The results are in for one of the first equity crowdfunding campaigns in Wisconsin—and likely the nation—and the entrepreneurs behind it are pretty happy with the results, despite coming up shy of their goal.
MobCraft Beer, a craft beer startup based in Madison, WI, recently closed the fundraising campaign it was running through CraftFund. The site, which is based in Milwaukee, is among the first allowing startups to find investors and sell shares in their businesses over the Internet.
MobCraft snagged commitments of more than $75,000 from 57 investors, which was short of the $250,000 the company was trying to raise. Still, MobCraft co-founder Henry Schwartz viewed the campaign as a success.
“We topped the highest brewery Kickstarter campaign, so I am really happy with what we were able to raise,” Schwartz said. That previous record was set by Covington, KY-based Braxton Brewing, which raised nearly $72,000 from 654 backers.
More than 370 breweries have started Kickstarter campaigns, CraftFund CEO David Dupee said. They’ve tried to raise money for things like new equipment, creating tap rooms, or expanding their production capacity.
The money MobCraft raised will go toward building a new 30-barrel brewhouse and “is a huge help to get us there,” Schwartz said.
Because MobCraft came up short of its goal, Wisconsin law gives its would-be investors the option of backing out of their commitments, Dupee said. While that could lower the amount, he said it looks like MobCraft will raise at least $66,000 from investors who will stick with the company, although details are being worked out.
MobCraft is one of two Wisconsin companies to raise money on CraftFund’s site so far. The other is Ellsworth-based Common Man Brewing, which raised $20,500 from nine investors, short of its $50,000 goal.
While there are a lot of craft breweries out there raising money online through crowdfunding sites such as Kickstarter and Indiegogo, MobCraft’s approach was different. A campaign on those two platforms offers backers different rewards depending on the amount they contribute.
An example is the Indiegogo campaign that Stone Brewing used to raise $2.5 million this summer. The internationally renowned brewery offered backers special edition beers for their support. That campaign generated some controversy. Stone is a very successful and established company doing well enough that it is building new breweries in Germany and the eastern U.S., certainly not a fledgling brewery trying to pay for new equipment. Stone has characterized its campaign as “an exclusive presales event.”
MobCraft’s 57 backers own a piece of the company for their investment. The brewery was able to make the offer thanks to recent changes to Wisconsin laws that make it easier for companies to raise money online and from people who aren’t wealthy. Other states have also implemented new laws allowing equity crowdfunding, while advocates wait for similar federal rules to be implemented.
Running the campaign was a new experience for Schwartz, and it required investor outreach and learning about new securities laws and regulations.
“Just like any fundraising, it is hard work, but I felt it was worthwhile,” Schwartz said. He also said he’d recommend it as an option for breweries.
Along with the money a campaign can raise, supporters of crowdfunding tout it as a way to raise a company’s profile, find new supporters, and create deeper connections with the public. That was something MobCraft was after and got with the campaign, Schwartz said. The company also got some advice.
“Even in this short amount of time, our shareholders have been very helpful in giving thoughts on our expansion,” Schwartz said.
It makes sense that crowdfunding would appeal to MobCraft, given that collaboration is part of its DNA. Unlike conventional craft breweries that come up with their own recipes and make and market their own beer, MobCraft crowdsources its beers. Home brewers can submit recipes they’ve created, and every month MobCraft puts a few on its website. Drinkers vote for their favorite by placing pre-orders, and MobCraft makes and bottles small batches of the most popular choice. The custom beers are sold at liquor stores and bars throughout Wisconsin and even a few in Minnesota and Illinois.
MobCraft was founded in 2012 and has its origins in an entrepreneur education program at the University of Wisconsin-Whitewater.
