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In Dog We Trust- Lessons Learned From Brewdog

April 28, 2017 • By TAB team

In a little over 10 years, Brewdog founders James Watt and Martin Dickie have built a £1 billion business. This remarkable story highlights the immense growth that can be achieved when a business aligns first-class product, unorthodox brand marketing and innovative strategy and financing, in this case, crowdfunding.

In a little over 10 years, Brewdog founders James Watt and Martin Dickie have built a £1 billion business.

This remarkable story highlights the immense growth that can be achieved when a business aligns first-class product, unorthodox brand marketing and innovative strategy and financing, in this case, crowdfunding.

We look back at the history of the company to see what we can learn.

* * * * *


LESSON 1 – A garage is a fine place to start. Just ask Jobs, Bezos or Gates.


In 2006, Watt and Dickie founded Brewdog in a garage in Aberdeenshire. Helped by a bank loan and a grant from the Prince’s Trust, the business soon outgrew their rudimentary premises. To do this, they needed funding.

Following the financial crisis of 2008, credit markets were in turmoil and high street banks and traditional methods of financing were reticent to commit large amounts of capital to risky propositions.


LESSON 2 – Adapt to your surroundings. Follow the money.


At the time, Brewdog – a small craft beer brand with no long-term record of success in business, brewed by two guys in their mother’s garage – wasn’t an attractive investment proposition.

So they were forced to seek funding elsewhere. This led them to crowdfunding.


LESSON 3 – Passion can’t be faked. To get buy-in from the crowd, you need them to believe in your product as much as you do.


So it was by necessity rather than by design, the founders identified the nascent crowd finance industry as a way to access good value investor capital. They quickly realised that raising money in this way turned investors into customers and hardcore brand ambassadors.

Brewdog launched its first campaign – Equity For Punks – in October 2009. The rest is history. The first round of Equity For Punks closed with over 1,300 “Equity Punks” buying shares, raising £642,000. Watt promised: “a good return for all investors and hopefully a bit of fun along the way too!”

In three subsequent campaigns, they raised over £26 million. Now the company employs 500 staff and posted a £7m profit on £71m of revenues. They plan to expand into Asia, Australia and the US. Equity For Punks USA is mid-campaign, having raised $30 million from the US crowd.


LESSON 4 – For a company to thrive, brand and product must be aligned.


What Brewdog has got right above all else is the alignment of brand and product.

From day one, Brewdog presented itself as a rebel, as an independent brewer who didn’t play by the rules. This ethos was made manifest through innovative marketing. In advertising terms, they’ve behaved like a challenger brand throughout their entire life cycle, even when they eventually grew into the market leader. Put simply, Brewdog have claimed that they’ve always wanted to be different.

This rebellious streak has run consistently through their business, from bottle and label design to product development, crowd finance benefits to controversial advertising campaigns. And people – the same people who were given the chance to be investors – literally bought into this different ethos.


LESSON 5 – Ignore the naysayers. Break the rules.


At their recent AGM, Brewdog announced it would be selling 22% of its business for £213 million to institutional investors.

Until now, Brewdog represented the rebel, sticking it to The Man. Watt once said: “We’re not Rockefellers. We’re Guy Fawkes”. Since inception, Brewdog’s product, brand, strategy and funding have been about being small, but playing big, aligning business with the intrinsic passion running through the organisation that it was all about beer, never about getting rich. But now it’s decided to sell out to The Man,

The Man here is private equity house TSG, one of the oldest VCs in America. It’s a classic private equity deal, alarming in contrast to everything that Brewdog and crowd finance stands for. Rather than democratic and equal, the deal appears structured and preferential.

Watt himself has said the Brewdog adventure was about: “changing small business finance forever,” so this deal smacks of a significant about-turn, and this move towards traditional finance seemed like the end of that decade-long era of individuality and rebellion, a decade that had led to a £1 billion valuation.

But before we get carried away, it’s important to note Brewdog shareholders voted in favour of the TSG deal and the company founders remain majority shareholders, focused on beer and little else.

The press view that the TSG deal is bad news for the company is also likely misplaced, written to sell a story rather than objectively assess an investment. The TSG money will help Brewdog achieve their lofty goals as they expand globally. In a year’s time, when the company is worth £1.5 billion, the critics won’t be so vocal.

Rather than question it, the deal with TSG should be welcomed. Raising money via a method that stands in direct contrast to what you’d expect is exactly what should have been expected from this contrarian, gutsy and, ultimately, wildly successful management team.

What we can learn from Brewdog and their £1 billion success

The success of Brewdog and crowd finance is inextricably linked. The two have grown together.

The deal with TSG likely highlights the fact that we’ve reached a point where crossover with traditional finance is inevitable as a result of growth that has led to huge deals involving ex-crowd finance funded companies becoming more regular.

The crossover should be welcomed. Brewdog’s move to “old world” of finance shouldn’t be scorned. Like Jobs, Bezos and Gates, Watts and Dickie built a £1 billion business in a garage. Their success is a clear sign that crowd finance is developed, here to stay and a viable alternative to traditional fundraising methods.

Perhaps that’s the biggest lesson of them all.