Queensland’s 4 Brothers Brewing is the latest brewery to launch an equity crowdfunding campaign, to help fund capacity expansion and its move to a brewpub model.
Adrian Cubit, founder and brewer at two-year-old 4 Brothers, is looking to raise between $140,000 and $180,000 with the campaign on crowdfunding platform PledgeMe. 200-250,000 shares are on offer, representing 23.5 to 27.7 per cent of the company.
The barman-turned-train driver-turned-brewer has seen the business grow 80 per cent in its second year. But it is close to reaching maximum brewing capacity and its revenue ceiling, he said.
The campaign is currently in its early stages, but since launching on Tuesday, Cubit said he has seen nearly 100 expressions of interest already from local supporters and businesses. The crowdfunding round will open for investment on 1st November, for a one-month period. Shares will be offered at $0.73 per share to investors.
Cubit plans to use the funding to move into a new 120-150 seat venue with a full commercial kitchen, on a site located closer to the Toowoomba CBD. He is also looking to invest in a bigger brewkit, to keep up with 50 per cent year-on-year growth targets for the next three years.
“We want to crowdfund to expand, basically. It’s getting to the point where we’re running out of space and can’t brew enough beer,” he said.
“We started really small. The venue is small and the equipment is too, so it’s a low base to grow from.
“Our model at the moment is a small brewery with a taproom, and it has allowed us to explore which model would suit us best.
“The funds raised will be used to fit out a new venue and brewpub with kitchen and furniture.”
Growth has forced 4 Brothers to outsource the production of their Toowoomba Lager to a contract brewing outfit, and the funding will allow the business greater in-house capacity.
4 Brothers is looking to upscale the existing equipment from its 200-litre Braumeister brewkit, which limits outputs to 14 kegs a week, Cubit said, to a 10 or 20hL kit.
Cubit explained that he had looked at equity crowdfunding to grow the business well before it was permitted by the Australian government in 2017.
“I’ve looked at other breweries both in Australia and worldwide who have done it – BrewDog being the most famous – and so we have been planning to do it even before it was legal in Australia.
“I knew when we did want to expand I’d like to use that funding model, and it’s especially good for consumer products such as breweries so our customers and fans can become shareholders and seek the product out more, growing sales.
“[It’s also] because we’re such a locally-focused brewery and we really focus on our Toowoomba region, and all of our local other small businesses, community organisations and customers, that we really want to give them a chance to become essentially part owners.”
Licensed equity crowdfunding platform PledgeMe is based in New Zealand and has hosted the campaigns of a number of other breweries, including Wellington’s ParrotDog Brewery, Yeastie Boys and Christchurch’s Eagle Brewing in previous years, while this year Behemoth Brewery raised NZ$1.5 million (AU$1.4 million) with over 600 investors pledging funding.
4 Brothers decided on the platform after meeting ParrotDog at an event in Brisbane.
If this round is successful, 4 Brothers will commit to three more equity crowdfunding rounds over the next 5 years to build more retail venues.
“We always planned to do it as a way to get people to buy in and I think at the small scale we’re at now is an excellent time to do it. We can really provide value for people that become shareholders.
“We’ve got a lot of growth ahead of us and we could keep ticking along as we are because we’re trading profitably. [However] we wouldn’t be able to expand for 2 to 3 years so I’d much rather do it sooner rather than later,” Cubit explained.
4 Brothers opened in April 2017 and was the only brewery in Toowoomba at that time. Two other breweries have opened in Toowoomba since: Volcanic Brewing and Monty Brewing.
Despite the potential risks of equity crowdfunding, many breweries have committed to rounds successfully, including Endeavour in February and Dainton in April this year, and Gold Coast-based Black Hops back in January. Prior to 4 Brothers, Holgate Brewhouse announced a round last month which is set to close next week.
Expressions of interest for the 4 Brothers campaign can be made here.
Updated 04/10/2019 to include number of shares on offer.