Crowdfunding experts have suggested that BrewDog’s £50m Equity for Punks campaign may represent a “sea change” in its use as a mainstream funding option.
Yesterday the Scottish brewer and pub operator announced a fifth round of its Equity for Punks programme, targeting between £10m and £50m.
Barry James, the founder of the Crowdfunding Centre, which collects data on the market, told MCA the hospitality sector had been a pioneer for utilising crowdfunding and that BrewDog had been one of its most successful proponents.
He said: “BrewDog are puncturing myths. A lot of people think that VC money is the apotheosis and the mark that you’ve made it. The fact that they have gone down that route but are quickly returning to crowdfunding shows that they recognise that this is part of the engine of growth.
“Crowdfunding is at least as much about the crowd as it is the funding. Just look at the way BrewDog have used crowdfunding as a marketing tool as much as a financial lever. Equity for Punks is absolutely at the core of BrewDog’s brand identity – and it is also funding their growth. That is a very attractive combination.
“I sense there’s a sea change. I think the VC guys will be rubbing their hands with glee because what they are ultimately interested in is a return and if this increases their reach and customer base and gets them to the next stage of growth that much faster, why would they resist it?”
James said there were a lot of lazy myths around crowdfunding, which BrewDog was helping to burst.
He said: “There is this cliche that people don’t understand what they are investing in but where is the evidence of that and if that were true why are people returning to invest again and again?
“Valuation is another one. Valuation is based on a number of different factors but ultimately something is worth what people are willing to pay for it. Professional investors get annoyed with BrewDog and the like because they don’t agree with that valuation. But the fact is that thousands of people have bought into that – and in many cases they have come back to invest again and again.”
On BrewDog’s failure to hit its $50m target in its recent crowdfund raise James said: “BrewDog may have underestimated the difficulty of going into a new market. We talk about the mint model – which is the two audiences you have for a crowdfund – the audience that already knows you and the audience you’re trying to attract. You need to get that balance right in terms of having enough people who know you to raise your profile to the people who don’t. Maybe ultimately they didn’t do that.”
Meanwhile, Lex Deak, chief executive of Off3r, which offers guides to investing through different platforms, said: “Fans of craft beer in the UK have invested almost £50m in their favourite breweries through crowdfunding sites, research has found, with the number of individual investments totalling more than 65,000.
“BrewDog are a very ambitious company with a lot of momentum and a great PR machine. This latest attempt is the most ambitious in terms of target size, with a previous attempt falling a little short of the intended target, this latest campaign will be a great barometer for the progression of the equity crowdfunding sector and the appetite of existing investors to keep following their investment.
“It’s great news for innovation and another step towards maturity for a funding route that offers the right companies and the right investors an opportunity for attractive returns.”
