Beer consumers buying into Bucket Boys’ dream for the future for beer retail have seen the Sydney beer shop hit its minimum investment target on the first day of its equity crowdfunding campaign.
Launching the offer this morning, after several weeks promotion, the equity crowd-funding offer has already reached its minimum target of $200,000. The retailer is targeting a maximum investment of $1 million, which would value the business at $10 million.
Co-founder Johnathan Hepner told a recent episode of the Beer is a Conversation podcast that the strength of the crowdfunding model was that it gave consumers a chance to own the businesses they spend with.
“It’s something that I’ve dealt with a lot in the music industry when we used to raise money for albums,” he explained.
“And it’s that idea of ‘what better way to get people excited and to help raise money than to allow people to invest in your company’.
“And so it’s kind of like a journey that we can go on together, which I think is a really cool concept.”
The crowdfunding prospectus outlines that the funds raised will fund an expansion of the business, including opening two new locations in Sydney, revamping their online store and brewing beer under its own label.
All investors will gain exclusive access to the retailer’s White Whale Society, which sources rare beers, plus lifetime discounts depending on the level at which they invest.
While equity crowd-funding allows consumers to invest in their favourite businesses, and receive ‘dividends’ in the form of significant discounts, investors can pay a significant premium for their passion.
As the Bucket Boys’ prospectus outlines, shares in the company are illiquid and cannot be transferred or sold easily, and investors may need to wait for the company to be purchased, a stock exchange listing or a share buy-back by the company.
“There is no guarantee that any of the exit options will eventuate,” the prospectus states.
Additionally, in the absence of a liquid market, it is hard to affix a market value to crowd-funded business beyond the investors’ enthusiasm. While Bucket Boys is a speciality retailer, general bottleshops in Sydney with slightly lower annual sales sell outright for less than $400,000, according to business-broking sites.
Financial comparison site Canstar has offered advice for investors looking at crowd-funding.
“Equity crowdfunding is risky and deciding to invest in this way should not be taken lightly. Typically, companies that raise capital through crowdfunding are speculative and carry high risks. Make sure you thoroughly research the company and platform before you invest, and consider your own personal circumstances and investment goals,” it advises.