Indigenous-owned zero alcohol beer company Sobah Beverages closed its equity crowdfunding campaign 10 days early after raising its maximum amount of $1 million.
A total of 596 investors were involved in the raise, which is still being kept open for any investors wishing to express interest and get on a waitlist for the shares, said Clinton Schultz, co-founder of Sobah Beverages along with partner Lozen McDiarmaid Schultz.
“We’re relieved, excited and pumped – it’s now game on!” said Schultz.
“And we’re stoked to be the first non-alc beer company to raise investment through an equity crowdfund in Australia. As our new co-owners and our customers already know – we’re First Nations first and we were the first non-alc craft beer to market – we like going first!”
But the exposure of the raise was not without its worries.
“As a First Nations man I’ve experienced and witnessed a lot of discrimination and negativity over the years as did Sobah in recent times so I was worried about what the response would be like. It has been so ridiculously positive that it is quite overwhelming to be honest,” he said.
Schultz also admitted that the lead up to the opening of the raise was “intense”.
“It was a lot of work but Birchal did warn us it would be. We are both hard workers so often when people say “it’s hard work” we take it as “it’s just another day” but this was a lot of work even by our standards. A lot of preparation, a lot of meetings and a lot of late-night writing sessions.
“We didn’t expect there to be so much media interest in the campaign because there have been a lot of craft beer equity crowdfund campaigns over the past few years. That’s why we asked James Grugeon from The Good Beer Co to support us on PR.”
Brewers have been dabbling in the equity crowdfunding space since it was permitted in Australia in 2017.
Many have discussed the complex and onerous regulatory obligations inevitably required for a raise and subsequent company structure changes.
“They are intense, but well warranted, we believe,” said Schultz.
“The regulatory and compliance obligations are a critical part of the process. It’s important that potential investors feel they can review and trust what you’re presenting in your investment offer and make an informed decision about whether to invest.
“It’s been a good process for us to go through and we’re in a very good place coming out of it. Birchal are all over it and have a great team and processes. We also had support from our own legal team at Minter Ellison to ensure we had everything covered.”
The Sobah founder advised other brewers that preparation was key to a successful crowdfund.
“Firstly, make sure you start doing the work on your investment offer early because you’ll need all your team – your lawyer, your accountant, your business advisors – to have time to work with you on it.
“It sounds obvious but it’s the most important document because it’s what people will base their investment on. It’s not something that can be rushed.”
Schultz also said that being consistent with messaging and your offer was vital.
“Be true to your story, don’t try and mimic anybody else’s. If you shift from your true purpose, position, values, ethics or anything else then people will know.
“Equity crowdfunding success relies on authenticity, so whatever that is for you and your business, stick to it!”
Hear more from Clinton and Lozen on the Beer is a Conversation podcast.
Schultz also described it as an iterative process, in which constructive feedback can be taken into account.
“The expression of interest campaign prior to the investment offer going live was a good chance for us to check out who was interested but also to take feedback from people who love our products, our brand and our mission, ahead of putting the investment offer out in front of potential investors.”
The question around valuations and whether the business is worth what the crowdfund share offer dictates has been an issue in the past, as companies would potentially not receive the same valuation from a professional investor or through a buyout.
Sobah’s valuation, offering 9 per cent of the company for $1 million, brings its valuation through the CSF to $11 million, and Schultz said the team thought it was a fair price.
“We had a lot of smart and experienced investors run the numbers during the campaign and tell us they thought it was a good investment which was great to hear,” he said.
“We’ve seen significant investment occurring in the non-alc sector as a whole and have seen brands in their infancy being highly valued so I think people are looking at potential of the market rather than simple revenue.
“We have a well-established brand and reputation in this space and are well placed to stay at the forefront of the market as it continues to blossom here and internationally.”
An experienced and established brand anyway, Sobah will be looking at how to keep in communication with its new investors, an activity which has proven difficult for some breweries post-raise.
“We’ll make sure they benefit from things like advance notice on new products and business decisions, discounts on our brews and merch, and invitations to attend annual events.
“We’ll also be calling on them to give us feedback on new products, support our marketing and sales, and to help us to amplify our message and mission.”
Sobah has also brought in fellow Gold Coast business Cake Equity which specialises in share registry to help with the regulatory side of things.
The journey from here
“In the short term, we will focus on making a big success of our nationwide deals with the likes of Coles, Dan Murphy’s, Accor and supplying into mining sites,” explained Schultz.
“We’ll also be supporting all our other vendors in New South Wales and Victoria as these markets open up again in a couple of months. We’ll need a brand development manager or national sales rep for this task so we will start to look for the right person for the job.”
With forecasts predicting the tripling of production in 2022 from 20,000 cartons to 60,000 cartons, a focus on supply chain, particularly with Sobah’s native foods element, will be in the works.
“Tying down deals with international distributors and continuing to plan for our new zero alcohol brewery and brew-café here on the Gold Coast/Kombumerri country will all be happening as well,” said Schultz.
“We’re really excited about the new brewery and native foods brew café. I’m especially pumped about having a new lab where I can create and develop more native botanicals and fruit-infused non-alc beverages to extend our range and reach.
“We’ve found a site for the brewery in a new industrial space due to be completed in May 2022, and soon we will get back to negotiating the engineering and manufacturing of the brewhouse.”
Part of Sobah’s success, Schultz suggested, was its strong ethical and cultural values, and this is something they wanted to continue to develop.
“We were stoked to hear a lot of positive feedback from our new investors about the value they placed on our brand and our purpose and mission,” he said.
“That stems from our First Nations ownership and leadership of course, but also our very clear purpose.”
Longer-term aims include plans to become a BCorp certified-business, as well as developing a new training centre for young First Nations people at the brewer and café and ongoing work with First Nations communities including the cultivation of native foods.
“We want to be a First Nations and purpose-led business pioneer, not just in the non-alc or beer space, but as a successful business with a high profile that is doing well, in Australia and internationally.
“That’s because we want to see more First Nations businesses and purpose-led businesses doing well by doing good. We also want to prove that purposeful business is just good business.
“We just want to thank every one of our 569 new co-owners for believing in us. We’re feeling blessed, grateful and excited that we’ve got them with us on the journey now and we can’t wait to get started on our big plans to build on our first four years.”