Crowdfunding consumer brands — equity crowdfunding opportunities on the horizon
Birchal.com
Australian consumer brands, and in particular craft brewers, are supremely positioned to benefit from the equity crowdfunding laws expected to be passed by the Australian Government later this year.
The wildly successful equity crowdfunding campaigns of craft beer brands Brewdog in the UK, and more recently Yeastie Boys and Renaissance Brewing in New Zealand, illustrate the opportunities that exist for brands that consumers can be passionate about.
Shifting consumer preferences towards small and independent consumer brands
A shift in consumer preference towards smaller independent brands has seen the erosion of market share for large corporate-owned brands in recent years. The growth of craft beer brands globally is an excellent example of this shift.
Most successful independent brands now have a hook, which can set them apart and cut through the noise of mainstream marketing. The hook could be the brand’s location, team, use of artisanal methods and resources, or an environmentally/ socially/ ethically responsible focus that consumers can identify with personally.
Crowdfunding as a model of alternative finance for small and independent consumer businesses
Funding business growth and expansion requires capital. It’s hard for small businesses to source funding that is both affordable, and appropriate. Unlike large businesses that typically have a range of funding methods at their disposal, SMEs are typically limited to unsecured debt (which is expensive) personal savings (which is risky) and investment from family and personal networks (which not everyone has available).
Crowdfunding has emerged as an efficient and high growth model of alternative finance for small consumer businesses, but is also a great way to grow a customer base and achieve deep connection with that audience, which is equally or perhaps even more important than having adequate funding.
Crowdfunding consumer brands — equity crowdfunding opportunities on the horizon
Crowdfunding campaigns for consumer products have typically high success rates on reward-based crowdfunding platforms. Given the early successes of craft brewers and other consumer brands on equity crowdfunding platforms in the UK and New Zealand, it’s likely that similar businesses are in the best position to benefit from the new Australian equity crowdfunding laws, particularly where a hybrid model of rewards and equity is used.
Matt Vitale — matt@birchal.com
