Investors who backed Emoov to the tune of almost £2m in its last crowdfunding campaign are threatening to take legal action.

The Times reported at the weekend that the investors are claiming that they were misled over the financial position of Emoov, which had said it was planning a flotation early next year.

Instead, Emoov went into administration a week ago, saying it had run out of money because funds promised during its merger with Tepilo and Urban had not materialised.

Emoov raised £1.84m – way over the original target of £1m – on Crowdcube this summer from 1,067 investors. They had been told that the merger had “attracted an additional £6m from existing shareholders”.

Emoov founder Russell Quirk told The Times that the funding that had not come through was separate from the £6m referred to in the crowdfunding campaign.

The Times quotes one backer who put £5,000 into Emoov who said that it had not been made clear that the company was “at risk of failure in a matter of months if it did not immediately raise further finance”.

Crowdcube told The Times that it has received over 20 complaints.

The crowdfunding sector has come under fire because of claims of poor due diligence before campaigns are allowed to launch, and because crowdfunding is generally not authorised by the Financial Conduct Authority.

However, Quirk said that while he sympathised with investors, everything had been done “in absolute good faith”.

The Times also says that the value of Emoov was cut by over half after the crowdfunding round was meant to have closed.

The value was downgraded from £104m to £51m. Investors were then given four days to decide whether or not to go ahead.

Quirk said that the lower valuation reflected concerns about the slowing property market.

This summer’s campaign was the second on Crowdcube for Emoov. In 2015, it raised some £2.62m.

Crowdfunding has also proved popular with other online/hybrid players.

This autumn Doorsteps returned to Crowdcube for the second time in just over a year, raising a total of around £1.1m.

Also this autumn, 99home raised £313,100 from 191 investors, valuing itself pre-money at £9.8m. Its original target was £295,000.

Crowdcube told The Times: “As we underline on our platform, investing in start-ups and growth companies is high-risk.”

The FCA warns potential crowdfunding investors: “You should only invest money you can afford to lose.”