From the guardian: “But about 220,000 investors, who contributed £75m in crowdfunding across seven “equity for punks” rounds, could walk away with nothing.”
I used to love the idea of crowdfunding but then I watched a bunch of people buy worthless common stock and get hosed over and over.
Part of the issue is that somehow you can buy just the "assets" half of a company and ignore the "liabilities" portion. And the assets include all the branding and brand name. So an essentially new copy of the previous company is made while fleecing all on the liabilities side.
For the bars that are being closed, they are less closed and more like abandoned remnants of the now-dead previous company. Perhaps the shareholders should just reclaim the abandoned items of value physically.
> Part of the issue is that somehow you can buy just the "assets" half of a company and ignore the "liabilities" portion.
You really can't and they didn't.
If Brewdog has creditors who lent it money or suppliers who are waiting on payment, then they will be getting paid as part of the deal or they will have agreed to a restructuring, up as far as being offered first refusal on the company's assets.
Brewdog's existing management could have made the exact same closures without selling the company.
If retail investors lost out here, it's because they were overly optimistic in the first place, or just unlucky, not because they're getting cheated in this deal. You can tell this because the institutional investors are also getting nothing out of it.
I looked at one crowdfunding offering, under the SEC "Regulation Crowdfunding" and it was totally obvious that the business in question was pursuing that path because sensible investors wouldn't be interested in investing.
I don't see how there's many real investment opportunities where crowdfunding wouldn't result in largely unfavorable terms for the crowd.
The "we invented this really cool product, but minimum production batch is 5000 unities and we need money for the tooling investment" is the right way to use crowdfunding. People get the product, or the company missed something and goes bankrupt.
The "I have a software proof of concept, but I need money to make it usable" is also a good way, with a lot more certainty of outcome, but it's one that doesn't strictly require crowdfunding. And the author better publish what he has at the end of the funding.
All those variations of you getting equity or repayment are just bad.
Well, the "investment" came with perks like free beer occasionally, 15% off your tab, invite to private events, etc. Stuff you don't get when you buy a share of MSFT. In my mind if an investment comes with perks like that it's more of a donation than an investment
Family used to own stock in a local ski resort (publicly traded), all shareholders were entitled to half price on lift tickets and some other perks. It was a great way to save a bit of money, get a dividend, and have a voice on any future expansion plans at the annual meeting.
They had ups and downs of course. The tourism industry can turn sour during a downturn as you might understand. But they weathered for 40 or so years until a bear killed a handler in the summer of 2017 at their wildlife park. This effectively killed the entire park business and forced a major reconstruction. A former major bank CEO offered to buy it wholesale and took it fully private via majority buy-out.
Plenty of companies offer shareholder benefits without ripping off your rights as a shareholder.
The big cruise line companies will give shareholders on-board credit, Berkshire Hathaway has sales from their subsidiaries at the yearly meeting, Intercontinental Hotels has discounts, etc.
One of the customer service backdoors for some companies is to buy a share and contact investor relations if you are having a problem.
Nothing is stopping you from investing in a company, or putting your money into a stock or other investment. If anything, over the years the club has become a lot less exclusive. When did Carlin say that? Think about how much more access any given person, at least in the United States, has to financial products.
Right, just like all of those people who put their money into Brewdog and then got nothing for it, while the larger investors potentially got made whole. It's almost like there's two classes of investors or something - common people, and then another smaller set - a club, say - that the common people are not part of.
You do not have access to the investments or financial instruments that the ultrawealthy do. Your investments are not like their investments, your returns are not their returns, the rules and regulations you face are not the ones they face. They are playing a different game than you, even when they're doing it with your money.
> Right, just like all of those people who put their money into Brewdog and then got nothing for it
Just like anyone who puts their money into an investment that fails... Stocks go up, stocks go down. I don't recall the exact details of the Brewdog investment scheme but some people losing their hat here is just a normal thing that happens in capital markets, otherwise investing wouldn't work. There's a reason that the predominant advice is to just set it and forget it with S&P 500 funds or total market (US or global) funds. It's up to you as an independent person to identify good opportunities for yourself or to consume and understand advice.
> You do not have access to the investments or financial instruments that the ultrawealthy do. Your investments are not like their investments, your returns are not their returns, the rules and regulations you face are not the ones they face. They are playing a different game than you, even when they're doing it with your money.
This is directionally true and angsty but it's beside the point. What's the alternative? Nobody gets to invest in anything?
While "the wealthy" have access to other opportunities that you don't have access to, you still have access to enough opportunities to make money.
Neither George Carlin nor I am saying that the average person cannot invest in companies, nor that they should not be able to (well, I'm not, at least).
We are both saying that the rules and conditions under which you and I invest in companies and the market are substantially different than those in which the ultrawealthy invest in the market, and ours carry both higher risks and more onerous terms. You can argue whatever you want about why that is or whether it should be, but we're not all on a level playing field, and that's relevant especially in an era when all of the answers to "how do I make myself secure against the vicissitudes of fate" involve "investing" in the market.
Nobody is on a level playing field, nor should they be.
> and ours carry both higher risks and more onerous terms
Can you speak to your experience in investing? I’ve invested in both public and private market deals. There’s nothing safer in my mind than low-cost index funds which are as accessible as running water for all Americans. $1 and a Robinhood account or something are all you need. Granted you can get higher returns of course in private markets but to suggest in general that they are both less risky and higher returning sounds inaccurate to me.
I’m not trying to discredit your underlying point, the ultra wealthy do have access to better terms. They have more capital to deploy - it provides similar scaling discounts to other volume-based businesses.
No equity holders got anything out of the liquidation - whether big or small [1]. Preference shares are just as worthless as common stock if there isn’t enough money to cover debt, tax bills, employee statuary entitlements/outstanding pay, bank loans, etc.
> No equity holders got anything out of the liquidation - whether big or small
This statement is not supported by the link you posted, nor any other reporting I've seen on the matter. What I have seen is that TSG is senior to all of the other equity holders, so if there's money to be had, they're getting it before the small holders.
Also from your link:
> TSG was promised an 18% compound return on its investment (which means the amount they’re owed grows by 18% each year, with each year building on the last).
> TSG’s preference shares entitle it to an 18% compound return on its £213 million investment. That return has snowballed over time. By 2024, it had grown to around £801 million.
I can't say for sure, but I don't believe those terms were available to the average investor.
Yeah, but TSG paid in 213 million and is (at max, assuming there are no creditors to pay, which seems unlikely) getting 33 million out. That's them cutting their losses, not making a profit. They could be getting about 15% of their money back instead of zero, but either way they aren't winning here, just losing slightly less hard than everyone else (though it sounds like the founders made out pretty well). (and realistically, it was probably obviously a very risky bet if the company was not able to get a better deal: these kinds of deals are generally a sign that things are already bad and getting worse, and someone is hoping to try to pull something from the wreckage: the deal obviously meant that if brewdog did manage to turn things around, the value would largely be sucked up by the preferred investors).
This is factually incorrect. 2005 was not the height of access to financial markets. You have much more access to financial markets and investment vehicles today than you ever have had and that continues to expand.
I used to love the idea of crowdfunding but then I watched a bunch of people buy worthless common stock and get hosed over and over.