Recently, the UK’s Northern Monk announced a £500,000 ($700K) crowdfunding initiative—one that was funded in less than 24 hours. BrewDog is famous for raising millions from their fans through Equity for Punks in both the UK and U.S. While many Stateside breweries have raised funds through Kickstarter over the years, this new generation of crowdfunding seems geared toward long-term investment more than simple perks like t-shirts and bottle openers.
So this week, we asked the Fervent Few how they feel about breweries who ask fans and potential drinkers to give them a little extra cash. Do we hold these beer makers to a higher standard? And what happens when more private investing or a total buyout occurs?
Zack Rothman: “A brewery is a business, so I look at them as I do most other businesses. As long as they have a solid business plan and a quality product, I see nothing wrong with raising money through crowdfunding. They should tell their backers how they’re planning to spend the money they raise and offer them rewards for contributing.
I contributed to a local brewery’s crowdfunding campaign that offered special ‘founders’ merchandise and membership in a special society once the brewery opens. They also offered backers the chance to put their name on a stool or a brick in the brewery—to become a permanent fixture. It’s pretty neat to give supporters the chance to really feel like they’re part of their local brewery.
The brewery achieved its crowdfunding goal and then some. They’ve posted constant updates on their construction and done a good job of communicating with their backers, which I also believe is key. Once they open, it’s up to them to achieve success. A large following and strong local support can help that happen, but they still have to execute their vision and follow through on their business plan. If one day that leads to them selling part or all of their business, more power to them.”
Mark Twig: “As a brewery that is currently using crowdfunding/founding members to help get us going, we are looking at about 30K in investment so that we can get to our feet and start selling on the market with a bit of working capital. Seeing these already successful breweries looking for money to expand their operations, it doesn’t sit right with me. But I’m open to hearing what everyone feels.
That’s why we want to create a very strong social responsibility charter in our brewery. So that at least if you’re hedging your bets with us then we’re hoping to give you some reassurance that we are going to try and do good things with that enterprise investment further down the road.”
Bob Preece: “Really depends on the brewery and the stage that its at. I agree with other comments: if they are looking for modest investment to smarten up the taproom, or give more space or expand range, that feels fine. I have supported two very local breweries and a micro-bar purely on the strength of the fact that I can (and do) walk to them, and they are where I like to drink. Also, I like the people who own them, and the way they are run. I’m not sure I would stretch this to places I don’t actively visit. The places I have supported have a strong local community bond. Also, in return for my investment, one of them dedicated a new toilet for me. You don’t get that on Wall Street…”
Lana Svitankova: “Well, I think generally speaking this hugely depends on the country, level of involvement, size of the beer-geek crowd, but the most important thing is general economic situation. I don't support local breweries, because there is no one who will dare to ask for it.
At the same time, I'm a member of few crowdfunding activities abroad, FF included. Mostly I'll support the projects I like, but decisive factors are the amount of money involved, aim of the project and, well, sometimes I just like to give to a culture I'm engaged in.”
Steve Rimington: “It is absolutely company sensitive. Northern Monk have just hit their goal in half a day. I share the view from others previously that I get involved in projects I’m connected with. I wouldn’t participate in non-UK projects as I feel I better understand the dynamics here and will get the chance to engage with and share the fruits of the investments I’ve made with UK companies. It’s the mixture of community and investment that’s important to me. Though if I enjoy the community dynamics I’m not really expecting to make a significant return, though of course that would be lovely!”
Rob Cartwright: “Here in Indiana we have Localstake, which is a cross between crowdfunding and actual investing. I like it because we're able to get in for relatively little cash (typical minimum is $1K), feel like we are part of a larger team helping grow a brewery, and get paid back (with interest) over the next 3-5 years.
Not sure that swag or discounts are enough to get me to donate to your business. However, if they offered naming rights to the bathroom than that would certainly change things!”
Brad: “Honestly, the type of crowdfunding that I prefer to support leans itself more toward a membership model than I think what Northern Monk pursued. My preference would be similar to what Tired Hands did with their believer's club. The brass tax is that I'll give you my money interest-free to help fund your inventory or any capex spend. In return you give me a gift card that I can use at your business, additional benefits including access to exclusive product, line cutting benefits, etc. This helps them avoid having to go to the banks to get capital access and gives me the perks that I'm looking for. I know that you have to have an incredibly strong brand and strong demand for you product in order to pull this kind of program at a large size, but those are the businesses that I would be interested in investing in anyway. I know that there are still potential issues with this model if the benefits aren't executed well and the club doesn't end up feeling that special. But I think that's less of a risk than you would take on many of these other crowdfunding methods.”
Miles Liebtag: “Personally, I can’t imagine really ever contributing money to a brewery crowdsourcing campaign when I know for a verifiable fact there are untold charities and nonprofit organizations out there who would use my meager contributions for something meaningful. Which is not to wag my finger at anyone who does—it’s your money, do what you feel—but I don’t think I want to see another brewery get off the ground so badly that I’d throw money in on spec, unless I knew the principals personally, maybe. Especially considering how little money I actively give to, y’know, actual charities. I’m happy to let new breweries live or die on the strength of their product and business model.”
Matthew Dick: “We started a brewery in Northern Ireland, the most tied market in Europe and a market that doesn’t let us sell direct. The only way we were ever going to get enough momentum to start a modern brewery here was to bring people alongside us from the beginning in a meaningful way. Allowing people to equally own a cooperative brewery was the best way for us. Plus, they got the softest T-shirt in the world.”
Richard O’Neil: “Most fellow Boundary members that I personally know were excited at the prospect of supporting a local enterprise to make exciting beer, in a very different way to what would motivate a pure investment decision. I feel we have a greater responsibility to our members than if it was just a purely financial relationship—it's not just about returns on investment. But any good business should try to treat all stakeholders as well as they are able.”
Kris Kazaks: “I’m on board with any method of raising capital! If it’s crowdfunding with no equity, then the donor will know they shouldn’t expect anything in return if the brewery gets bought out or takes private equity.
Anyone who donates to a Kickstarter-style campaign that doesn’t offer any equity ownership should know what they’re getting into: pride of supporting a new local business, and those smaller perks like swag, membership allotments, or line-skipping benefits.
However, for people that actually want to invest in their favorite beer company long term (assuming it’s not BUD, TAP, BREW, or STZ), I think it’s cool more fundraising breweries are starting to offer equity.”
Rob Day: “I'm in favor of whatever method people need to use to turn the gears so long as the businesses use them properly. Kickstarter is about perks like t-shirts and stuff. When there is an equity investment fans are usually just happy to be supporting the venture and the return is gravy to an extent. If breweries go the equity route there are usually laws that define what they do in a buyout situation or they are stated in the fund raising. So I'll let that happen as it will.”
How do you feel about breweries who start up by asking for funds? What about already-established breweries asking for a bit more money from their biggest fans? Join the Fervent Few to discuss all this and more with our growing community. We’d love to have you.