How Boise Brewing Offers Stock to Spur Growth

Offering equity instead of a T-shirt, Boise Brewing founder Collin Rudeen has made offering stocks a way for his brewery to grow.

A licensed C-Corp brewery, Boise Brewing raised $450,000 in an initial stock offering in 2014 before the brewery opened and Rudeen has started a second round for the Idaho facility and added another $250,000 for expansion and looking at reaching 2,200 barrels in 2018.

“This round has enabled us to expand our production capacity — about doubling it — so we could start canning our beer,” he said. “There were a bunch of peripheral upgrades that went along with that, like new keg washer, upgraded glycol, and others. It also allowed us to put a grain silo in the public right of way.”

Forgoing crowdfunding sites like Kickstarter, Rudeen said this was the way to go to get his business off the grown and ingrained into the Boise populous.

“Those types of crowdfunding are more for projects than for raising funds for use by a company,” he said. “You can’t really raise the amount of money we were looking for unless you’re a video game, it seems.

“The real difference for our investors is that they get equity in the company through our public offerings, while through Kickstarter, you can only get a T-shirt, or whatever reward they’re offering for your donation, but you can’t get equity.”

Boise Brewing has 415 owners right now. Since the brewery is a C-corp, there are no official duties or requirements for them. However, owners do get a mug at the brewery with their name on it and a growler fill per month for the rest of their lives.

“We’ve got an annual shareholder meeting that is part business, part party,” Rudeen said. “We try to give them first crack at bottle releases and have additional parties, etc.”

Rudeen explained the process. Fort the first round, there was a registration of the securities with the state, called a Small Company Offering Registration. The second time was an Exemption by Order with the state.

“Both are pretty similar in the end,” he said. “Basically, we format our business plan and financials for the state’s application process, get their review and then we can both sell and advertise to the public, with certain restrictions.

“There are definitely legal issues to deal with, starting with having the proper risk factors in our offering documents, both to make sure prospective investors know what they’re getting into, and also to protect the company so nobody can come back later and say we didn’t disclose pertinent details. We’ve also got to be very careful about making sure every single shareholder receives official notices for shareholder meetings, etc.

“There have also been a few deaths and sales of stock, so managing those transfers of stock adds a little extra work every once in a while. Basically, having this many owners has been a really great way for us to raise money and build in a solid customer base, but is also not for the faint of heart.”

This is definitely not doing it the easy way, but it’s the right way for Boise, Rudeen said.

“We got our start as a community-supported brewery, and the idea of a small number of already wealthy people owning all of the company didn’t sit right with me. This way, we can be true to our community values, not only in our operations, but even in our ownership structure.”

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