In continuation of his Crowd-Sourced Funding (CSF) for Breweries series, Mark Hubbard, an OnMarket Campaign Manager, brewery founder and former brewery owner, chats with Nick “Bootsy” Boots, former general manager of Stone & Wood, about what makes a brewery investor ready.
When I talk to craft brewery owners CSF, many are intrigued by the prospect of finding an economical source of capital to realise growth ambitions but are worried about meeting investor expectations.
To deliberate what makes a brewery investor ready, I chatted with Bootsy, who has recently launched his consultancy The Business of Beer to provide strategic and commercial advice to the Craft Beer industry. As it turns out, many of the key success factors of being ready to welcome investors are the same as those for running a successful brewery.
Pictured: Nick Boots & Mark Hubbard
So Bootsy, I asked, "what makes a brewery investor ready"?
“There are a few key elements of being investor ready, but the first tick in the box for me is to have a rigorous plan. The reason for the plan is to ensure clarity of purpose. It should address questions such as 'why are you in this industry?', 'what are your goals?', 'is there an end game?', and 'what does success look like?''What is my competitive advantage and my point of difference?'
Does success look the same for owners, management and staff?
Success can be anywhere on the spectrum from simply being the best brew hub and community hub in the local area to being a multi-national, multi-venue behemoth. Regardless of what success looks like, there is a plan to buildout to make the pathway to get there. Then that plan needs to be a living document - often revisited with assumptions regularly challenged or verified and adjustments made as circumstances change. The objective is to eliminate ambiguity and promote alignment. With a good plan that constantly evolves to stay fresh and relevant, that is communicated to stakeholders with simplicity and precision, you are less likely to get lost on your journey. Investors will value this.”
That’s great insight, I say.
But what about individual or small family owners who start with a plan and have daily internal dialogue revisiting the plan but don’t document or otherwise communicate the outcome of their deliberation?
In my case, establishing Blizzard Brewing, I had a great plan to start, then adjusted the business in real time as changes were needed without actually documenting it or sharing widely. It made running the brewery a bit easier, but I always felt I was lacking a bit of clarity in strategy if I wasn’t articulating it regularly.
“Life can be easy with no one to argue with.”
We both laughed –
“But on the flipside, having a group of trusted advisers, formally or informally, helps enormously with doing your due diligence, challenging your assumptions, validating your decisions, acting as a sounding board, and bringing their experience and skills to the situation to complement your own. This is where I see a need for the services I am offering – we can add value in this process as unbiased, independent advisers, able to engage with the business as needed to support this process.”
That resonates with me. It is exciting to be nimble in decision making and concise in execution, but sometimes it gets bloody lonely! Having a sounding board makes a lot of sense. Having reassurance you are on the right track, or being held up from making a mistake, allows for a better night’s sleep. Coincidentally, there is nothing more validating of your pathway than undertaking a successful CSF campaign. When people share your vision and want to participate in your raise, it is very rewarding.
So, Bootsy, what else is on the list of being investor ready?
“Having a strong and sustainable track record is important. Being able to show others that you can hit targets, sustain and grow your vision, and do what you say you are going to do provides confidence to investors and others. This helps establish the capability and credibility of a brewery. The ability to do this de-risks an investment proposition to a certain extent and optimises the opportunity for success in the business as well as success in raising capital for further growth.
Also, focusing on compliance is key. Both in producing the offer document and in post raise obligations. The brewery must have a clear understanding of their obligations, both legal and moral, and be prepared to comply with them.
A sound back office, good financial controls and good financial reporting protocols are all integral to this and will assist in ticking this box. Also, breweries with a strong marketing capability and those who administrate a beer club will already have some credentials in this regard as managing and communicating with shareholders is similar in many respects to managing and communicating with retail customers and club members. The skills in the latter can be leveraged into fulfilling the former.”
That is good to know. I would point out, as part of engaging OnMarket to run a CSF campaign, we assist in ensuring compliance in the preparation of an offer document, running the raise, and post raise obligations.
In summary, based on our experience, Nick Boots and I agreed that the key to being investor ready is to:
Have a solid understand of your business values and aspirations - your brand
Have go-to document that outlines your aspirations and comprehensive plan for success
Revisit your go-to document regularly and make any necessary updates
Engage with those with complimentary skills and relevant experience to test your assumptions and keep you on track
Build traction to provide confidence to investors and grow your brand
Keep a focus on compliance
Is CSF right for you to access capital to execute your plan? Contact mark@onmarket.com.au, let’s have a conversation.
And if you need an independent, experienced and capable sounding board to help you to get investor ready (or even just to get or keep your brewery in order and on track) contact The Business of Beer.
Email bootsy@thebusinessofbeer.com.au to start the conversation.