Capital Markets: Not just 'dumb money'

Blenheim's Renaissance Brewing was the first to raise equity on a crowdfunded platform, it's now beaten profit forecasts.

Blenheim's Renaissance Brewing was the first to raise equity on a crowdfunded platform and was pleasantly surprised at how the exercise raised more than just capital.

Renaissance's Development Director Roger Kerrison says its successful sale of $700,000 worth of shares in September created a lot of positive publicity for the brewer's brand. It also created a "whole lot of love" from its shareholders and customers, many of whom are the same people. "We're trying to involve them in the company as much as we can. We crowd brew beers," he says.

More than half Renaissance's investors are on a Facebook group the brewer has used to ask for guidance on which labels and ingredients to use in their latest brews - Little RIPA and Darth Saison. "It's not just their money we're after. It's important that they are part of the company and feel that they own a craft brewery - not just a share certificate," he says.

Kerrison says publicity around the crowdfunded capital raising was invaluable and he encouraged other growth businesses to consider using the process, given its relatively low cost and the disciplines it instilled around governance and strategy.

"That's the issue with New Zealand businesses. How do they raise money to take them to the next level if they don't have benevolent family members or friends?" Kerrison says. "We've never been approached by venture capitalists or private equity. Doing a private raise would have been far more expensive in terms of having audited accounts."

The total cost of the capital raising for Renaissance was $60,000 for fees and design work. A future capital raising would cost less as much of the initial work did not need to be repeated.

However, Kerrison cautions that it will not be appropriate for every business, particularly the smaller ones not willing or able to adopt the extra disciplines around reporting and independent directors. "It's not for someone who's operating out of their garden shed. It needs to be a small or medium-sized company that's willing to do all the things to become a more professional medium or large size company over a long period of time."

Renaissance's capital raising was helping it grow sales at more than 30 per cent and it was looking at the potential for another capital raising to fund yet more growth within a year.

He sums up the appeal with reference to recent comments by fellow crowd-funded brewer Yeastie Boys, who jokingly described passive investments from "friends and family" as dumb money, while crowdfunded capital from customers who were fans was more engaged. "That's why they called their money love money."