Hydrowood successfully raised $2.1m from 622 investors - awarding their equity crowdfunding (CSF) raise the largest in Tasmania to date!
Of equal importance to the growth capital raised, Hydrowood have gained an engaged community of 622 brand advocates. Since launching, promoting and closing their campaign, Hydrowood has experienced significant increase in demand from individuals and organisations for their ethically sourced timber.
Before raising, Hydrowood's key CSF goals were to increase brand awareness through marketing exposure, create a healthy shareholder spread for a potential IPO listing in two to three years, and raise working capital to support the commercialisation of their timber. Hydrowood have now achieved all three goals and are starting a new chapter, embarking on the next phase of their growth journey.
Hydrowood and OnMarket's relationship:
"Working with OnMarket was great. The team were open and informative about the process. They’re extremely knowledgeable in their understanding of how to run a successful campaign and having Nick travel to us in Tasmania was of high value.
Everyone was very friendly and the raise was professionally run. Together we've done something in a really tough environment, so I think we should all be pretty proud of it."
- Andrew Morgan, Co-Founder
Image: Hydrowood & OnMarket presenting at Hydrowood's CSF launch event in Tasmania
Who is Hydrowood?
Hydrowood is a Tasmanian-based company that has developed and proven the technology to remove remnant standing trees from hydroelectric dams. Hydrowood then mill them into high grade timber for furniture and architectural applications.
Based at Tasmania’s Lake Pieman, Hydrowood is an accredited sustainable timber producer. Having commenced operations in 2015, pre-commercial sales have generated approximately $2 million in revenue to date. Hydrowood has spent the past eight years de-risking the developing business in a pre-commercial phase. This platform is now ready for scaling as a fully commercial operation in its established premium reclaimed timber market.
Over this period Hydrowood has produced a range of products including sawn boards, veneers, flooring, and architectural panelling to showcase and ultimately test performance and marketability whilst generating wide brand awareness as a supplier of ethically sourced sustainable timber.
There is a significant amount of timber still to be harvested from Lake Pieman on Tasmania’s West Coast and Hydrowood is in discussions with Hydro Tasmania to expand the available resource via access to an additional 300,000m3 of harvestable timber in the state. In addition to this, there is an estimated 300 million tonnes of timber submerged in lakes worldwide with an estimated value of $50 billion.
As access to land-based natural forest in Australia and around the world is curtailed, the hidden resource submerged in man-made hydroelectric lakes is going to be an increasingly important component of the global supply chain. Hydrowood is uniquely positioned to be a major player going forward.
What are the key drivers of growth for Hydrowood?
Having spent the past eight years proving business viability in a pre-commercial context, Hydrowood is ready to scale as a fully commercial operation within the premium reclaimed timber market.
Timber Shortage
There is a global shortage of timber, with timber demand set to quadruple by 2050. Australia is a net importer of timber products with a $2 billion trade deficit and the gap is growing . With a rotation of native timber already taking 60-100 years to reach maturity, the combination of a reduction in native forestry production, reduced supply due to bushfires and increased demand for decorative timbers will exacerbate a pre-existing supply issue . Hydrowood is in a unique position to supply sought after timbers into the future. Safe from both fire and the sovereign risk of policy change around terrestrial native forestry, Hydrowood is ready to harvest now.
Increased Environmental Awareness
Hydrowood is certified to both the PEFC and Responsible Wood standards. Increased awareness of climate change and the need for sustainable construction materials is driving demand for timber over and above other materials. It is also a perfect investment for decarbonisation projects. Due to its environmental credentials, Hydrowood is perfectly placed to deliver this market demand.
Societal Pressures Australia’s leading architects and international designer/makers are drawn to Hydrowood for its compelling story and environmental credentials. Political and social pressures have spurred governments and corporates to utilise accredited, climate-friendly building programs. The Victorian Government recently announced they will end native timber harvesting by 1st January 2024 and the Western Australian Government has pledged to phase out native timber harvesting by 2030 , driving demand for alternative timber sources, such as Hydrowood.
What's next for Hydrowood?
"We’ll be following the plan outlined in our offer document, so boosting timber into our drying shed that we can turn out the other side and use to generate revenue. And I think if we can do that over the next 12 months, we’ve got a very different story to tell.
Then it's a play for an ASX listing or a private equity conversation. But we're going to have to be very mindful. Obviously, we originally modelled our 12-18 month plan on raising $5m, but we also had to model it our minimum of $2m so we can be conservative.
In summary, conservative growth over the next 12 to 18 months and then hitting the accelerator with a view to a listing." - Andrew Morgan