Crowdfunding a Brewery?

Saskatchewan becoming the first province in Canada to permit equity crowdfunding got a fair bit of play in the media shortly after its announcement late last year. To date, the excitement hasn’t translated into many (if any) tangible results – but adapting to anything new takes time.

I believe equity crowdfunding provides an amazing opportunity to grow the already booming craft brewing, distilling, and winemaking industry in Saskatchewan.

Before I get into why I believe this, let’s step back & run through exactly what “equity crowdfunding” is. A generally accepted definition of crowdfunding is:

“the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.”

OK, so what makes Saskatchewan’s new legislation unique? Kickstarter, Indiegogo, and other platforms have been used to crowdfund start-ups, charitable campaigns, humanitarian efforts, etc for years. Sask’s legislation allows for equity in a company (i.e.: ownership/ shares) to be offered in return for an a crowdfunding investment. Typically, offerings of this nature would go through extensive (and expensive) regulatory review and approval – these obstacles could be show-stoppers for a small craft beer start-up.

cropped-cropped-Logo-No-Line21Saskatchewan isn’t the first jurisdiction to permit equity crowdfunding – Ontario has dabble it’s feet; and several US states have legislation in place to permit and regulate equity crowdfunding. In fact, CrowdBrewed is a US website devoted to equity crowdfunding breweries. All About Beer magazine wrote a great article about the crowdfunding model and it’s application to the craft brew scene.

Equity crowd funding provides a unique opportunity to raise capital – in return for equity – with significantly less red tape.

Note I said “less” red tape – not none… SK’s financial regulator still reviews the structure of crowdfunding websites, and of offerings that are going live. The interesting thing about the regulatory review is that the government uses the phrase “no news is good news” when discussing regulatory approval. So long as a crowdfunding website submits the required logopaperwork 30 days before going live (10 days, in the case of a business wishing to equity crowdfund), they are good to go if they hear nothing from the government by the stated go-live date. For those who have dealt with red tape before, this element alone is huge! Unless the government explicitly says no within the 30 (or 10) days, Approval is implied.

So, what at the rules the home brewer with a dream of one day running a craft brewery (or the bathtub distiller hoping to produce craft spirits) has to play within? To my mind, the three items of key interest to Saskatchewan entrepreneurs are:

  • Both the business and the investor must be located in Saskatchewan
  • Businesses can make two, six-month offerings of $150,000 each over the course of a year.
  • No person may invest more than $1,500 in an offering.

Despite facing some regulatory hurdles, equity crowdfunding provides quite the opportunity to float an idea to the masses, garner support from like-minded craft beer drinkers, and (hopefully) join the Saskatchewan craft beer boom (3 new breweries in 2013 and at least 2 new ones confirmed for 2014).

The idea of many people providing (relatively) small amounts of money is something most Saskatchewan folks can relate to – Kinsmen TeleMiracle is an excellent example of crowdfunding. For nearly 40 years, TeleMiracle has taken to the airwaves one a year for 20 hours straight. Over the course of these 20 hours, the telethon raises immense amounts of money through multiple small donations. $5.3 million was raised in 2014, amounting to about $5 for every resident in the province. 

Just to the east of the Saskatchewan border rests an example of a start-up brewery hoping to leverage crowdfunding to kickstart their business. Prodigal Sons Brewery (Twitter | Facebook) announced their intention to start a brewery near Winkler, Manitoba last week. They are currently running an Indiegogo campaign to raise funds in support of the brewery. At the moment, they haven’t raised any funds – so if you think it’s an interesting idea, consider supporting the campaign (deadline is June 3, 2014).

Of course, an even more stereotypically Saskatchewan way of starting a brewery is the Co-operative model. And the co-op is exactly what a group of folks in Saskatoon are hoping to use to get their brewery off the ground. If you haven’t had heard of Temperance Brewing Co-operative, have a look at their Facebook page & give them a Follow on Twitter (hopefully we’ll be hearing more about them soon).

So what’s this post about? It’s about my desire to see new craft brewers, distillers & winemakers enter the Saskatchewan market. The liquor landscape in Saskatchewan has changed a fair bit over the past 20 years, and some of the most dramatic changes have occurred in the past 2 years. I suspect some of the opportunities have been lost in the shuffle. There are amazing home brewers making the leap into the world of Saskatchewan craft brewing… but there could be more lurking in the woodwork, unaware of the options available to them, and the support that exists in the community.

We’ve shown time & again that we support causes we believe in – from the Roughriders (through thick & very, very thin); to TeleMiracle; to a university professor starting a small, unlikely brewery in an old Regina building…

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