It's hard not to admire the success of Brewdog. Launched in 2007 by James Watt and Martin Dickie, the Aberdeenshire-based beer maker and bar operator now employs 277 people and turned over a tidy £29.6m last year. That's up 64% on 2013 and shows why it's been named the fastest-growing food and drinks company in Britain for three years in a row.
The growth can be attributed to a couple of things: making interesting beer that (some) people really like and creating a PR firestorm. Brewdog's never shied away from controversy, launching drinks with names like 'Speedball', and the world's most alcoholic beer, which was sold inside a small taxidermied animal (yes, really).
The company's shown it's got international legs too. Eight of its 26 bars are abroad, and it exports its beer as far and wide as Mexico, Australia, South Africa and China. But its latest scheme seems ambitious even by Brewdog's standards.
With its anti-establishment image, it's not the sort of company that would get on well with institutional investors and for the last few years it's been raising money through its 'Equity for Punks' crowdfunding scheme. Yesterday it announced plans for its fourth round, in which it hopes to raise a breathtaking £25m – more than anyone in the world has ever raised through equity crowdfunding.
'This is a new dawn for beer, this is a new dawn for small business finance,' Dickie announced to stage-managed whoops and cheers at an event for existing shareholders at the company's Shepherd's Bush bar last night.
'We need to continue to expand and we need finance to do that, and we don‘t want venture capitalists, we don’t want an overbearing parent company, we don’t want investment bankers, we want to make sure that the people who own the company love our beer and Equity for Punks makes that possible,' Watt told MT.
£25m is a lot of money – it's more than five times what Brewdog raised in its last Equity for Punks round, which took six months. What's more the investors putting up the cash will only receive a combined 8.83% of the business, valuing it at a more-than-ambitious £283m - over 70 times the £3.9m operating profit it made last year.
That seems like a fairly raw deal for investors, who are unlikely to see any dividends anytime soon either. 'Apple was over 20 years old as a company before it paid any dividends,' Watt told MT. 'We’re a high-growth company – we’ve averaged over 70% growth year-on-year for the last five years. We want to give our shareholders value by investing in our company and increasing the value of their holding rather than paying a dividend.'
But then Equity for Punks isn't meant to be like a traditional investment. Speaking to previous investors, MT found many were more interested in the perks on offer than in a chance to make any money. One said he'd already made back the £95 investment he made by using the discounts shareholders get in bars and online. 'Equity Punks' also get a free beer on their birthday, the chance to attend Brewdog's less-than-conventional AGM and a bunch of other benefits.
For people that are seriously into their beer, investing in Equity for Punks can make a lot of sense – though raiding your life's savings might not be a great idea. But Brewdog will need to work phenomenally hard if it's going to convince so many casual investors to stump up the cash needed to reach £25m in the one year it hopes to raise the money in.
Image: Bernt Rostad