photo by Matthew Curtis
THE GIST
Leeds-based brewery Northern Monk Brew Co is launching a round of crowdfunding with the aim of raising at least £500,000 ($700,000) with an option to raise as much as £1 million ($1.4M). The business will raise funds by selling a maximum 10% equity, but only if the overfunding target is reached. The effort will be hosted by the Crowdcube fundraising platform, giving investors a genuine stake in the business, unlike platforms such as Kickstarter or GoFundMe that don’t offer equity.
If the first target is reached, Northern Monk plans to add eight 100-hectolitre (85-BBL) fermentation vessels to its existing production facility. But if overfunding is achieved, which will be capped at a maximum £1 million, the brewery will look to fast track plans to open bars in London and Manchester, as well as investing further in its barrel-aging and wild beer program. If the maximum total is reached, it’s likely the London location will also feature its own brewpub.
WHY IT MATTERS
When beer historians look back at this period of brewing, crowdfunding will no doubt be viewed as having a major role in the development of the British beer industry. Since its first round of “Equity for Punks” in 2009, BrewDog has raised more than £53 million ($74M), with its most recent fifth round bringing in around 25% of that figure. London's Hop Stuff Brewery recently completed its own successful round of funding via Crowdcube, smashing its initial £400,000 ($560,000) target to raise £770,000 ($1.1M).
For fans of Northern Monk, this presents an opportunity to increase the pace at which their long term plans come to fruition. There have been rumors of the brewery looking to open a bar in London since late last year, but the crowdfunding would accelerate that timeline.
“With demand for the beer and heaps of plans for the future, we’ve had people want to invest in the business from the outset,” Northern Monk founder Russell Bisset tells GBH. “We’re now in a position where we can say to those key friends, family, and people around the business that this is a good time to invest. We’re solidly profitable, we’ve got big plans for the future, and we have a track record that shows we can deliver.”
Bisset says that sales at the Leeds-based brewery have doubled year-over-year since it was founded in July 2013, and the business is on target to hit a gross sales total of £4 million ($5.6M) this year. Last year, the brewery added a 50-hl (30-BBL) production facility to its existing 10-hl (6-BBL) system, increasing annual capacity from 3,900 to 14,000 hl (3,300 to 11,900 BBLs). The company’s growth, along with Bisset’s ambition, shows no time of abating any time soon.
“To us, the value of crowdfunding is not just the monetary investment, but surrounding the company with likeminded people who can join us for our journey,” he tells GBH. “We hope to attract people that share our ambition for the business and really buy into the ethos of the brand.”
There are those that see crowdfunding as being a finite resource, however, especially with the amount of funds already having been poured into the industry by beer fans looking to own their own slice. South London’s By The Horns Brewing Co. aimed to raise £350,000 ($490,000) last year that would fund further brewery expansion. But the campaign was mysteriously pulled from Crowdcube when the amount raised was at around 25% of its target. Investors were not charged and the brewery did not receive the funding, but no explanation was given as to why the campaign ended, either. East London’s Redchurch Brewery only just scraped over the line with their own funding drive, with some reports suggesting that not all investors were happy with the outcome. With genuine equity at stake, Northern Monk’s Bisset is all too aware of the risks at stake.
“I’m sure as crowdfunding becomes a more popular investment opportunity for the general public and a more common way to raise funds for businesses, people will become more savvy about their investments and know what to look for in the companies they intend to invest in,” he tells GBH. “Ultimately, the onus is on the brewery to make sure that they give themselves a realistic valuation, have the right intentions for their businesses, and don't over-use this fundraising method, which could leave potential investors fatigued.”
—Matthew Curtis