BrewDog — the Scottish craft beer maker that’s known for its Punk IPA — just launched two new crowdfunding drives on platform Crowdcube, letting people buy shares and offering a bond.
Investors can buy a minimum of two shares for £95 ($US145) or lend BrewDog a minimum of £500 ($US768) in the form of a 6.5% fixed rate 4-year bond. It’s the first time Crowdcube has offered a joint equity and bond offering, and the first time BrewDog has offered a bond.
The new Crowdcube partnership and bond are part of BrewDog’s latest crowdfunding drive, Equity for Punks IV. The company’s fourth crowdfunding began in April and BrewDog, founded in 2007, is looking to raise a total of £25 million ($US38.4 million) by next April.
Up until now BrewDog has done all its fundraising on its own site, rather than turn to one of the many crowdfunding platforms out there. So why is it turning to Crowdcube now? And why ask the public for a loan, as well as sell shares?
Well, it looks like it the latest crowdfunding drive could be stalling.
BrewDog trumpeted the fact in May that Equity for Punks IV raised £5 million ($US7.68 million) in just 20 days. But in Tuesday’s release announcing the launch on Crowdcube the company says it has raised “almost £8 million ($US12.2 million) to date.”
£5 million in the first 20 days, but only around £3 million ($US4.6 million) in the 3 months after that — it’s a pretty big drop off, especially when you’re gunning for £25 million.
Crowdcube is the UK’s biggest crowdfunding website, having raised almost £100 million ($US154 million) from investors since launching its platform in 2011. BrewDog could do with tapping its resources.
Asked about the slowdown in investment, co-founder and CEO James Watt said in an email to Business Insider: “Over three previous rounds of Equity for Punks we raised £7 million, and in Equity for Punks IV alone, which launched in April 2015, we have already raised £8 million, breaking our own historic record in the process. Furthermore, we raised the first £5 million in the first 20 days of launching, which was an epic response to our most ambitious project to date.”
“The partnership with Crowdcube enables us to offer both equity and the first ever BrewDog Bond to the platform’s almost 200,000-strong community, and will help us push even further towards that ultimate target of £25 million. Response so far (having only launched an hour ago), has been crazy awesome, with healthy investment rocking up already.”
BrewDog has already attracted 35 investors on Crowdcube, according to the site. The Crowdcube campaign, offering both stock and bonds, will run for 45 days.
Unlike most crowdfunding campaigns on the site BrewDog has not given a total target to raise, saying only it will go towards to £25 million total targeted. As a result it’s not clear how much has been raised from those 35 investors.
Crowdfunding research company All Street pointed out in May that “it is difficult to see how investors will make a financial return on this deal given the high valuation of £305 million ($US468 million).”
At £47.50 ($US72.90) for each share, BrewDog is valued at an eye-watering 115 times earnings. Shares in most listed breweries trade around an average of 25 times earnings.
BrewDog argues that its explosive growth justifies its high valuation. Turnover increased by 63% to £29.6 million ($US45.47 million) in 2014, while operating profit rose 56% to £3.9 million ($US5.9 million).
BrewDog plans to use the £25 million it hopes to raise to: open new craft beer bars in London and Glasgow; build a “craft spirit distillery”; open a sour beer brewing facility; launch a craft beer hotel; and invest in environmentally friendly technology.
As well as the UK crowdfunding drive, BrewDog recently announced plans to launch its first crowdfunding drive in the US to help fund a brewery there, its first outside of Scotland.