Tuesday, 20 October 2009

Punk Equity

It seems I am a Punk. I own shares in BrewDog, which I bought through equityforpunks.com so I must be a punk. I buy beer from BrewDog - beers for punks. I need go no further.

Now, I need to know if my £230 is well invested. £2.3m is the total that Bracken and the others are hoping to raise. The total, should they sell all 10,000 shares, will be worth only 9% of BrewDog. That results in a complete value of the BrewDog brand of £25.55m. Do we think it's worth it?

Well, as a share holder I need you to now all to invest in their cunning plan. Without the £2.3m investment it won't get to the £25.5m value they are expecting. The trouble I'm having is that the current value of the assets and liabilities are not much more than £0.5m and they are only looking to expand 10 fold. So we have to assume that their current brand and fixed asset value is around £2.5m based on a £0.8m turnover and negligible profits.

Admittedly they are expecting final year turnover to be significantly higher as they are rapidly expanding. Additionally, low profits could easily be due to heavy investment, but still, I'd like to see more on the bottom line myself.

But hey, if you are a visionary, what do numbers matter? If you can buy into the idea that they are on a mission "to show people how rewarding and exciting craft beer can be" then what are you waiting for? If you can consider a beer to be Abstrakt1 and enjoy the fact that it is, then go ahead, invest in these to young ragamuffins, what else is there worth investing in these days? Not property and for sure not banks.

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1Read the document on the web site.

8 comments:

Wurst/Whorst- Brewing Arts Instructor, CEO APRK said...

If you're a punk, what were your favorite bands? You do kinda remind me a beery Garry Bushell.

James, BrewDog said...

Putting a value of a successful young brand, especially one growing this fast is notoriously difficult. Our most valuable assets - the brand itself and the people behind it are not shown anywhere in our accounts. We want people to buy into our journey and our vision. Look at where we have taken BrewDog in 2 years and imagine where we can be in a further 3. This is a journey and a future we want you to be part of. As well as Martin and James, you will also be investing in the skill and experience of Keith Greggor and Tony Foglio http://www.brewdog.com/news.php Their last brand, Skyy Vodka is now a $1billion plus brand (yes billion!). Just imagine what they can help BrewDog achieve.

Andy said...

In response to your question is the £230 well invested, well that depends what your looking for. As a purely financial investment I would suggest no. If you look at the share offer documents you will see they sold a 12.5% stake to Griffin Group LLC for £600,000 in Jun 2009 which would value the company at £4.8m. The value a few months later is now over £25m. It's an ambitious valuation given the current financials, but you already know that. That doesn't mean you won't make money eventually, but I suspect Theo Paphitis and co would be looking for more than 9% for their £2.3m

A lot of people will invest for reasons other than financial gain however and thats really the way the offer is being marketed - be part of something different and invest in something you have a strong connection to. it's the same reason why some people buy shares in certain football teams. In any event the 20% lifetime discount on their beer is a nice little perk.

Ed said...

Yes, I don't think anyone's going to make a killing out of this investment. And are there really 10,000 beer nerds out there who'd want the 20% off? Still as a beer nerd myself I am kind of tempted...

jesusjohn said...

The valuation is insanely rich, but there is one mitigating factor, which is if you are already a relatively heavy customer on their website the 20% off for life is a fairly significant dividend in itself. It's not transferrable, though, so you'd need to hold on to the share for a looooong time to recoup on that basis (by which time, one would hope real dividends are coming through, though 1-10,000th of 9% ain't gonna yield much).

That said, it's a bit of fun, the ecobrewery plan can proceed with bank debt even if they raise only £500k and - I must say this is the overriding positive - the AGMs will be absolute pissups, I'd imagine.

Don't give up the dayjob, Dave.

StringersBeer said...

[speechless]

Velky Al said...

Cue legions of "fans" complaining loudly about BrewDog "going corporate" and how long before the whispering campaign about the beer not being as good as it used to be starts?

scissorkicks said...

Love the idea, hate the imagery on the site. Always imagined BrewDog took pride in separating themselves from unreconstructed trad Real Ale types sprawling semi-naked "Fantasy Bird" imagery all over their pump clips (stand up and take a bow, Hart Brewery. It would seem I was mistaken.

Perhaps the press shots are supposed to be "funny" or "ironic". Reality is, they're just "shit".

It gives me no pleasure to moan about this, because the beer is so SO good.