Beer, Crowdfunding, and the Future of Small Business Financing

By Zack Millerc, Rewards-based crowdfunding is being used to finance lots of different things: from financing college educations to supporting concert tours tosending athletes to the Olympics to financing indie movies.

Crowdfunding, in the form that’s been made popular by sites likeKickstarter and Indiegogo, works particularly well for consumer products that can people can rally behind. Those can be really nifty new gadgets, movies and films, and now…beer.

Yes, it turns out that beer is a particularly good product to crowdfund.

A typical crowdfunding campaign for beer

Known as the grandfather of craft beers, Jack McAuliffe first founded his brewery in Sonoma, California in 1976. That brewery eventually shut down in 1982 but Jack’s daughter never gave up her dream of reintroducing Jack’s New Albion Ale to the general public.

To realize her dream, Renee DeLuca turned to crowdfunding to raise money to reboot the brand. It’s early days in her campaign to raise $75,000, but it’s possible that with crowdfunding, New Albion Ale will make it to market again.

beer-images-free-download

Other crowdfunding campaigns for everyone’s favorite drink

The New Albion Ale campaign isn’t the first beer-related crowdfunding campaign and it certainly won’t be the last. Would you pay $1000 once to get free beer for life?

Well, many people would and that they did. A brewpub and a coffee shop in Minnesota’s Twin Cities have used this one-time payment method to save their businesses. It works like this:

  • a prospective restaurant or pub owner needs to raise money
  • instead of bringing in large investors and ceding control of their businesses, these entrepreneurs turned to crowdfunding their dreams
  • in return for a $1000 “investment”, patrons would receive free beer for the rest of their lives and a small equity stake (non-voting) in the business

Northbound Smokehouse & Brewpub, located in a quiet southern corner of Minneapolis, hit its goal of $220,000 through the participation of over 100 people who participated in the crowdfunding campaign.

According to the NationalJournal:

Northbound has now been open for almost two years and is thriving. The investors didn’t drink them dry. The restaurant is giving away some 17 beers a day, and the cost is low, at just 40 cents a beer. Plus, investors aren’t just going to the brewpub for a beer by themselves—they order food, bring people, or maybe order a scotch after dinner. For the investors, it’s also about the sense of ownership. Or, as Johnson explains, “We have an army of over 100 people who are our cheerleaders.”

Crowdfunding platforms just for beer

Many crowdfunding campaigns have taken place on general crowdfunding sites like Kickstarter and Indiegogo, which offer crowdfunding projects in a wide variety of projects.

But for niches — specifically, types of projects that can benefit from smaller groups of people with very specific tastes and expertise — general sites don’t always work. Craft beers and the entire ecosystem around the industry (beer gardens, festivals, hops farms, etc.) seem to attract people very passionate about their beers.

That’s spawned CrowdBrewed, a crowdfunding site dedicated to financing all businesses and events having to do with beer. It’s also the site on which the abovementioned New Albion Ale is crowdfunding. CrowdBrewed provides two different types of crowdfunding projects: Rewards and Equity. Backers can decide to either donate to specific beer-related projects or if they’re so compelled, to invest in microbreweries, beer festivals, pubs, and more.

If you’re a fan of beer or thinking about fundraising for a new craft beer, crowdfunding can work to grow the fan base around certain brands and bring in the money.

Zack Miller is a partner at global equity crowfunding platform, OurCrowd, and the co-host of a fresh podcast on crowdfunding, This Week in Crowdfunding.

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