Gold Coast-based Black Hops Brewery is the latest Australian brewery to announce an equity crowdfunding campaign.
Hosted by Birchal, sister platform to crowdfunder Pozible, Black Hops’ latest raising opens today with a short expression-of-interest campaign ahead of a private launch to family, friends and EOIs next week.
Black Hops’ 2019 campaign marks the first equity-based crowdfunding raise by the company.
After launching the Black Hops brand in November 2014, co-founders Dan Norris, Eddie Oldfield and Michael McGovern launched their first rewards-based crowdfunding campaign in early 2015 to raise money to help complete their brewery and taproom build in the southeast Queensland coastal town of Burleigh Heads.
Norris told Brews News that of the $400,000 needed to launch the brewery, a small percentage was raised through its crowdfunding campaign.
“When we built our first brewery we spent about $400,000 and about $18,000 of that was from crowdfunding.
“It was a small component of what we needed but it was enough to pre-sell about a 100 cartons of beer and it was enough to buy us a small-scale bottling machine and give us the final funds to open the brewery.”
The next phase came in 2017 with brewery expansion plans. Black Hops first equity raise came through private investment. Having sought a total of $300,000 with a minimum investment of $50,000, the founders raised funds to triple brewery capacity from a potential 15,760-litres per month to 43,350-litres per month.
Last year saw the third phase in Black Hops’ expansion, with plans for a second brewery and taproom build in Arundel, 30 minutes north of its current site. Another private equity raise, this time Black Hops hoped to raise $2.5 million with the same minimum investment of $50,000. The campaign ran from 13 June 2018 to 29 June 2018. Norris told Brews News that the brewery garnered $1.6 million through this investment round, which kickstarted Black Hops second brewery build.
In its 2018 prospectus Black Hops valued the brewery at $15 million based on then revenues of approximately $1.4 million.
Black Hops’ current capital raising has a target of $400,000, though what this equates to as a percentage of the company and the company’s current valuation has not yet been determined. Investors can be involved for as little as $50 or for as much as $10,000. They will receive ordinary shares in the company and, depending on the value of their investment, may be offered rewards such as priority access to limited-release beers.
Funds raised through the current equity crowdfunding campaign will go towards finishing Black Hops’ second brewery and taproom, Black Hops co-founder Dan Norris told Brews News that much like the 2015 raise, this round is similar just on a much bigger scale.
“We’re already about 90 per cent of the way through building our second brewery, funds from the equity crowdfunding are just going to get us over the edge.”
While utilising equity crowdfunding, Norris said they were still offering incentives similar to traditional crowdfunding.
“With equity crowdfunding, it’s quite like a little mini investment round from a whole bunch of investors… they actually own part of the company,” he explained.
“In an equity crowdfunding round, if you invest a certain amount you’ll get a small amount of ownership but you might also get a small discount at the taproom or something like that.
“With our business currently, the investors get some benefits that other people don’t get.
“We’ll probably do something similar with our equity crowdfunding, so if you invest a maximum amount you might get to brew a custom beer on our pilot system.”
For Norris, this equity round is not just about capital gains for investors.
“It’s also a good thing for us as a way to engage with the community and getting some of our supporters closer to the business and building on our list of ambassadors,” he explained.
“It’s a good marketing thing to do, it’s a good community thing to do and it’s always been something that I’ve always been interested in doing.
“A lot of the time when people invest in things like this, they’re not only investing for a return in a few years, they also just want to be part of the story, they want to be part of the community.”
“For $50… it’s not going to be a meaningful amount of money.”
“It’s sort of like you have the opportunity to have a small ownership, you get some benefits for doing so.”
Norris told Brews News that Black Hops’ existing brewery and taproom will remain open to the public, with the brewhouse focusing on limited-release and experimental brews. The soon-to-be-completed production brewery and taproom will focus on Black Hops’ core range and production of scale.