2.1 Why are we raising more money?
Our entire crowdfund was based upon projections of what we thought the project would cost us at that time. We needed to raise the funds to execute the project well in advance to give the seller of the building security we could renovate it once purchased. Now that time has passed and the developers fit out has been completed we have a far better clarity as to the actual, real costs on site. Some things are costing us more than we originally thought (architects, solicitors, M and E drawings) and some things we failed to factor in originally (SMTP Fees, Under Floor Heating, ….). We have confidence that the costings we now have are accurate and that there will be no requirements for further funding beyond this.
2.2 Are you going to keep coming back and asking for more money every year?
Absolutely not. Our intention was to raise funds via crowdfunding once, with all future growth being funded by operating profit. This is still the case, and we have no intention of raising funds for any future projects.
2.3 If I reinvest now will my perk level increase?
Yes. We will take your investment from 2018 and add it to your new investment. If you invested £500 in 2018 and £500 in 2019 we’ll award you the full £1000 perks.
2.4 If the majority vote to raise funds from our investors do i have to invest too?
Absolutely not. You can choose to or not to re-invest at this time and will in no way affect the value of your existing shareholding. You can also vote that you think raising funds from existing shareholders is the right thing to do while not reinvesting yourself. You are simply stating your opinion as to the best course of action for the company, not your own personal ability or desire to re-invest or not.
2.5 Will the new investment be eligible for EIS?
If we vote to bring further investment in we will do so mid April 2019. The new investment falls under the EIS pre-approval granted last year, and you will be able to claim relief in the year 2019/20, the year after the last investment. Having been through the process once before we will (I promise!) be far faster at issuing the certificates this time round.
2.6 When is Finzels due to open?
We stated November 2018 back when we raised funds in March 2018. At that time we were utterly at the mercy of the seller and their fit out team. Any of you who have bought or sold a house I am sure can empathise with how these things can drag on once solicitors get hold of it (sorry any solicitors reading this…..;-). Now we have the keys and the developers fit out has been completed we are now in control of our own destiny. We have a great build team instructed and we are now into the part of the project that we are fully experienced in, actually fitting the place out. I have full confidence that we’ll hit our schedule and be open the 2nd week in June.
2.7 Why don’t you just borrow the money or Asset Finance the brewing equipment?
We can for sure. If you as a group think that this is the best option we will go ahead and asset finance the brewing equipment, serving tanks and cooling equipment, totalling £300,000. This will equate to around £5000 in repayments every month and simply reduce our available cash reserves from month 1. Our projections suggest that this is feasible and if the business begins as we expect the additional monthly costs will not stress us. I am however always cautious of taking debt into our business in any situation, especially when the repayments are based upon projected turnover and profit. We have managed to date to grow while taking very little debt into our business and given the opportunity I would continue to do so.
2.8 We still don’t have all the physical perks from 2018! Where are they?
We will be giving out the merch bags and Yeo prints during our opening parties in June, with anyone not able to attend being sent them the following week. All growlers will be handed out at the same time with a free fill. Again, if you cannot attend we will post the weeks after (minus the fill obviously!).
2.9 Are you going to devalue our shares by selling more?
No. At the end of our crowdfunding round, Left Handed Giant was valued at slightly over £8m. If you do decided that we should raise further funds; we will do so at a valuation of £8.5m, meaning that by raising £300,000, your shares will be worth slightly more than when purchased in the previous round.
We believe the value of our business has increased by more than this over the course of the last year however this raise is not about achieving full value but about raising the required funds for the Finzels Project internally, from our existing shareholders. Because of this we will set the value in the best interests of us as a group.
2.10 Will you use Crowdcube to process the transactions?
We will work directly with our solicitors and our investors for this round. While using Crowdcube exposed us to a lot of people, and by extension helped us raise more money, they are an expensive company to work with. All in we spent around £70,000 with them processing the raise. As we are not offering shares to anyone but existing investors we see no need to use Crowdcube. Their primary strength is exposure and we do not require that at this time. We will use the same solicitors we used during our crowdcube raise to process the companies house documents to issue shares to each investor.
FAQ’s from 2018 Crowdcube Raise. These remain relevant today:
1. What will we do with the money?
All of the money raised will be used to further develop our business. This will include:
Opening an Iconic city centre Brewpub in the heart of Bristol. We have the Compressor Building secured in the Finzels Reach Development and will turn this 7500 sq ft space into a world class destination venue. It will house a 2500L brewhouse with serving tanks and canning line, a bar area with a capacity of 220 people, a restaurant on the first floor (more on that later) and an event space on the top floor.
We will further develop our existing 2500L brewhouse in St Philips, Bristol turning it into the cities first dedicated sour beer facility with extensive barrel store. Here we will house Foudres, hundreds of barrels and Bristol' first Coolship, along with a tap room to drink these beers from source.
2. What is the timeline for investment?
We go publicly live on Crowdcube Friday 2nd March with a private launch on the night of Thursday 1st March. Invites to the private launch will be sent out via our Investors Mailing List (if you are not signed up to this please do so via the link below!!). At this time no money changes hands, you are simply pledging to transfer the money once the pitch completes. We expect to be live for a month, and money will be required around 4 weeks from completion. You can expect to be asked by Crowdcube (who deal with the money and share transfer) to transfer funds around late April.
Investments of this nature carry risks to your capital as well as potential rewards
3. What is the timeline for the Brewpub?
We hope to be open by November.
4. Are we taking a lease or buying the Brewpub premises?
We are purchasing the 250 year Long Leasehold of the Compressor Building at the Finzels Reach Development for a sum of £1.4m. We are taking a commercial mortgage of this entire value to fund this and have built the repayments of this into our projections. We are more than confident that the profits yielded from the business will allow us to service this debt and own the Brewpub in entirety with no debt within 15 years. With a 250 year LLH we will see appreciation in the value of the property way beyond the expected lifespan of our business. We expect the building to have appreciated after our fit out alone to around £2.5m.
5. What can you expect to receive for your investment?
We hope to bring people into our business who are looking for more than just an increase on share value and an exit plan for recouping their investment. We do recognise however that despite your motivations for investing into our business there has to be some financial reward. We will of course have some epic perks (more on that later), but we also expect that during the time you own shares in our business we will see serious appreciation in the value of our business. With the appreciation in value of the brewpub premises and the profits we project through year 1 and 2 of the premises being live we expect to see an increase in value to around £15m to £20m by that time. By year 5 of the brewpub being live we would expect to have seen an increase of somewhere between 5 and 10 times value.
6. How did you come to your valuation
The valuation of our company and the shares we would release during our campaign was one of the most discussed topics during our preparation. Ultimately small breweries have recently been traded and sold for extremely high values that stand outside any traditional model for how you may value a business. Camden, Meantime, Brixton and London Field all selling for significant values well beyond multiples of EBITDA have helped set a high bar that others have been able to follow. Wild Beer, Hop Stuff, Redchurch, Tyne Bank, Seven Bro's, Red Squirrel and Camden Town (before they sold entirely) have all sold equity via Crowdcube and done so again at values that defy traditional valuation models. That left us with a question of how we go about setting a value that adequately rewards the investor, leaving significant room for appreciation in value and ultimate return on investment. We've analysed all previous brewery Crowdcube raises, both in their turnover and profit margins, and had long conversations with our accountant trying to balance a traditional valuation with a realistic expectation of what our value. We based those conversations on our position in the market, projections and current turnover and profit. We also based it on our successful raise last year at a valuation of 2.5m (for further info on this see question 12 below). We feel strongly that the valuation is a fair reflection of our current business, with a slight nod to the work we've put in securing the premises at Finzels Reach and our partnership with renowned chef Peter Sanchez-Iglesias and the increase in value that those plans will bring to the business. We also firmly believe that we have left significant room for appreciation in value, and that anyone that investing in LHG at this stage will see a 5 to 10 times appreciation in value over the next 5 years. How you'll realise that value? See the next question!
7. What’s the exit?
We have absolutely no intention to sell our business to anyone else. We’ve seen too often small breweries build a business around community and trust, transparency and honesty with their customers and then utterly undermine that trust by selling to big business and not only damaging their own beer and brand but also damaging the craft beer scene and culture as a whole. That’s not us. But we do recognise that we can’t work forever, and that you will want some assurance that you’ll actually see the appreciation in value of your shares turn into cash at some time in the future. Which is why around year 5 we hope that we can offer to buy your shares back from you at 5 to 10 times the value you buy them from us now. There will be no obligation to sell, but we hope that will be in a financial position to make the offer. Why would we do this? Check out the next question!
8. How will you ensure that the culture you have now remains as you grow and expand to operating 2 sites.
During this share offer we are gifting shares to every one of the people who work in our brewery and bars. It is utterly critical to us that as we grow our business we not only grow the turnover and profit, but that we also grow the sense of community within the team. We want to build and nurture a group of people that feel a true sense of ownership of the project they work within, and create an environment where they feel valued and have the ability to truly express themselves. To feel that they have a voice, a place and that their impact into the business and the beer is real. To do this we feel that they need to have a true and impactful ownership of the business. In year 5 we intend to offer to purchase back initial investors shares and offer in our own shares to create an employee share ownership plan which will allow every employee in our business the ability to increase their ownership year by year and them to have a voice in the future of our business.
Check out Modern Times for a great example of this:
9. is there tax relief on my investment
We have a pre-authorisation application in with HMRC for the EIS tax scheme which we expect to have approved by mid March. This will give eligible investors up to 30% tax relief on their investment.
The availability of any tax relief, including SEIS and EIS, depends on the individual circumstances of each investor and the company concerned, and may be subject to change in the future. If you are in any doubt about the availability of tax reliefs, or the tax treatment of your investment, you should seek independent tax advice before proceeding with your investment.
Further information can be found via the link below.
10. our projected profits are ambitious. Can you achieve them?
Within the team we have huge experience running businesses within the craft beer sector with bars, craft beer wholesale companies and breweries within our CV’s. We have a solid understanding of the costs involved at each point from production to logistics to operating retail venue’s. Our projections have been built directly from real world experience, and based around gross and net profits that we personally have achieved. The brewpub throws out some really great numbers as we lose a huge amount of the costs normally associated with a brewery. We lower packaging costs, pretty much write off transportations cost and lower our carbon footprint as an added bonus. We’ve built in turnover figures in the brewpub at figures significantly less than Small Bar on King St and many other craft beer venues in the city centre. We believe that the projections we have built in are not only achievable, but that we can exceed them.
11. You sold shares last year at a business valuation of £2.5m. Why has the business tripled in value in under a year?
We sold shares last year when we were still Cuckoo brewers to fund the build of our brewery in St Phillips, Bristol. We launched our new brewery in Oct 2017 and more than tripled our sales in the first 2 months of brewing. We have maintained that sales rate and are seeing X3 increase on sales in comparison to last year. With bringing our brewing onto our own brewery and the introduction of cans (that yield a larger margin than keg and significantly larger than cask) we have seen our profit margins rocket. Since that share sale in 2017 we have bought our own brewery and significantly increased the assets owned by the business. We believe that all this more than justifies the increase in value we have placed on the business.
12. Who were the shares sold to in 2017?
The shares were sold to family and friends all of whom had been keen to invest in our business for some time. Two of whom supported our business at its inception and reinvested at that time. A large number of the people who invested last year are reinvesting again at this share offer.
13. What perks can I expect to see for investing?
We will release these as a full blog later this week.
14. What are Foudres and Coolships??
Our Foudres are essentially large barrels for aging beer in. We buy them second hand from a company in Italy and they usually have housed red wine before we turn them to holding our beer.
A Coolship (traditionally spelled koelschip) is a broad, open topped vessel that is used in the production of spontaneously fermented beer. The practise has been maintained in the Seine Valley of Belgium by the local lambic producers throughout the years with the practice becoming more popular around the world recently. The wort (beer in it’s unfermented state) is left in the open topped Coolship overnight to cool and become inoculated by the airborne bacteria of the area. It is then transferred to barrels where it ferments out solely via the yeast picked up naturally from the air.
There is only one brewery in the area using a Coolship currently (the small but utterly awesome Mills Brewing) and only a handful in the UK. There are currently none in Bristol. Our Coolship will allow us to create beers that are truly intrinsically linked to the city of Bristol and its environment.
Investments of this nature carry risks to your capital as well as potential rewards