March 15, 2013

Disruptive Capital for a Disruptive Industry

My companion in writing this post is Stone Ruination IPA, a bold IPA self described as having an “immediate ruinous effect on your palate.”  Stone ceased distributing in Wisconsin (sigh) and so I made sure to stock up on a recent trip to Western Michigan.  Stone Ruination IPA’s disruptive hops profile is characteristic of the craft beer industry in general, one which pushes the boundaries of what beer is and can be.

Craft beer disrupts the Big Beer model that this country became so accustomed to.  The Big Beer business model is based on quantity.  In order to produce more beer and generate higher profits, quality was sacrificed in the name of efficiency.  Craft breweries disrupted this model by instead focusing on quality and smaller batches.  A movement that started innocuously has now seized 9% of the total beer sales. It is expected to be a $17 billion industry by 2017.  In short, craft beer shows no sign of stopping.  Big Beer now fully recognizes the disruption that is ongoing and is attempting to respond by creating craft (or “crafty” depending on your perspective) products of its own.

Investment crowdfunding is poised to similarly disrupt capital formation.  Previously, only the very wealthy could invest in breweries and other small private businesses. Once the SEC finalizes the JOBS Act, these same investment opportunities will for the first time be available to the average American and craft beer enthusiast. The potential to source smaller investment amounts from a much larger pool of investors will disrupt and democratize the traditional finance model.

Craft beer should lead the charge in this democratization of corporate finance.  An industry that prides itself on being independent and anti establishment has an opportunity to turn to its passionate crowd for capital instead of banks or angel investors.  Craft beer sales are not cold transactions.  They’re relational in nature. In the same sense sourcing capital does not have to be arms length transactions with uninterested lending institutions.  Instead, it too can be a means to build relationships and further a brand.

We will be launching a revamped website in the next couple weeks that seeks to create a disruptive community of craft beer lovers interested in investing in breweries once investment crowdfunding is officially legal.  CraftFund is excited to form an investor community that is as disruptive and bold as Stone Ruination IPA.

Comments

  • RyanJanecek

    Exciting to see the new site Dave - congratulations!

    April 2, 2013 at 11:47AM CST

  • DavidDupee

    Cheers, Ryan!

    April 3, 2013 at 10:27PM CST

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