Disclaimer: The following is a fictional, tongue in cheek account and not meant to offend anyone at Camden Town or in the Dragons’ Den (I’m sure they have too much cash to be offended anyway.). Any national stereotypes or criticisms of business practices are not to be taken seriously but merely as the product of a childish imagination looking to poke fun at an issue (before being seriously considered).
This week saw the start of Camden Town crowdfunding to secure a new brewing premises. 2% equity was offered for £1.5million. I wonder what the Dragons would think of that…
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Evan Davis: Welcome back to Dragons’ Den, where another plucky entrepreneur will seek funding from a panel of millionaire business people seeking a return for their stake. This week, Jasper Cuppaidge of Camden Town Brewery pits himself against the Dragons in a bid to secure the funding needed to expand operations and keep up with demand. But will the Dragons part with their cash?
Jasper Cuppaidge: G’day. M’name’s Jasper and I run Camden Town Brewery based underneath some railway arches near the market. Since 2010, the business has grown a massive cult following and a reputation for brewing high quality beer. We now employ 65 people and revenue is £9 million, up from just £2.5 million in 2012. We’re seeking £1.5 million for 2% equity to help secure further growth.
*Scribbling ceases, and five veiny faces snap up with eyes bulging from their heads. Deborah Meaden looks at Peter Jones, whose mouth seems wedged open. Duncan Bannatyne’s jowls wibble in disbelief. The silence is broken by the giggle of Piers Linney.*
Piers Linney: Jasper, hi, I’m Piers. Before we get to the money, I want to know a little bit more about your business. Where did it all begin?
JC: Well, granddad was a brewer back in Oz and when I bough a pub here in Blighty I had a go at brewing like my forefathers down in the cellar. Got pretty good at it and people were buying it so I thought “sod it, why not?”
PL: The branding looks very sleek and modern, you’re a youthful guy and you’ve got a lot of energy. This craft brewery has a lot of younger drinkers I’m guessing, a lot of Camden hipster types if you know what I mean.
JC: Dunno about “craft brewery” mate, it’s not a term I’ve really ever thought much of. I’m just trying to give the public some good quality beer. I prefer to think of us as a Lager Brewery.
Duncan Bannatyne: Whoa, whoa whoa, whoa. Did you say lager?
JC: That’s right.
JC: Oooooh yes.
DB: So it’s not craft beer?
JC: As I said, it’s not something I’d immediately identify with. It depends on your definition.
Deborah Meaden: *Scowls* Are you wearing a bobble hat?
DM: *Shakes head* I’m out. *Glares*
Peter Jones: Jasper.
PJ: I don’t like beer.
PJ: I’m out.
DB: So, let me get this straight. You want one and a half mullion pounds?
DB: For 2%?
DB: *Laughs* So, that would value your company at £75 million?
DB: But you don’t have a very large production premisis. Current production is outsourced. Where is the company’s value coming from?
JC: Our brands are very popular and going from strength to strength…
DB: You want £1.5 million for 2%. Which means you value your company at £75 million, which is a similar value to Missouri’s Boulevard Brewing which was bought by Duvel in 2013, and had a production capacity of 185,000 barrels annually. Let me ask you this: how many barrels does Camden produce annually?
JC: Well it’s difficult to say really-
DB: Aye, it’s difficult to find out too. I’ve just googled it and cannae find it anywhere. I did find out that you sold 7.6 million pints last year though, which works out to 36219 barrels if I’m correct. So you’re five times smaller than Boulevard Brewing, a brewery you’re valuing yourself alongside?
JC: Err…I guess so.
DB: I’ll give you £1.5 million for 10%, and that’s taking a risk that you’ll be as successful as a 25 year old business. It’s my final offer.
JC: C’mon mate, that’s a bit different to what I wanted.
DB: It’s still a new business. It’s popular now but there’s no insurance that it’s not a flash in the pan. The market is saturated and you specialise in the same product as the runaway market leaders 5000 times your size and at a higher price point to boot. Your valuation is apparently totally unfounded as you have low output, next to no property and apparently potentially costly legal battles ahead of you. How can 2% of this business be worth £1.5 million. It can’t be. It’s not. I’m out.
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It wouldn’t be pretty watching. I doubt the Dragons would be so succinct, and the ensuing slaughter of poor Jasper would make for gruesome entertainment. There wouldn’t be time for any other investment-seekers.
Don’t get me wrong, I like Camden Town. I respect what they do and how they’re flying slightly in the face of what British “Craft” beer is whilst simultaneously carving out a little foothold as the posterboys of it. However, if you look at this offer from a purely business perspective, it’s laughable.
A quick Google will give you an idea of the company’s net worth. It’s is much, much, much lower than the valuation this equity sale would suggest. That’s because a) net worth is very different to market value, which for Camden Town would be much higher (due in no small part to the strength of the brand), and b) this isn’t a real investment situation. This is crowd-funding. This is the world in which companies secure lucrative funding in return for a novelty, a gesture or simply bragging rights.
Remember when you could buy shares in Manchester United? As a kid, I was jealous of the bit of paper on friends’ walls, and envious when they claimed that they owned a little bit of the football club I supported. Manchester United got the pocket money of thousands of children, and the children got a bit of paper and the chance to show off.
That’s exactly what Camden are doing. You get a t-shirt or a discount that barely scratches their profits. If you have more money than sense, you can afford a party with 50 of your mates at the Camden Town Bar. (You could all just go to the Camden Town Bar and spend the same £100,000 and I’m sure you’d all have an absolutely unforgettable if not totally forgotten night.)
This isn’t an opportunity for budding investors. It’s a way for the company to make their customers feel more involved. But every pound you spend only gets you 0.00000133333%. And if you never listened in maths class, let me remind you: that is essentially zero.
Let’s put that in the perspective of another famous crowdfunding brewery: BrewDog.
Through their Equity for Punks scheme, BrewDog have raised around £7 million. In the process, they have sold 15% of their business. That stake is huge compared with the share Camden are prepared to sell.
That values BrewDog in that terribly simple Dragons’ Den way at about £105million. So every pound gets you 0.00000214285714286% of BrewDog. Still not a lot, but more than the same money will get you in Camden. Not that that actually matters, as you’ll still only be rewarded with a certificate and a discount (which is probably quite valuable to BrewDog bar regulars.) With a minimum spend of nearly £100, it’s a real investment, and it appears you get a lot out of it.
BrewDog’s capacity is more than twice the size of Camden’s, at 85216.7 barrels annually. Still a long way off of Boulevard mind. But BrewDog is a market leader, with an estate of more than 25 retail outlets around the world, so the value of the company is in no doubt. That can’t be said for Camden.
Do Camden Town really see things this way? Do they think BrewDog, with 235% higher production are only 40% more valuable?
I’m guessing no. I’m guessing that they just wanted to generate some cash from their loyal fans so that they could give those fans more in the future. But why should those fans pay up?
Fair enough to those who do. If you want to see Camden do well and you need a new t-shirt or your mate really loves Camden and you want to annoy him/her and you have some cash to give, go for it. But I don’t see how I would benefit from it.
I’m sorry, Camden. I’m out.