BrewDog bang drum for crowdfunding at Holyrood

BrewDog has already raised almost 7 million pounds through its 'Equity for Punks' scheme. Picture: Neil Hanna

Appearing in front of the Scottish Parliament’s economy committee, BrewDog finance director Neil Simpson said the Ellon-based firm had tapped its fans to help with its fundraising plans because mainstream lenders were too risk averse.

He told MSPs: “My experience so far is that, if you have some nice bricks and mortar, it’s easier.

“Launching a new venture, you have no evidence to prove success, so it’s not such an easy way to raise bank funding.”

BrewDog, founded by Martin Dickie and James Watt in 2006, has already raised almost £7 million through its “Equity for Punks” scheme, and earlier this month raised the target for its latest funding round to £4.25m.

The economy committee was taking evidence as part of its probe into access to finance among small firms, and Tim Wright, director of Glasgow-based advisory firm Twintangibles, said there are now 900 crowdfunding platforms around the world.

Wright said there was a “general lack of awareness” of crowdfunding among institutions such as Scottish Enterprise, although some banks have told him they would be more willing to lend to a company if it had already succeeded in raising funds from individual investors.

Asked by Green MSP Patrick Harvie why BrewDog had gone down the “homebrew” route rather than turning to established crowdfunding sites such as Crowdcube or Kickstarter, Simpson said the costs of going it alone were “significantly” lower than using a platform, although it would explore those options if it had to start from scratch again.

Simpson said it was difficult to put an exact figure on the extra value generated by raising funds directly from the company’s fans, “but we have 12,000 sales reps on the road for our brand and they have a vested interest in its success”.

He said: “We would welcome another member in the market coming along.

“One or two other breweries are looking at this on the back of our success.”

Arran Brewery is also hoping to tap into the market to raise up to £4m, which will be used to upgrade its facilities and open a chain of bars, although managing director Gerald Michaluk has stressed that this avenue “is not an investment for the faint-hearted, nor for someone who is not passionate about the company’s product”.

The committee also heard from Ken Barclay, head of Scottish corporate banking at Royal Bank of Scotland, and Bank of Scotland regional managing director for commercial banking Alasdair Gardner.

Gardner acknowledged that BoS has “considerable work to do” in terms of increasing access to finance, while Barclay admitted that this month’s publication of Sir Andrew Large’s report into lending at the state-backed group had made for “uncomfortable reading”.