Scottish-craft beer brewer Brewdog has beaten its latest target for raising cash after securing £10m of debt in its latest mini-bond.
Founded in 2007, the firm has been one of the most-widely known companies to raise money from 'the crowd'. It claims growth rates to make traditional brewers weep, mostly funded through several rounds of equity raising as well a mini-bond issued last year, of 6.5 per cent over a four year term.
This round of debt issuance beats last year’s, offering a 7.5 per cent annual interest payments.
A total of 2756 investors are backing the raise which started on 2 December and raised nearly £1m in the first 24 hours. By the 20th of December, the bond had raised over £5m. That number has now doubled to £10m.
But what’s on offer to investors? This new proposition, offering a higher rate of income, similarly comes with a four-year term as last year’s bond after which the principal will be repaid. Payments are biannual. Investors can gain exposure with as little as £500.
Brewdog says it has been profitable every year since 2008 and is on track to deliver EBITDA of £6m in 2016. The new cash, the firm says, will help it to grow revenues further in 2017 by an astonishing 80 per cent. The money will be used in investments in staff, infrastructure, equipment and working capital.
Rupert Taylor, CEO of AltFi Data, last year crunched the numbers in an article for AltFi on Brewdog’s equity crowdfund raise ‘Equity for Punks’. The share based fundraise featured a questionable valuation, with this suggesting the equity offered little to no upside, he argued, and would also be wiped out first in the event of a default.
Furthermore, the round suffered from poor disclosure, and offers its investors “B Shares” – which carry significant dilution risk.