When Berrywhite Organic Drinks wanted to expand into plastic and canned products, it turned to online seed investors for help
The mid-sized business, which launched in 2011, looked for growth finance after 18 months of trading and decided to try its luck with crowdfunding. An 84-second proposal video and an outline of the business plan have brought in £380,000 from around 180 investors for 6% equity offered, smoothing the path to growth for the company.
“We decided to use Crowdcube as the most established crowdfunding platform in the UK,” says Jennings. “My initial impression was that crowdfunding was for startup companies but it was pretty clear [from Crowdcube’s website] that many larger companies were also using this process – which isn’t as daunting as many people would think.”
Essentially, all that was required was a “very good business plan”, to get it online and to start pitching to clients. The money raised has gone towards working capital for the business and rebranding of the existing range but mostly it was used to help the company expand its product line from glass bottles into canned drinks.
Since launching its new carbonated drinks range last year, Berrywhite has sold half a million cans, and demand is growing. Internationally, it has exported to 30 countries across Europe, Asia and the Middle East, and the business has grown from supplying online stores, such as Amazon and Ocado, to high street names, such as Waitrose.
Raising finance has been a challenge since the financial crisis and we’ve seen non-traditional lenders enter the market. Following the financial crisis, some traditional lenders are still exercising much more cautious lending policies, and that’s making it tough for medium-sized businesses to raise growth finance.
As equity crowdfunding becomes more mainstream, however, platforms such as Crowdcube and Kickstarter are becoming a viable option for SMEs, connecting them with multiple investors, from everyday people to angel investors. Tax reliefs are also potentially available to individual seed investors, such as Enterprise Investment Scheme (EIS) tax reliefs on share issues through such platforms.
More financing options
For further information on raising finance and the options available to medium-sized businesses, visit Grant Thornton’s Centre of mid-market financing.