Spinifex raises $2m in biggest beer CSF raise
Western Australian beer brand Spinifex Brewing Co. has closed its equity crowdfunding raise six weeks early after raising its maximum of $2 million in a matter of days.
The brand, which launched last year but was forced to quickly pivot to making hand sanitiser and only moving fully back into distributing its contract brewer beer in February this year opened its raise on the Equitise platform last week.
Spinifex’s minimum was $500,000 and maximum was $2 million, the latter which equates to 25.2 per cent of the business and values the beer brand at around $8 million.
While a number of crowfunding campaigns have come close, this is the biggest seen in Australia, although Behemoth Brewing Co. in New Zealand raised $2.1 million for its new brewery and venue.
“We’re very excited,” said co-founder Adam Barnard, chief executive officer and co-founder of Spinifex.
“It happened fast, just two days into the public raise, and we also just had so many things going on. We went public with about $1.7 million, and this is the biggest raise in craft beer.
“We had around 740 investors in total and the absolute majority were retail, investing $10,000 or under.
“And that was what we wanted. We wanted to bring the public along on the journey.”
Due diligence and crowdfunding
The decision to crowdfund rather than privately raise money was a “deliberate choice” Barnard said.
“We didn’t need to go down the equity crowdfunding route, but we realised we had a brand that was unique and it was a great way to form a large number of ambassadors around Australia,” he said.
“And we had a very large percentage of retail investors really wanting to buy a significant slice, so they were even higher value investors.”
To put this in perspective, Barnard said, Spinifex only started selling solely beer earlier this year.
“Whilst we launched in 2020 to really significant support, only a few weeks later the country shut down and we moved to manufacture of hand sanitiser so it wasn’t until February we moved back into beer.”
Despite this, clearly Spinifex’s offering has resonated with customers.
“Part of crowdfunding is bringing people along on our journey and we want them to be excited about it.
“With Spinifex we’ve almost created a new genre of craft beer through the infusion of native ingredients, we’re not trying to differentiate based on alcohol volume or wild tastes, we’re differentiating ourselves through our story and our story is extremely unique, infusing with indigenous native ingredients, creating opportunities in the bush foods industry, and also with our veteran support – we donate profits from our F88, and it’s our social conscience that has attracted people.”
That’s not to say that the CSF raise was an easy ride.
“There’s been a lot of work going behind the scenes with a raise, the logistics, the prep of the offer document and the pitch deck.
“Equitise’s due diligence is not a walk in the park by any means, if they weren’t 100 per cent about anything – it wasn’t completely guaranteed – we couldn’t use it.
“They worked hard and it was a great relationship with them but people have got to be aware of the due diligence process in that type of raise is significant.”
Valuations and for equity crowdfunds are known to be unstable, with previous beer industry CSF raises valuing companies as high as 18.9 times revenue, which BrewDog Australia offered in its crowdfund, to as low as four times revenue multiples.
Revenues at Spinifex stand at $562,000 in total sales for the 2021 year making its valuation just over five times its revenue amount.
With projected director remuneration of $75,000 and three directors though, this remuneration would eat up much of the revenue.
“The directors are actually supported through other ventures, we aren’t taking that out – we’re poorly remunerated and have other income. And you’ve got to remember sales are growing an average 30 per cent per month so that’s significant too,” Barnard explained.
Spinifex predicts it will return $3.2 million this financial year according to its offer document and as Barnard explained, valuations depend on more than just revenue.
“As we only started selling beer in February when we had the full range available and with Spinifex being a startup, you couldn’t value it by a standard multiplier.
“You’re buying the opportunity for the future, which is not a measurable target.”
According to Barnard, there is also “significant news” in the works which will add further value to the company, although the brewery cannot offer details just yet.
Spinifex brewery and hospitality plans
Following its crowdfund, Spinifex said it would spend $1.25 million on its new brewery and $250,000 on its North Beach Alehouse, with the remainder going towards working capital, marketing and the costs of the CSF raise.
“[Because of the crowdfund] we will be a debt-free company and we can pay for everything outright and won’t be burdened by debt through this raise so we’re in a strong position given the circumstances,” Barnard said.
But Spinifex’s original purpose and plans underwent a seismic shift during COVID-19.
“COVID changed everything for us. Spinifex was primarily about export, when we launched the domestic market was not of the greatest significance to us. The whole thing about Spinifex was that we wanted to replicate what Fosters and Fosters’ branding achieved globally.
“That was what the primary driver of Spinifex was, however the opportunity domestically has been up and down and really affected by COVID and it’s really given us the opportunity to grow slowly and we’re now ranged with BWS, Dan Murphy’s and Vintage Cellars, and the demand has just grown.”
However its focus on export hasn’t been sidelined and the plan is to export to several markets, including in Peru, Sweden and Japan.
“We were actually approached from those markets initially. We did a lot of research, we had consultants in those countries and sent samples over. Particularly from native ingredients space, Australia is regarded well so we’ve had that advantage, it really resonated with those countries.”
Short term plans are to complete work at its North Beach alehouse and its production brewery, consisting of a 24hL brewery and site within the WA State Government Food Innovation Precinct in Nambeelup.
“[The alehouse is] our first venture into the real estate side, we’re using repurposed shipping containers just under 2,000 people signed our petition of support, so the local population has been extremely supportive of the development.
“Engineering works are underway [at the brewery], it’s being built and the slab is being poured. We’re on track for a May 2022 opening. There’s a lot of things coming to us at the moment!” said Barnard.