Just a day into their second crowd-funded capital raise, Behemoth Brewing Company is almost halfway to its target of raising $1.8 million.

And that’s just from current shareholders who have first rights to increase their holding before the offer is open to the public.

Existing shareholders paid $1 a share 18 months ago when the brewery raised just over $2 million but those shares are now valued at $1.32 – reflecting the new $34 million valuation for Behemoth.

The brewery was valued at just over $23 million ahead of the first capital raise and the new valuation – despite a more conservative assessment process – reflects the massive revenue increase in the past year.

Behemoth used a revenue multiple of 5.5 when valuing the company in 2018. This time the founders based the valuation on a multiple of 4.05 on predicted annual revenue of $8.4 million for this financial year and a multiple of 3.9 for predicted 2021-22 revenue of $8.7 million.

As a comparison, Parrotdog was valued at $16.6 million when it started its second capital raise in 2017. And Lion agreed to pay up to $25.1 million for Panhead Custom Ales in 2017 – a $15.1 million upfront with another $10 million contingent on earnings in the subsequent four years.

Childs said the directors looked at pre-money equity valuation for similar beverage companies and found they used an a multiple of 5.52 on most recent actual annual revenue and 3.80 multiple for forecast revenues.

“The way we calculate the valuation is in line with industry multiples – it just reflects the massive increase in revenue we’ve had this year,” Childs said, referring to revenue of $4.9 million for the seven months to October 31st.

“We actually discounted the multiple to under 5.0 to reflect a more conservative approach because of the impact of COVID-19 but it just goes to show how much growth we’ve had. Despite COVID, we’ve had record sales every month for the past four or five months.”

And it seems current investors share that optimism. On Tuesday afternoon existing shareholders had reinvested more than $800,000 in just over 24 hours.

“It shows how much more value we have in business now that Churly’s up and running and how we’ve grown despite challenges of 2020. Grocery has gone up massively – beer in total has gone up more than 20 per cent according to data I’ve seen – so it’s been a really big year for craft beer.”

The capital raise is designed to expand the brewery operation at Behemoth’s brew-pub headquarters, Churly’s, as well as to open new outlets around the country as well as barrel-room in Auckland.

Childs said the rapid rate of new investment could see the full $1.8 million raised before the offer is open to the public. So far 1800 people have registered an interest in investing.

If Behemoth reaches its goal, it will dilute Childs’ own shareholding to 50.05 per cent. The brewery does have the option of raising more than $1.8 million but that comes with the possibility of Child’s own shareholding falling below 50 per cent.

“I am conflicted about that – a lot of me says ‘no’ but if extra capital allows us to grow the company and benefit everyone, I’ll think about it seriously. In the end the board will decide if it’s in the best interests of the business to raise more capital.”

Equity crowd funding has been a popular way for small brewers to raise funds, though the success of funded breweries and returns to investors has been mixed. Brewers such as Australia’s Black Hops has used the the pathway to successfully grow its business, while Endeavour Brewing recently revealed a significant reversal of its financial position, shortly after raising half a million dollars from equity investors.

The United Kingdom has also seen mixed fortunes for breweries using the model.