Black Hops has become the latest brewery to launch and equity crowdfunding campaign as it looks to open a second production facility and taproom and also expand interstate.
With investment options ranging from $50 to $10,000, Black Hops is aiming to raise up to $400,000 from investors through the crowdfunding offer which is on the Birchal crowd-sourced funding (CSF) platform.
The crowd sourced funding regime had previously required companies to convert to unlisted public companies before they could raise funds under the regime, but was expanded to include proprietary companies in October 2018.
Australian private companies are typically limited to a maximum of 50 non-employee shareholders. However, under these reforms, investors acquiring shares through a crowdfunding offer are excluded from this cap, allowing private companies to raise funds from potentially hundreds or thousands of investors.
Dan Norris, co-founder of Black Hops has been a keen proponent of crowdfunding for several years.
“We’ve been following the process for legalising equity crowdfunding for a few years,” Norris said. “Now that it’s finally here, we are looking forward to being one of the first breweries to run a campaign, and the first to use equity crowdfunding to help fund the opening of a brewery.”
Investors will receive ordinary shares in the company and also be offered priority access to limited release beers as a reward.
Norris added: “One of the best things about crowdfunding is how great it is at building up a group of advocates and followers. We’ve done this since day one with our Black Hops Ambassadors.
“Backers are likely to be fans and advocates of your business and thrilled to be part of the action. And what better advocates for your company than the people who are prepared to buy a stake in it.
“We believe that equity crowdfunding is a great way for everyday drinkers of our beer to become investors and share in our future growth.”
The funds raised through the current equity crowdfunding campaign will go towards finishing Black Hops’ second brewing facility and taproom in Biggera Waters, which is due for completion in early 2019.
“This is an opportunity for every day Aussies to own part of one of Australia’s fastest growing breweries,” Norris said.
Matt Vitale, Co-Founder of Birchal, said with the crowd funding reforms in place, there was huge opportunities for consumer brands and craft breweries in particular.
“When you add brewery equipment costs, venue costs, and tax and excise to the usual costs that any other new or early stage business needs to meet, you’ll soon find that craft beer businesses are possibly one of the most capital intensive small businesses around,” Vitale said.
“For many years now, Australia has been one of the most challenging places on earth to raise investment for small and medium businesses. In the context of the Royal Commission into the Banking and Financial Services Industry, we’re already seeing the problem of access to funding for small businesses is getting worse.”
Birchal has recently joined the Independent Brewers Association to support Australian brewers wanting to raise funds through equity crowdfunding, and offers IBA members free assistance to prepare their CSF offer documents (usually costing $3k).
Last year, popular craft brewer Endeavour Brewing Co became the first craft brewery to take advantage of the crowd funding reforms and launched its own equity initiative.