This month Renaissance Brewing won a Gold award for their flavoured Rauchbier at the NZ Brewers Guild Awards 2017. Days later Renaissance had been placed in voluntarily administration. So what happened to the company that was, in August 2014, NZ’s first company to successfully raise capital through equity crowdfunding under the Financial Markets Conduct Act 2013?
According to the administrators appointed, Shephard Dunphy's Iain Shephard and Jessica Kellow, the keg has not run dry just yet: "Staff are still being employed, customers are still receiving their orders and we're now seeking expressions of [interest] in respect of buying the business".
Our equity crowdfunding regulations allow each company to raise up to $2million from the public in any 12-month period without having to prepare a formal Product Disclosure Statement but provided the crowdfunding is done via a licensed crowdfunding service provider. Shares (equity) are issued in consideration, with the amount of shares investors receive being proportionate to the funds invested. Using Snowball Effect’s crowdfunding platform, Renaissance raised its 2014 funding target of $700,000, bringing on board approximately 300 investors. Funds were aimed at growing Renaissance’s craft beer business domestically and overseas, and in early 2015 four new fermenters were purchased to expand operations.
Renaissance offered new investor rewards as part its 2014 offer, including that each investor purchasing 1,000 shares ($2,000 value) or more would receive one 12 bottle case of beer a year for each 1,000 increment of shares. However, Renaissance’s voluntary appointment of its administrators reinforces that equity crowdfunding, like any other investment, is not without risk. The key risk being that if a company does not perform as anticipated you cannot get your investment money back (although you may have received a few cases of beer).
However, voluntary administration (VA) does not mean all doom and gloom for Renaissance Brewing. VA is a Companies Act 1993 process which is intended to be a proactive alternative to liquidation. Essentially, providing a short term freeze on a company’s financial position so an administrator can investigate the company’s affairs and form an opinion about whether and how a company or its business can be saved. If being saved is not a possibility, then the administrator will conduct the company’s affairs to receive the best possible return for creditors, hopefully better than what would have been received had the company been placed straight into liquidation. For Renaissance, voluntary administration will allow co-founder and sole director Brian Thiel and management to work with Shephard and Kellow, as well as Renaissance’s creditors to hopefully rectify its cash flow and product management issues. ANZ Bank’s 2017 Craft Beer Report noted there were 194 craft breweries in New Zealand – here’s hoping there is room for Renaissance to keep brewing awarding winning brews. I’ll toast to that.
"We believe there's a hell of an asset here - the tide is still coming in in the craft beer market, they only entered one beer in the awards that were held at the weekend in Christchurch and they won a gold for it," Shephard said.