Back in 2011 we published a report for the MSKE Conference in Portugal called Getting Something Brewing. It was based on research we had undertaken on the craft brewing sector in Scotland which focused on the possibilities for these small businesses to create value from the use of social and collaborative technology.
Our main point was that this was a sector that is highly tribal, and increasingly digital and that, by developing a crowd based asset, these companies could improve both on operational efficiencies, drive sales and marketing and create something that could generate significant value for them as opportunities progressively arose in the social era.
One area in particular we highlighted was the role of social assets to create the potential for crowdfunding to become a funding stream for smaller brewers.
Our conclusions were that – at that time – very few of the many participants in the sector were doing a good job of it and that, as such, it was something of a missed opportunity.
Of course Brewdog continue to demonstrate the art of the possible and as they close in on the £4 million target of their third and most recent equity crowdfunding round it caused me to reflect on other recent crowdfunding success stories in the brewing sector.
In the UK it’s fair to say that Crowdcube are the platform with much of the success. One of the more recently completed funding rounds, in May of this year, was Quantock Brewery. This is a relatively small 8 barrel family run brewery who aimed to trade 40% of their equity for £100,000. As it turns out the demand led to their eventually choosing to trade some 48% of equity in return for £120,000 from 130 investors. The equity on sale was A Share only. Also they were EIS eligible – which is pretty much the case for all equity crowdfunding rounds at present.
Even more recently – in fact in this month – the Hop Stuff Brewery, a startup looking for funding to build a 10 barrel plant, managed to raise £58,000 from the sale of 35% equity consisting of both A and B shares from 70 backers.
To complete the set, just over a year ago the Brupond Brewery – again a start up and this time a quirky vegan brewery with crowdsourcing in its DNA – raised £35,000 of for 25% of their A share equity. This tiny set up were SEIS eligible as well.
If we look a bit further afield we come across Cerveza Guayacan brewery in northern Chile which raised some $135,000 on the Broota equity platform (a curiously apposite platform name for a brewery funding round). This came from 48 investors and an average investment of $2,600
Reward based success stories are harder to find, not least because most platforms prevent beer, or any alcohol for that matter, being offered as a reward. But, the more creative can succeed too and the Grapevine Brewery in Texas managed to generate $61,923 from 201 backers for their startup brewery. Their project ran on the US based platform Fundable, and consisted of 9 reward categories, of which the $250 value reward was the most popular. One factor that may well have contributed to their success is a commitment to sink 5% of their quarterly profits back into the local community which would undoubtedly have harnessed the power of Locavesting, as Amy Cortese would have it.
To meet this growing demand we are also beginning to see specialist platforms emerge that deal specifically with this sector. For example there is Crowdbrewed in the US that is waiting with baited breath for the final enabling of the JOBS act to branch into equity.
A brewery’s crowd based assets have many ways to create value but it is apparent that crowdfunding is increasingly one of them – as we predicted.