Why this award-winning Colorado brewery wants people to invest in its business at a time when the beer industry is struggling

Crowdfunding campaigns are nothing new in Colorado s craft beer industry Dozens of breweries have raised money on platforms like Kickstarter and GoFundMe to finance everything from startup costs to equipment purchases to emergency relief In return for donations of or or participants received perks from free beer and t-shirts to brewery tours and other swag What Lafayette-based Westbound Down Brewing is doing with its crowdfunding campaign though is something different and it will cost supporters a lot more In April Westbound Down began seeking investments through a type of constituents offering called regulation crowdfunding The brewery wants to raise up to million to increase beer production fourfold expand its distribution footprint and eventually open new brewpubs including one in Denver For a minimum of anyone can buy shares in the -year-old company at each and advocacy its future plans The residents offering now live through a company called DealMaker comes at a time when the craft beer industry is struggling Beer production dropped in compared to the year prior contract group the Brewers Association not long ago informed Additionally last year was the first time in two decades that the number of brewery closings outpaced openings nationwide The economic headwinds have inspired major ownership consolidations in the craft beer sector Molson Coors for instance offloaded its craft portfolio and shut down its in-house craft incubator while AB InBev the maker of Budweiser sold large pieces of the breweries it had acquired over the past years In addition independent beer makers have joined forces including Left Hand Brewing in Longmont which merged in April with Dry Dock Brewing and Denver Beer Co and Great Divide Brewing which have been rolled up into a single entity However Westbound Down CEO Jake Gardner declared his brewery is different it s on the upswing so much so that production isn t keeping up with locals thirst for its beer Jake Gardner is the CEO of Westbound amp Down Brewing in Colorado Provided by Westbound amp Down Every time we ve added more equipment we ve been sold out of beer announced Gardner who is also the co-founder and head brewer We ve added a considerable amount of equipment in the last few days and we re still sold out of beer Hopefully at several point we can keep the beer on the shelves In December Westbound Down inked a distribution deal with Elite Brands of Colorado to bring its products to more parts of the state and in recent days spent on major upgrades including six new fermentation tanks which will help increase brewing quota In the brewery made barrels of beer equivalent to around kegs up from just barrels in Westbound plans to increase that to barrels by and to make million in annual profits according to the resources documents But to take that step Gardner knew he d need access to more capital Though Westbound has sought more traditional avenues of funding in the past including bank and Small Business Administration loans finding an inventive way to raise money and build a legion of fans who are literally invested in their success is a win-win he announced We liked the ability to connect with our everyday customers he reported about crowdfunding The brewery has offered stock to friends and family But at various point you run out of friends and family If we re taking on people we don t know I d rather they be our fans A deep dive into the numbers With regulation crowdfunding the U S Securities and Exchange Commission allows companies to use online platforms like Dealmaker and Wefunder to raise up to million in a year without registering with the agency But to do so they must comply with SEC disclosure requirements meaning they have to publicly lay out their accounting books goals and other information In this incident those documents provide an extraordinary amount of transparency into the finances of a private company For instance the SEC filings show that in Westbound had a net loss of million on total revenues of million It has total assets of nearly million and debts of nearly million Cannonball Creek Brewing and Westbound amp Down Brewing collaborated on Howdy Folks a West Coast-style IPA Cannonball Creek Brewing Though the business is now operating at a loss Gardner reported breweries become profitable at scale as they increase buying power on raw materials like malt and hops and keep the cost of labor consistent while ramping up production Westbound Down has also been investing in growing its brand In December it paid million tobuy High Country Brewing the holding company for Aspen Brewing and Capitol Creek Brewery in Basalt We have had profitable years Gardner announced Years where you double top in revenue and purchase Aspen Brewing Co are not going to be that year Still Gardner explained the company has valued itself at nearly million because of its plans to scale up In other words the more beer and food it sells while keeping operating costs low the more revenue it will bring in Westbound Down s greater part popular beers are the West Coast-style Westbound IPA and its hazy cousin Juice Caboose Despite being maxed out and winning the title of mid-sized brewpub of the year at s Great American Beer Festival it is still a relatively small operation If production ramps as anticipated by the brewery will still be smaller than Left Hand Brewing and Denver Beer Co which brewed barrels and barrels of beer in respectively By comparison Colorado s largest craft brewer Odell Brewing made more than barrels the same year Enthusiasm so far has exceeded expectations Gardner commented people have invested and another -plus have started the paperwork to do so That gets Westbound Down to the majority of its target goal and means fundraising could close as soon as May One thing investors should know Since shares aren t publicly traded they can t be easily sold Westbound Down plans to reinvest all profits into the business for the foreseeable future so this should be considered a long-term expenditure Gardner announced In fact the only way to get a return is if Westbound is sold or goes inhabitants These are both considered long-term exits taking approximately - years and often longer the brewery stated in its prospectus Sometimes there will not be any return as a impact of business failure A growing trend Westbound amp Down Brewing Company started as a single humble brewery in Idaho Springs in and has since expanded to include five locations Photo courtesy of Westbound amp Down Brewing Company Jeff Fierberg Though somewhat novel regulation crowdfunding efforts like Westbound Down s are becoming more popular in the beer and spirits industries One reason is that platforms like DealMaker lower the cost for microinvestments Gardner explained Their hardware in a way democratizes investing in privately owned companies In January Golden s gluten-free beer maker Holidaily Brewing Co closed a similar campaign and raised more than to fund a multi-state distribution plan In mid-April Shelter Distilling which opened its -square-foot flagship brew-stillery in Montrose in launched a campaign to help grow its inventory capital reserves and marketing efforts Similarly Colorado beer stalwart Left Hand Brewing Co closed a regulation crowdfunding campaign in February which collected about from individual investors That money helped the company buy Dry Dock Brewing Co in Aurora and will also be put to use expanding Left Hand s sales and marketing personnel and acquiring additional real estate noted spokesperson Jill Preston This was Left Hand s first crowdfunding effort in its -year history and Preston mentioned it was a success because drinkers are privy to the industry s challenges Staying independent requires collaboration and we re working to build a platform that not only helps us stay strong but also supports other like-minded beverage companies Preston commented by email We believe our investors see the long-term value of that vision and want to be part of building something that supports future progress A new champion Enhancement has been the mantra for Westbound Down which started with a single location in Idaho Springs in and has since expanded to five including a state-of-the-art brewhouse in Lafayette Distribution sales meanwhile have ballooned since the brewery states in its offering What makes this brewery specifically a good venture Really it comes back to quality Gardner revealed A decade ago when craft beer was booming people overinvested in improvement and underinvested in quality with this assumption that everybody was on the rise Westbound he added is doing the opposite starting with quality Its next measures would be to expand sales into other states like Nebraska Illinois Texas New York California and Oregon The company s leaders also plan to open more brewpubs beginning in Denver and then maybe going state lines Since Westbound has operated a small taproom near Denver Union Station but it only serves beer Gardner declared the company thrives when it can offer a fuller hospitality experience He hopes to identify a new Denver location by the end of this year Related Articles Denver-area small businesses deal with ever-changing tariffs uncertainty Tivoli Brewing ends -year run in historic Auraria learner union These breweries will push the boundaries of beer at Collaboration Fest There s a new kind of American whiskey and Colorado distillers are buzzing about it Skeptical Gov Jared Polis signs law blocking more grocery stores from selling hard liquor Not to say the beer isn t worth a stop alone Westbound Down is one of Colorado s the greater part awarded breweries consistently earning accolades at prestigious competitions like the Great American Beer Festival and the World Beer Cup As realm forces trim out specific existing breweries Gardner believes his company can emerge as a leader Colorado craft beer which I m very proud to have been part of for a long time requirements a new champion he mentioned Every day we re confident we re going to continue the pursuit of keeping that legacy of Colorado craft beer excellence alive and we believe people in Colorado want that Westbound amp Brewing wants to raise million from investors for a major expansion Provided by Westbound amp Down Subscribe to our new food newsletter Stuffed to get Denver food and drink news sent straight to your inbox