This week saw the release of a new independent report looking at the correlation between equity crowdfunding and craft beer breweries. The report by award winning UK beer blogger, Martyn Cornell, contained data and insight provided by OFF3R.
OFF3R’s CEO, Lex Deak, commented that “Equity crowdfunding and beer have always been closely linked over the years and this report by Martyn really goes deeper on the history of this link and why it continues to be such a close association.” Deak continued that “OFF3R were delighted to work with Martyn to provide him with the data he needed to make this report. We believe it helps to further draw attention to a growing investment asset class that many want to learn more about.”
A summary of the report has been provided by Martyn below and the full report can be downloaded here.
Fans of craft beer in the UK have invested almost £50 million in their favourite breweries through crowdfunding sites, research has found, with the number of individual investments totalling more than 65,000.
The latest successful effort has been from Redchurch Brewery in East London, which has just closed its second fundraising drive through the crowdfunding platform Crowdcube, raising another £433,000 from 688 investors to add to the £497,000 it brought in last year.
Research by the investment comparison company OFF3R has found that more than 40 breweries in the UK, and half a dozen craft beer retail operators, had taken the crowdfunding route to raise cash for their expansion over the past four years.
At least six brewing companies have raised sums in excess of £1.7m at a time, and brewing ventures made up two of the top 20 biggest crowdfunding efforts in 2016.
While more than half the money raised, £27 million, has gone to just one firm, BrewDog, the maverick Scottish brewer, other big beneficiaries of the remaining £22.5 million brought in through crowdfunding include:
- Chapel Down Group, owner of Curious Brew, which gathered a total of £5.66m via Seedrs;
- Camden Town Brewery in North London, which raised more than £2.75 million from 2,173 investors via Crowdcube before being sold for £85 million to the international giant AB Inbev in December 2015;
- Innis & Gunn of Edinburgh, which raised £2.2 million from almost 1,800 investors; and
- The Wild Beer Company of Somerset, which brought in £1.8m from just over 2,000 backers.
Analysis of more than 11,200 investors who have put money into brewing and beer-related companies via the by Crowdcube platform shows a distinct tilt towards male investors compared to crowdfunding ventures as a whole. Men make up 17 in every 20 brewery crowdfund investors on Crowdcube – 85 per cent – against an overall split among Crowdcube investors generally of 73 per cent male to 27 per cent female, suggesting a strong element of “fanboy” investing by male beer drinkers in their favourite brew.
Each investment in breweries on Crowdcube averages £1,503 at a time, 16 per cent lower than the average individual investment across Crowdcube as a whole, £1,789. However, almost a fifth of Crowdcube brewery fund investors have put money into two or more brewery crowdfunding ventures via the platform.
The average age of brewery investors on Crowdcube is 41. Geographically the largest proportion of brewery investors on Crowdcube, at 27 per cent, more than one in four, comes from London, although London has less than 14 per cent of the UK’s total population. The next biggest regions for brewery crowdfunding investors on Crowdcube come from the South East of England, with 10 per cent, and Scotland, with 9 per cent.
Critics of crowdfunding say it is often hard for investors to get their hands on their returns. However, some brewery crowdfunding investors have seen spectacular leaps in value. According to BrewDog, anyone who put money into its first Equity for Punks crowdfunding, which closed in February 2010, has seen the value of their investment increase 2,765 per cent in seven years, a compound growth rate of almost 275 per cent a year.
Risk Warning: Investing in early stage businesses involves a high level of risk, including illiquidity (inability to sell assets quickly or without substantial loss in value), lack of dividends, loss of capital and dilution risks and it should be done only as part of a diversified portfolio. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Your capital is at risk.
Sources All data within this article is from the report by Martyn Cornell, titled “Crowdfunding taps beer drinker’s enthusiasm.”