Monday, 5 March 2018

Brewdog EFP V slows to trickle as company slashes target

Image result for sad bulldog

Brewdog's fifth Punk Campaign to raise £50m has been a turbulent ride. Now as the funding dries up, the Dog is not looking so confident.

When Brewdog launched EFP 5 they had a stated target of £50m, with an initial aim of £10m in 100 days. 

When the time for the completion of the £10m was drawing near - the company were still at around £8m mark - things looked a little sad. However through some sort of magic within 9 days they had convinced people to produce the required £2m to get them over the line. This was some achievement, as the average investment per day at this time was around £50k-£60k.

Since this large injection, which just happened to be around the date the £10m target was set to be completed - 15 January 2018, the company has received only £3m in 50 days. Doing some maths this takes the investment back to around the average of £50k to £60k per day. You might be forgiven for questioning the coincidence.

Realising that this daily input was not going to get even close to their £50m target, Brewdog have now reduced this 'target' to £15m - with no explanation. Its their crowdfunding so they can do pretty well whatever they like. But you have question the honesty behind it all.

Brewdog is a very successful company run by almost brilliant entrepreneurs. This sort of mucking about and deception isn't necessary. It reflects very poorly on the egos of the two founders who it appears just cannot stand being wrong, even when they are. It also makes the whole EFP project a bit of joke. Like their US EFP project turned out to be.

Lets hope it's not.  


  1. Brewdog are very effective at squeezing a few more pounds from investors; extra product perks, competitions, heavy marketing of the (pretend) deadline so I am pretty sure there is nothing untoward about how they hit the £10m target having had a bit of stall previously, just well drilled hard sell into quite a well established investor base. The extension date and changes to the target are pretty arbitrary - they are never going to raise £50m having tried so hard just to get 10, but I think they see a number of benefits to having a semi-permanent raise on the go. At some point the music has to stop and then we'll see if they can really build a £2bn value business or have just deluded themselves and their investors. It's not impossible but there's a very long way to go and the hard numbers, while very impressive, have still got to go through the roof just to make the current valuation look sane let alone make the latest round any kind of return. I think it's a better business than I suspect you do, but the reality has got to catch up with the vision that they have already priced in and that is going to take some doing. The fact that the majority shareholders have ruled out a sale or allowing investment by a major brewer is not going to help with any exit at the dizzying multiples needed to get anyone who has just bought in their money back. They are cranking up the publicity machine at the moment and are still pretty awesome at that.

  2. You may not have heard that they sold 22% of their business to a US PE House - having said this is something they wouldnt do. I have little doubt the funding here is fixed but its their platform so who cares. They are without doubt (as we have said many times) a remarkable success story - up to a point. That point was passed a while ago in terms of investment - hence the 22% sale when the US EFP fell well short. They can still be a great global company but ROI for recent investors is unlikely. It's a problem with believing your own PR.

  3. I think we are broadly in agreement on that. The sale of the TSG stake was strategically very sensible, pretending a senior ranking instrument with an 18% coupon is the same as an ordinary share is less so.