Ellon-based BrewDog last week announced that it aims to raise £25m through its “Equity for Punks” scheme. If successful, it would be more than anyone in the world has raised to date through equity crowdfunding.
The announcement raised eyebrows as commentators noted that investors in this latest round will only receive a combined 8.8 per cent of the business. The resulting valuation is more than 70 times the £3.9m operating profit chalked up by BrewDog last year.
Speaking on Friday night at BrewDog’s pub in Glasgow’s Argyle Street – where the company was promoting its latest share offer – Watt said the business has been growing at 18 per cent year-on-year, putting it on a par with US burger chain Shake Shack. On their first day of trading earlier this year, shares in Shake Shack more than doubled, valuing what was once a Manhattan hot dog cart at more than $1.6 billion (£1.05bn). “Which makes us look very, very cheap,” Watt said.
The company’s “Captain” – who spent five years on a Fraserburgh fishing vessel before launching BrewDog – expressed frustration at suggestions that BrewDog is not a genuine investment. The company has closed three rounds of “Equity for Punks”, the last being a £5m campaign in 2013. Investors can buy or sell shares once a year on the Asset Match electronic trading platform.
Investors in the second round of Equity for Punks in January 2012 paid £23.75 per share, Watt said. By November of 2014, some were able to sell those shares for £125. “That is why it really annoys me when people say, ‘It is not a serious investment, you’re just selling benefits’ – that is a real and substantial return,” he said.
BrewDog is expected to announce further news this week. Watt would not be drawn on the nature of that statement, but conceded that the fourth round of Equity for Punks is off to a strong start.
“We are confident about the valuation for our company,” he said. “We had people complaining about the valuation in Equity for Punks I, II and III, but we have justified that.”
Watt and co-founder Martin Dickie are assured to the point that work is set to begin within two weeks on a £3m brewery that will quadruple the company’s production capacity.
Other projects to be financed by the crowdfunding round include new bar openings, the launch of a craft distillery and the opening of a “craft beer hotel”.