Crowdfunders raise $2.8m
Equity crowdfunding campaigns for Beer Cartel, CoConspirators Brewing Company and O’Brien Beer closed last week, raising more than $2.8 million between them.
Equity crowdfunding has proved to be a lucrative option as well as a great marketing exercise for breweries, but it is not to be undertaken lightly, as these businesses found out.
Fresh off the back of their successful funding rounds, Beer Cartel’s Richard Kelsey, CoConspirators’ Jacqui Sacco and Joe Procter from O’Brien Beer discuss the challenges of crowdfunding and what they’ve learned from their campaigns.
Beer Cartel’s equity crowdfunding campaign, also on Birchal, closed earlier last week with investment of $1.5 million from a total of 1063 investors. It raised half a million dollars in the first 48 hours.
“We are absolutely delighted with how it all turned out,” said Beer Cartel director and co-founder Richard Kelsey.
“Leading into the raise we wanted to make sure we got well above $500,000 and said that beyond $1 million would be an amazing result.
“To get where we did ($1.45 million) was fantastic. We’ve got a very special magnum of beer that we put aside if we got over $1 million – it will be pretty exciting to share that with the team once we get out of lockdown.”
Next steps are to finalise the share registry, issue shareholder certificates and set up investor rewards, and Kelsey explained it is important to consider the investors, not just in the immediate raise, but the aftermath too.
“For investors we will then be doing more after this, engaging and onboarding them as shareholders in Beer Cartel.
“We’ve got some fantastically talented individuals who have invested into Beer Cartel and a number have already offered to assist, providing guidance in different areas of the business. That knowledge base will be fantastic to tap into.”
Beer Cartel will be spending its investment capital on some fundamental improvements to the infrastructure of the business.
“The first focus is improvements to the website – ensuring that we really have a strong channel for people to quickly and easily buy beer from,” explained Kelsey.
“Alongside this we’re continuing to build out our marketing capability further to really capitalise on the website changes as they’re made.
“We want to be quite strategic in how we use the funds, ensuring we’re building out skills and capacity as we apply the funds to different areas of the business.”
Overall growth is the main aim in the next 12 months.
“The business has been growing at 25 per cent each year so we want to maintain that or better it. We already have some key projects around marketing, new product development, and our website – we want to build out these further to really drive that 25 per cent growth.
“Hopefully we can get a few more special projects off the grounds too, like the HPA collaboration pack we did last year which was a lot of fun.”
Other breweries or brewing industry businesses can learn a lot from those that have trodden the trail before them
“It has been a huge three months focusing on the raise, we knew it was going to be a lot of work but it was even more than we expected.
“The most important thing to ensuring success in any crowdfunding campaign is planning – the more work you put in beforehand the easier the raise is. You also want to make sure you have minimal normal day to day work, the focus should be almost 100 per cent on driving the crowdfunding raise,” Kelsey suggested.
“There are so many elements to doing a raise from the promotion video about the raise, to preparing the offer document, financials, constitution and engaging with those interested. Everyday you’re thinking about multiple elements to continue driving things forward.”
Kelsey said finding the right partners in all areas, from legal to PR and digital advertising, was key.
“We definitely couldn’t have had the same level of success without them. They alongside the guidance Birchal gave us throughout the raise were absolutely crucial for the success we had.
“For breweries considering a crowdfunding raise I would say it’s a pathway to definitely consider, there is a large amount of work that goes into the raise but it doesn’t stop post raise, you need to ensure you are keeping shareholders updated and engaged alongside the rest of the work that you do.
“For those that do go down a raise path I would definitely recommend engaging with as many of your fans as possible before and during the raise, set yourself a low minimum target and get feedback on the offer document before you go live from larger potential investors to get guidance on those likely to invest from a high net worth position.”
Rebellion Brewing, which trades as gluten-free beer brand O’Brien Beer, closed its offer last Thursday, raising $701,406.00 from 475 investors. It had hoped to raise $1.5 million
“We were very happy with the result as our initial target was $500,000 and we finished at $700,000 given we ran a campaign in the biggest COVID lockdown in Australia,” said director Joe Procter.
“[It’s a] great start as we are running a complementary private wholesale raise which will add to our capital base and strengthen the total value for all shareholders.”
Having a mix of different types of capital raise can help diversify your investor base, but can be a tricky one to juggle.
Next steps for O’Brien are to hire a national sales manager, develop an internally-led sales strategy, and widen distribution, Procter said.
He agreed with the other two crowdfunders, saying that it was a great experience but requires a lot of time away from day-to-day operations.
“[We] didn’t expect a COVID lockdown at the start of the campaign which wasn’t ideal for the industry as a whole but great result in the end
“It requires plenty of attention away from the core business but [it was] a key learning experience in retail sales and customer/investor relations.”
Victoria’s CoConspirators Brewing Company closed its equity crowdfunding campaign, hosted on Birchal, towards the end of last week, raising $619,348 from 407 investors.
Since starting with contract and nomad brewing in 2016, Co-Conspirators Brewing Company has brewed over 40 different beers, but the dream of founders Jacqui Sacco, Maddie and Deon Smit and Tim Martin has been to open ever since has been to open their own site.
“We’re ecstatic,” said co-founder Jacqui Sacco. “We wanted to get to that minimum so that was really good and we’re happy we’ve gotten over that.”
The funds will be primarily used to finish CoConspirators planned 195-person brewpub in Brunswick, with a 12hL brewkit to enable the team to start brewing their own beers in house.
“All [the capital raised] is going to the brewpub. We have our brewkit in storage and are planning to install it within the next four to six weeks, and subject to everything going on we’re planning on brewing by early September,” Sacco explained.
“It is a lot of work. For the people that are looking at doing it, it’s a really massive process and we’re lucky three are four of us.
“There are lots of startups that do it, with one or two people and it’s a massive undertaking.”
Sacco suggested that having the right team in place was key.
“It’s really important to find the right people to help you out, whether it’s for video or digital marketing, find the right fit with all those people.
“Expect to work really hard. We’ve been working on this since March so it’s been a long and rewarding process at the end, but it is really demanding on your time.
“Some of us are still working, doing late night calls and meeting with people late at night, its really demanding on your time, good support network.”
But for now, it’s back to business as usual.
Basically back to normal work now, and full focus on brewpub opening. That’s the main thing now to get that over the line.”
CoConspirators is hoping to have the brewpub complete and open by Summer 2021.