End of the free beer as craft brewer struggles
Renaissance Brewing, the first Kiwi company to receive equity crowdfunding, has gone into voluntary administration.
The Blenheim craft brewer became a poster boy for equity crowdfunding when it raised $700,000 from investors in 2014, and its financial difficulties highlight the risks involved.
Equity crowdfunding was designed to make it easier for small businesses to raise money from the public, by allowing them to raise up to $2m from retail investors without filing a formal prospectus.
It has since been used by dozens of firms to raise tens of millions of dollars of capital.
Iain Shephard of administrator Shephard Dunphy was confident Renaissance Brewing would be sold as a going concern.
‘‘The business is trading as normal today. We are brewing and all customers’ orders are getting fulfilled.’’
The company’s seven staff had been retained, but it was too early to say what the situation would be for investors, he said.
‘‘We have only been administrators for 24 hours and we are working through the usual process.’’
In a note to investors, Shephard Dunphy said the firm had struggled to generate sufficient margins on sales and that, coupled with reduced turnover, had placed a ‘‘significant strain on cash flow’’.
‘‘The director had sought additional funding from the bank and others, however this was not forthcoming.’’
Auckland public relations executive Conor Roberts is one of 300 beer fans who put a ‘‘couple of thousand dollars’’ into the firm ‘‘for a bit of fun’’ in 2014.
‘‘They brew great beer and they have just put in a new bottling line but they have struggled a bit I think with distribution,’’ he said.
Renaissance Brewing had been pretty good about communicating with its investors in the past and warned in a quarterly report in August that it faced a challenging trading situation last year, Roberts said.
Although it was disappointing the brewer had gone into administration, the experience wouldn’t put him off equity crowdfunding.
‘‘There are no examples of there being zero risk in the world. You should always go into these things with your eyes open but sometimes they will work and sometimes they won’t.’’
He had at least got a case of beer each year, in return for his investment.
‘‘I’ll be enjoying one this evening – toasting someone else coming in and picking [the business] up.’’
It may be the last free case for investors for a while.
Shephard Dunphy said a consequence of the administration was ‘‘that there will be no distribution of beer to shareholders at this time’’.