BrewDog taps the crowd for $50m to funds its US expansion

By Lisa Walls-Hester on Friday 19 August 2016

Savings and Investment

The Scottish craft beer producer is looking across the pond to further expand its growing empire.

BrewDog has turned to the crowd (again) to fund its latest expansion plans, but his time it is inviting American investors to join its 46,000 strong European investor pool and cough up $50m.

The Scottish-based brewer wants to build a new brewery in the US and has launched an equity crowdfunding campaign on the US platform BankRoll.

BrewDog started life in 2007 from a shed in Scotland and now claims to be the number one craft beer brewer in the UK. It has so far run four equity campaigns in Europe. The most recent closed in April.

BrewDog has grown rapidly in the UK, opening dozens of craft beer bars by raising tens of millions of pounds through equity crowdfunding. It now plans to do the same thing in the US.

According to papers recently filed with the US Securities and Exchange Commission BrewDog plans for its US operations to eclipse those in the UK. The company has secured 42 acres of land to build a 100,000-square-foot brewery that will be it US headquarters. The new site will also host a taproom, a restaurant, and a visitor center.

The company plans to distribute beer to 20 US states this year and then eventually supply the entire country and also Canada. It also wants to build a network of brewpubs and add a second brew house which will produce a further 1.5m barrels of beer a year.

BrewDog says it will scale its American business even faster than it has done already in Europe and says it already has two US distribution deals in place with others under negotiation. “We are going to combine Europe’s most explosive craft brewery with the world’s most explosive craft beer market.” But does scale bring disadvantage to its crafted origins and principles? 

The company has had an impressive growth trajectory so far but just how much longer it can continue to call itself a ‘craft brewer’ is becoming a hotly debated subject, one in which brewing associations and advertising regulators are tuning into.

The offer

To service this expansion strategy the company requires a massive capital injection and it is offering 1,052,632 shares of common stock, just over 14 per cent of its US operation for $50m. The offer is open to anyone who wants to invest, anywhere in the world. Shares cost $47.50 each, and the minimum investment is two shares or $95.

According to the company the campaign has topped $1m in indications of interest in its first three days since going live. 

BrewDog is planning to spend $17m on its headquarters and the new brewery and it plans to use almost half of the proceeds from the stock offering, $22.5m, to open brewpubs.

This U.S. stock offering dwarfs all other fundraising BrewDog has done in its four earlier so-called ‘Equity for Punks’ campaigns.

The mechanism for selling these shares is new. The Securities and Exchange Commission created it as part of the Jumpstart Our Business Startups Act, or JOBS Act. It gives companies the right to sell up to $50m in shares online, to anyone.

Kendall Almerico, a Florida-based lawyer who specialises in crowdfunding and is representing BrewDog, calls the share offering a mini-IPO. The scheme is much cheaper than a public stock offering and also allows companies to advertise the share offering.

“The shares are recognised as a financial instrument, like the stock of a publicly traded company. BrewDog doesn’t have to release quarterly earnings, but instead must publish financial documents twice a year” said Almerico.

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