Camden Brewery, who raised almost £3m on Crowdcube only this summer, have sold out to global drinks giant AB InBev.
The deal leaves the Crowdcube investors with a return of roughly 70%. Rumour is that AB paid around £85m. During the Crowdcube pitch the business was being valued at £50m. Not bad for a short journey.
It does seem odd that Camden would go to all the trouble of getting over 1000 investors on board and then sell up. Jasper Cuppaidge, friends and family who own 95% of the company are the real gainers. It must have been just too tempting to cash in. Maybe this deal was struck before the Crowdcube campaign and AB wanted to see the pulling power the brand had? Or maybe the thought of having to raise another £6m in the next two years was just too much for the owners. We will never know which is a shame.
It certainly isnt the story that was being sold by Camden only a few months ago during their successful pitch. Investors might wonder if they would have seen the promised 10X returns if the Cuppaidge's had not wanted to cash in. It's just one of the many dimensions that ECf investors have so little control over. Crowdcube have a standard drag along clause for all B shareholders and with the majority ownership in the family, even A shareholders (£25k) would have had no say.
The craft brewers are all crying foul and it is true that once smaller brewers get taken over by the big boys the quality falls - Doom Bar for example.
Camden investors were EIS eligible but clearly that is now no longer the case with this early exit. Interesting to know how many investors have already ticked their claim box on their self assessment forms.
Listening to the comments from Jasper Cuppaidge, you would be forgiven for thinking that this Camden Brewery was different to the one who raised money on Crowdcube only a few months ago. Now, he says, the company could not hope to prosper without the investment from a company of ABs size. Dont remember reading that in the Crowdcube plan.
We await the Crowdcube press release and the spin they create over this. Whilst it is a return, along with the E Car Club deal, it is nowhere near to the kind of return the platform promotes. So two exits to date, both of which have returned only a fraction of the wealth promised. Better than nout and almost certainly better than any future Camden brew.
Whilst I enjoy your blog, I do think that this article is sour grapes. A 70% return isnt a bad investment for such a short a time holding shares.
ReplyDeleteSorry if hasnt come across but that is what I tried to say - not bad for such a short hold. The other issues here are what degree of control investors have over their investment - none here and whether what they are told when they invest turns out to be true - in this case no. Some might argue that money invested here under the pretence of a 3-5 yr return at say 10X is money that cant be invested in another cracking opportunity offering much better than a 70% lift. Lost opportunity costs due to the lack of transparency.
DeleteCredit where credit is due, this is definitely a huge success. Camden Town Brewery was one of the specific showcases where 'professional' investors were warning about 'inflated valuations' in crowdfunding, I remember an FT article where they compared revenue multiples with listed old-school breweries...
ReplyDeleteTrue, it's not 10x and even crowdcube's 'multiple return' sounds exaggerated, but I wonder which opportunity cost would give a return >70% p.a. Unless one is a genius that only picks those investments that certainly will tenfold after 3-5 years, I doubt your expected opportunity costs will top even 10%
The point is not that this isnt a good return per se - it is. However the credibility of the ECf platforms is built on the idea of spreading out a investment portfolio over say 10 investments. Of these 6 will fold, 2 will carry on trading with no prospect of ROI and two will hit the jackpot ie exit. So if these two only return 1.7 and 2.5 (Camden and E Car Club) there is not hope of making up for the loss of the six (assuming an equal investment in all 10).
DeleteI hear what you are saying.
ReplyDeleteIm a small shareholder, so I was always going to have to go with the flow, whatever.
My atitude to these investments are that they are high risk and that more ventures will fail than succeed. So it's nice to get some sort of return in this case, than non at all.
Now I just need to ring my tax advisor...
Well done for picking a winner. There are lots of issues we have covered in this blog about investors etc but if the attitude is well its a all a lottery then any return, as you say, is a good one. This is not the way the platforms sell themselves - which is our point. anyway you'll have an greater Christmas now with your unexpected bonus.
DeleteI love your blog. I discovered it today and couldn't stop until I had read every post. Truly insightful.
ReplyDeleteIt does appear though that of the 3 parties involved in ECF, the crowdfunding platform, investors and startups, the investors appear to escape your scrutiny. This seems somewhat one-sided as it is clear that the investors are largely unfazed by the "misdemeanours" of the platform and startups.
The investors, some of which are "sophisticated" are the main drivers of the ECF movement as it stands. It is simply a classic case of dangling the carrot in front of the greedy donkey and as far as most investors go, the fatter the carrot, the more interesting the prospect.
The truth is that investors are the same whether investing in high risk pre-revenue startups or revenue generating ones as has been proved in failures of some high profile startups like www.fab.com and www.quirky.com who raised several $million from world-class VC firms and valued at $billion but still failed.
While I don't condone falsifying or inflating valuations, I believe ECF will die a natural death if investors become as savvy as they should be and exercise due diligence when they choose their investments. But again, do we need investors to be so cautious that they stop investing in early stage businesses? Isn't the whole point of investing in early stage businesses to give them a chance they wouldn't otherwise get and hopefully create some viable businesses in the end?
The fact is that most startups will fail and even the most savvy of investors/VCs do not have anywhere near a 50% success record means anyone investing in startups already know the risk they are taking by doing so.
Accept the donkey analogy. Maybe we are trying to lengthen the stick so they cant get at it so easily.
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