess of £5m", but Mr Magliocchetti said this second aircraft was never actually purchased, just looked at.

"If we had had a full fleet during the time of the review it would have been a disaster, the cost would have been unbearable at a time like then," he said.

"In September, when we relaunch, it is going to be like we have always planned, just with a lot more resilience in our fleet and business model."

In said crowdfunding campaign advertising, Waves also valued itself at £17m, but now, Mr Magliocchetti declined to release a re-evaluation of the company.

The current Waves aircraft 2-CREW has been in the UK since the start of June. It was recalled for maintenance, meaning Waves had to cancel all of its flights for June. It was meant to begin flying again on June 22, but the aircraft has still not come back to Guernsey. Mr Magliocchetti would not confirm its exact location.

Mr Magliocchetti also said the plans which Waves originally sold as part of their business model - an app akin to Uber to book flights with and a flight academy - are still part of the September relaunch plan.

The Judicial Review itself was conducted by the States of Guernsey's Transport Licensing Authority. It did grant Waves a licence, which the airline said was unrestricted, but the President of the that committee, Deputy Barry Paint, said: "We can’t do anything about that [what has happened with Waves], the events which have taken place, we have no control over. At the moment we are not going to revoke their license, but you never know."