Melbourne based brewer SAMPLE has become one of the first movers onto equity crowdfunding platform Birchal in the wake of legislation approved earlier this year, and the company is hoping the new fundraising method will unlock its next phase of growth.
Founder Vedad Huric has always been keen on the idea of equity crowdfunding, closely following its roll out in places like the UK and planning for when he’d be able to do it locally. With his company recording revenue of $2.3 million last financial year and locking in 500 brewer accounts on the platform, he told StartupSmart now is the time to take SAMPLE to the next level.
“We’ve reached the stage where we see a much bigger opportunity to accelerate the growth of SAMPLE, hence why we decided to go ahead with raising on the Birchal platform,” he says.
Birchal joins the ranks of platforms such as Equitise and Sharequity, which have all begun to launch expressions of interest for equity crowdfunding offerings over the past month, thanks to legislation passed in March that came into effect in September.
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Currently, each platform is seeking a crowdfunding license from the Australian Securities and Investments Commission, although Sharequity founder Geoff Reilly says he would be “very surprised” to see any company get its license “this side of Christmas”.
SAMPLE has had expressions of interest open for two weeks, and those will continue for another 14 days. Once the interest period has closed, Huric says he’s hoping to have the offer document released by the end of January and says the interest so far has been encouraging. The total amount of funding the startup attempts to raise will depend on the expressions of interest it receives.
“It has been overwhelming, and I’ve been speaking to friends and the public and I’m surprised how few know what equity crowdfunding is. It’s aimed predominantly at retail investors, but I’m surprised how little coverage there is out there for it,” Huric says.
“I have a feeling most expressions of interest will be institutional and sophisticated investors, but for us it’s about getting the message out there that there’s a new way to be part of SAMPLE and its community.”
SAMPLE born from homebrewing side-hustle
The inspiration for SAMPLE came to Huric while he was still working as an architect in 2014, though he says he never planned to launch it as a commercial venture. He’d been working with some large architecture firms in Melbourne and was in the process of establishing his own studio while also dabbling in some home brewing on the side.
“The issue with starting your own company is that you have no clients, so I was starting to do some networking sessions with potential customers. At the same time, I was really into homebrewing, so I would make limited batches to present to my clients,” he says.
“People always ask why I called it SAMPLE, and in the architecture world, you’re always surrounded by samples and prototypes, so it made sense.”
Passing on some of his beer to friends working in hospitality, Huric started to receive a lot of positive feedback for his brews. Soon he was moving to working part-time on the brewing business and, eventually, full-time.
The SAMPLE team now consists of nine employees, with a mix of management, production, sales and marketing roles. The company has been mostly funded from Huric’s own back pocket, although the company did complete a “quite small” capital raise last year. Huric says the business is set to increase revenue by 70% this financial year.
“Instead of going through the traditional route of raising capital, we wanted the opportunity to give back to consumers, give them an opportunity to own a bit of the company,” he says.
“It’s not that hard to raise capital — there’s plenty of money in Australia. This is more of an opportunity for us to build our community.”
Consumer-focused businesses strongest for equity crowdfunding
Huric believes consumer-focused brands will be the hot opportunities for equity crowdfunding. When consumers can have a “physical attachment” to a brand like they do when drinking a bottle of beer, they’re more likely to jump on the opportunity to own a piece of it, he says.
“I think consumer brands are going to benefit from this instead of things like business-to-business startups,” he says.
While he acknowledges the risks might be there for early stage companies, and investors in those companies, when it comes to equity crowdfunding, Huric says SAMPLE has enough years behind it to be a low risk. Regardless, the company is doing a lot of communication with intermediary Birchal to make sure all the right disclosures are in place.
“I think equity crowdfunding is really going to democratise how companies fund their businesses, and if anything, it’s going to foster more innovation,” he says.
“For me, the thing that’s helped the most in this process is appointing a strong board with expert advice and a solid leading team.”