CROWDFUNDING grew as a way of enabling small companies to easily raise equity finance without using the stock markets. But now, even listed companies are getting in on the act.
Kent-based Chapel Down this month raised £3.95m in an equity crowdfunding campaign alongside a conventional £670,000 placing on the ISDX smaller companies market, on which the group is listed. The wine maker says this makes it the first quoted company to use the innovative form of financing.
"With crowdfunding we’re getting something more than just an investor," says CE Frazer Thompson. "We’re getting a customer — and actually someone who becomes a pilgrim for the brand." People who will "sit around dinner tables on Saturday nights and bore people to tears about how good Chapel Down is".
Chapel Down has had several difficult years, following poor harvests in 2011 and 2012, which led to low wine stocks and poor sales last year. In the first of those years, Chapel Down — known for its English sparkling wine — branched out into beer, a product less susceptible to the vagaries of the weather. The company enjoyed a record harvest last year, is forecasting another bumper crop this year and reported a 20% rise in sales in the first half of this year — thanks in part to its Curious brand of craft ale.
Now Chapel Down is firmly in growth mode. It raised £4.35m through a new equity issue in July last year to increase production, buy winery equipment and hire new people. The 13-year-old company has brought in 1,500 new investors through its campaign on London-based equity crowdfunding platform Seedrs.
Investors who bought more than £560 worth of shares get a third off Chapel Down wines, 25% off beers and free tours and tastings at the Tenterden vineyards. The funds will be used to build a new winery and a brewery, plant more vines and create a visitor attraction the company’s Kent headquarters. The new shareholders also qualify for the enterprise investment scheme, which offers investors 30% income tax relief.
Mr Thompson says the new FCA oversight gave the company reassurance that crowdfunding was a secure route to new funds. "You do take a deep responsibility when you ask people for money to invest in your company.
"We’ve had to feel confident as a company that crowdfunding would reflect the integrity that we have as a brand. I want people to invest in us because they know what we’re about and they like us.
"I think that’s what sound investment is all about.
Posted from : http://www.bdlive.co.za/life/2014/10/13/listed-companies-get-in-on-crowdfunding