Scale up without selling out says Founders First CEO

Founders First CEO, Mark Haysman

Founders First CEO, Mark Haysman

Craft accelerator Founders First opened the offer period for its planned IPO this week and is aiming to raise up to $17.5 million when it debuts on the ASX.

The investment vehicle specialising in craft brewing and distilling is looking to raise between $10 million and $17.5 million in the raise, at 50 cents per share.

With between 20 and 35 million shares available (between 18 and 21 per cent share of the business) the offering gives Founders First a market capitalisation of $63.5 million.

A retail offering opened yesterday ahead of its last AGM before the listing itself on 17th December.

Launched in 2017 by Stuart Morton and Dan Wales, its IPO prospectus says the company aims to provide a “solution to capital constraints, brand awareness, market access, supply chain vulnerabilities, high cost bases and knowledge and skills gaps” for craft beverage businesses.

Mark Haysman, chief executive officer of Founders First since joining the business last November, said it was “exciting times” for the accelerator. He said the reason for the IPO was to provide even more room to manoeuvre.

“[The reason behind the IPO] was access to the market for capital as easily and as quickly as we could,” he explained. “And to have a really strong financial position to be well placed to take advantage of opportunities that come up and build out our brand and portfolio of businesses.”

“We’ve had a huge 12 months and obviously we had the two rounds of capital raising and then set ourselves for IPO and we’ve got our day job to do, it is onerous with all the [due diligence] and preparation but we’ve had amazing support.

“We’ve had to be careful with the deals we do and the partners we partner with, and I guess the other side of IPO will have different requirements and we’re well aware of that, but the access to capital, the liquidity ongoing and the freedom to really build the business outside of IPO really puts it in balance.”

Haysman said he had over 20 years of experience in the liquor industry at both Lion and CUB. He said his role at CUB introduced him to the craft industry, notably the 2017 purchase of 4 Pines.

“[The deal with 4 Pines was] probably a little bit of the inspiration for me to get into craft was hearing the guys at 4 Pines and hear their story, to see what they’ve done it was really quite inspirational. Then I thought, you know, there’s this huge opportunity for the independent craft guys to scale up without needing to selling out.”


Independence is a tricky concept. Both industry and consumers grapple with its importance and there is uproar when an independent business gets taken over by one of the mainstream brewers – most recently it was New Belgium’s acquisition by Lion Australia.

The concept of independence is an important one to Founders First too, said Haysman. He said their aim was to get businesses, often unprofitable and in early stages, to profit as quickly as possible.

“We cover their gaps where they are not quite so capable or where they need help but enable them to still be independent.”

He said that there were a number of reasons for Founders First’s emphasis on keeping the business in the hands of its founders.

“Australia loves the notion of these independent craft businesses out there that have made their way whether it be Stone & Wood or more recently Balter and the like.

“That sense of independence, punters really want to know what they’re drinking, who is making it and what their story is.

“That independent thought, that innovation edge are the things that made them interesting to us in the first place,” he explained.

Apart from the consumer preferences in support of independents, there was a more practical reason for the backing of founders.

“Ideally we would want a portfolio of brands that are complementary. We want everyone to have a big dream and be driving hard towards that with skin in the game themselves, which is why leaving the founders in to run the business is such a critical part of what we think will make us successful.

“We want to help people achieve that and sit in the background and help them in their journey.”

Since making its first investment in Jetty Road, taking a 55 per cent stake totalling $3 million in equity and loan funds, the business has announced plans to launch a central Melbourne brewpub.

Founders First has also taken a controlling stake in Foghorn Brewery in Newcastle, in exchange for $1.5 million in equity and loan facilities, which has expanded from a brewpub model into wholesale with the help of the accelerator. It has also taken a stake in Brisbane’s Slipstream (45 per cent) and owns 42 per cent of Sparkke in Adelaide through a convertible note.

Other stakes are considerably smaller, including a 10 per cent share of Brisbane’s Ballistic Brewing and 15 per cent of Sydney’s Sauce Brewing Co.

Inner workings

Part of Founders First’s earnings come from the commission from sales through the Indie Craft Collective, its sales team, while it also receives earnings from partners in which it has a controlling stake, according to its prospectus, as well as revenues from the ownership structure of its venues and from the increase in the value of its investments.

As part of its plans for additional revenue streams, it will also acquire or develop a select number of licenced premises to “drive brand awareness and local connections with partner brands”.

It has already entered into an agreement to acquire its first wholly owned venue for $1 million in Moonee Ponds, an inner suburb of Melbourne, which it expects to refit, rebrand and open in 2020.

According to the prospectus, sales revenues reached $7.5 million in its full year 2019 accounts, but an EBITDA loss of $1.3 million.

Funds received under the offer will go towards capital expenditure on Jetty Road and Foghorn, completing the acquisitions of Ballistic, Slipstream and Sparkke.

It also plans to spend $6.3 million on acquiring additional hospitality venues, and $7.8 million on its sales strategy, product and development, as well as Founders Momentum, its export business arm.


The investment of the experienced team in the craft sector, both spirits and beer, indicates a confidence in the continued growth of the industry.

According to research commissioned by Founders First from Frost & Sullivan, the Australian craft beer market size was worth $518 million in 2019 – 13 per cent of total beer sales by volume, and independent beer made up $223 million of these total sales, roughly 6 per cent.

The research found that only 0.3 per cent of breweries product more than 5 million litres – only 3 or 4 breweries in the whole independent industry, and only around 30 to 40 have regional or national distribution.

While the businesses Founders First look to partner with will have “big dreams” this does not necessarily have to mean worldwide domination, said Haysman.

“Some of these businesses want to just be locally dominant in the market and in their state with a bit of overflow into adjoining markets and that’s absolutely fine, particularly if you overlay the brewpub model, which we think is a great way to embed your brand and business into the local community.

“We probably don’t want 10 brewers around the country that want to be the next Balter. That’s not going to work for us.”

The team have taken learnings from the US industry and while Haysman says the Australian craft beer market is about five years behind, there is still room to grow.

“What we know in Australia is that craft beer overall is growing 8 per cent compound annually, and independent craft is growing at one and a half times that rate.

“[That highlights] the importance of driving and fuelling that independent craft sector.

“We think there’s good growth in the market, there is still a bunch of headroom based on what we’ve seen in the US. Craft in the US has about something like 24 per cent by value and in Australia its only about half that.

“Down the track there may some consolidation but we’re well-placed in terms of what were looking to do to try to help those we’re working with create a stronger independent craft sector, more broadly, such as that that part of the industry can continue to drive growth for many years to come.”

Those interested in the Founders First retail offer can find out more here.

Back to News