With a long list of industry success stories and continued appeal from investors, crowdfunding remains a popular source of finance for breweries — but can a brewery still take advantage if it doesn’t have the profile of brands like Brewdog and Camden Town Brewery? Matthew Grant (pictured), director at Garbutt + Elliott accountants and business advisors, goes back to basics to list six steps to crowdfunding success.
You can’t help but notice the growth of crowdfunding in the brewing industry in recent years. The likes of Camden Town Brewery and Brewdog may have grabbed the headlines with high-profile equity crowdfunding rounds, but there are many more examples where brands have turned to peer-to-peer lending as they seek to raise capital.
So what does it take to launch a successful crowdfunding campaign? Here are my six steps to success.
1. Have a story – and share it!
You need to get buy-in from potential investors and the only way you’re going to that is to share your story. Who are you? What are you doing? Why are you doing it? Remember to tell people how your product or business idea can benefit funders and, most importantly of all, why they should fund you.
Video is an increasingly popular method of delivering this message and makes it more personable. It’s getting easier and cheaper to produce professional-standard videos, and of course it’s easy to host them on websites and social media.
Remember to inject some personality and show people exactly what (and who) they will be investing in.
2. Ensure clarity of proposition
One of the biggest reasons that start-ups fail is because the entrepreneur over-complicates things. Make sure you are clear about everything, not just for your own benefit but for the benefit of potential investors, too. This includes your target amount of funding, what you are offering to funders and for how much.
Be crystal clear about any ‘extras’ you are willing to offer, too. Brewdog in particular has had success offering rewards, including a lifetime discount in all Brewdog bars and on the online shop. If you are looking to offer discounted purchases or another loyalty scheme, make sure you can deliver on your promises.
3. Work hard on your business plan
Remember you are dealing with sophisticated investors, so your plan needs to be sound. Despite what some people might think, the growth of crowdfunding does not mean you can draft a half-hearted business plan, stick it on the internet and wait for capital to come pouring in. If it was that easy, we’d all be doing it!
All key figures in your forecasts need to be backed up by stated assumptions. While costs are easier to predict than sales, both must be included — and remember, businesses fail if they run out of cash, regardless of whether they turn a profit, so a cash flow statement is important. If figures really aren’t your thing, seek assistance from an accountant.
It is also important to show you have done your research on the market and the competition. Setting these things out clearly at the start will reduce the number of enquiries from potential investors down the line.
4. Find the right platform
As crowdfunding becomes more and more popular, there is an increasing number of platforms to choose from. Some have an all-or-nothing funding model, which means if you do not reach your funding goal, you get nothing, while others enable you to keep the funding even if you do not reach your goal. Speak to the experts and make sure you understand the differences, including the small print.
5. Market your campaign
One of the most critical factors in the success of any crowdfunding campaign is to reach as many people as possible. And this means using as many different marketing methods as you can.
Needless to say, social media appeals because it is free to use and many people are already using it, which means it can fit around your lifestyle and interests. If your business is to be in a specific geographic location, use the local press — they love a good story about a new business that local people can get involved in. You could also speak to other complementary businesses to see if they can offer support.
This part of the project needs commitment and will take up a lot of time, but it is vitally important. Without awareness, it will be very difficult to secure the funding you need.
Above all else, keep your investors and potential investors updated with your progress. This will keep them interested and engaged, plus a happy investor will tell others about you and help you market your proposition. Be careful not to exaggerate, though. Tell the truth and keep your feet on the ground — no one likes a show-off.
Most importantly, your ultimate goal is to be able to deliver on your promises. Reaching your funding goal is just a step on that road — the hard part comes in between.
Garbutt + Elliott has sponsored the York Beer and Cider Festival since 2009 and is a supplier associate member of the Society of Independent Brewers (SIBA). Matthew Grant is passionate about beer, having been an officer in the York branch of the Campaign for Real Ale for a number of years, including five as chair. He has also been a key member of the committee for the York Beer and Cider Festival since 2009.