‘Uber of the sky’ never received £510k of crowdfunding

Thursday 28 June 2018

Waves never received the £510,429 it raised through crowdfunding, resulting in a big hole in its finances for this year, Express can reveal.

The Guernsey-based airline won over investors with promises of an Uber-style inter-island air taxi service between the islands, where bookings could be made via a mobile app. Some pledged money privately, while others invested in the cause through a crowdfunding site.

But now it has emerged that the money raised via the online investment platform was eventually returned to the investors after the crowding funding company's 'due diligence' checks stalled following a Judicial Review into Waves’ business model, sparked by a complaint from competitor Blue Islands. 

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.

Pictured: A legal challenge from competitor Blue Islands "scuppered" Waves' crowdfunding campaign, the airline's CEO said.

Its crowdfunding campaign was run on Kickstarter equivalent, Seedrs, who collect the money raised and put it into a third party bank account.

When the licensing issue began, 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 was completed earlier this year, Waves were no longer allowed to sell single seats on their aircraft, and so Seedrs and Waves concluded its business model had changed enough that the two months of due diligence done before the campaign started was now voided - resulting in Seedrs returning money to the investors.

Nick Magliocchetti (pictured below), Waves' CEO, told Express 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.

"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, but 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.

Pictured: Waves' CEO said that the airline always planned to have three aircraft, but only ended up securing one.

"If we had gone in with a full fleet it would have been a disaster, the cost would have been unbearable at a time like now," 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."

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, but according to the terms of that, if it is not used for three consecutive months, it could be revoked or suspended.

The political lead for transport in Guernsey, Deputy Barry Paint, commented: "We can’t do anything about that, 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."