Craft beer fans’ crowdfunding platforms Crowdcube and Seedrs agree merger

Crowdfunding platforms Seedrs and Crowdcube have agreed to a merger which it is hoped will create “one of the world’s largest private equity marketplaces”.

Scottish beer giant Brewdog used crowdfunding platform Crowdcube before establishing its own Equity for Punks funding structure. (Photo: Brewdog)

Both companies said in a joint statement today (5 October) that they had agreed to merge their two businesses, and expect to complete the process by either late 2020 or early 2021.

Crowdcube and Seedrs are popular with breweries that are trying to raise capital but cannot secure a bank loan, or do not want to be substantially influenced by one investor, such as a multinational brewer. Seedrs also offers a “secondary market” service, that allows investors to trade their own stakes in startups they have made donations to in the past. Backers get shares in the business, plus perks like bar tabs, brewery tours and merchandise.

As part of the deal, Crowdcube will fully acquire Seedrs. Existing Crowdcube shareholders and option holders will own 60% of the combined company, and existing Seedrs shareholders and option holders will own 40%. The merger will create a “more robust company”, a spokesperson said, as well as creating more services both for startups looking to raise money, and for investors.

Jeff Kelisky will serve as CEO of the combined company, Darren Westlake, Crowdcube’s CEO and co-founder, will serve as Executive Chairman, and the management team will include key leaders from both businesses.

The deal is subject to shareholder agreements as well as a green light from the UK Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA).

Both companies have provided funding platforms for some of the world’s most successful drinks startups including breweries Brewdog, Camden Town, and low alcohol beer specialist Bg Drop.

Brewdog’s Equity for Punks shareholder structure, which was launched in 2009, works in the same way as regulated third-party platforms such as Crowdcube and Seedrs. The brewer also continues to raise funds on Crowdcube, securing more than £2 million from 950 investors on a mini-bond release last November.

Big Drop, meanwhile, managed to exceed its £500,000 crowdfunding target on Seedrds even after lockdown began in March, thanks to a late six-figure investment from Mark Hunter, the former chief executive of Blue Moon producer Molson Coors.

With almost any business able to drum up capital through equity crowdfunding, investors have fallen victim to unsustainable breweries. South-London-based Hop Stuff, which was founded in 2013, raised funds through Crowdcube three times during its time as an independent business, securing £1.5 million from around 1,300 investors. However, Hop Stuff went into administration last year amid years of unpaid construction bills and rent. The business was later bought out by Molson Coors for less than half of city banker turned brewery boss James Yeamons’ valuation of £1.5 million.