In record time, Lee Cooper has raised more than $1 million in equity crowdfunding for his forthcoming Fort Point brew pub, restaurant and brew-your-own destination, Hopsters.
Announced in July of 2016, the Sleeper Street location (rendered above) will be the second Mass. location after the Newton spot opened in September 2013. By 2022, if Cooper has his way, there will be 22 Hopsters across 10 cities nationwide. The Fort Point addition is all the more relevant now that Trillium announced a major brewery relocation there slated for the end of 2017.
For the Fort Point rollout, Cooper took to the crowdfunding site Wefunder, capitalizing on a federal law called Regulation Crowdfunding that went into effect May 16 of last year. Known also as Title III of the JOBS Act, the law made it possible for private companies to raise up to $1 million per year not just from accredited investors, but from friends, customers, family or anyone else interested in owning a piece of the pie.
"The Wefunder platform has enabled us to seek investment from [about] 600 of our customers, fellow beer lovers and local community members," Cooper told me. "What's more, we would never have been able to raise the capital needed to open the Boston Seaport location and launch our national expansion."
If Cooper's name is ringing a few bells, here's why: He was very much at the center of a recent local craft beer feud involving him and the owners of popular craft beer chain, Craft Beer Cellar. In an internal memo sent to all franchisees, which Cooper eventually leaked via Twitter, CBC called a handful of local breweries "unfit for consumption," including Hopsters – a declaration Cooper very much took exception to.
According to its stats page, Wefunder is the most prolific equity crowdfunding platform operating today: Of the $18,161,365 investors have funded in regulation crowdfunding offerings across all sites from May 16, 2016 to Jan. 5, 2017, more than $12 million has been invested through Wefunder.
And Hopsters has become just the fourth company to hit $1M through the site, joining an artificial pancreas company, a Hollywood studio and a craft brewery out of Texas.
"Hopsters was a success because they launched their campaign to a group of excited customers, and had an offering that investors liked, with perks that made investing a great experience," Wefunder founder Mike Norman told me, adding, "All of this made Hopsters the fastest campaign to hit $1M in the history of Regulation crowdfunding at 48 days."
Cooper is required to give investors five days notice before closing the campaign, which he plans to do in the next couple days. For the campaign, investment levels were set at $500, $1,000 or $2,000, each of which came with certain perks like an engraved stainless steel mug waiting for you at the brewery or an annual investor-only event.
Those increments represent units investors bought in Hopsters: Cooper sold those units (or the LLC equivalent of stock) at $500/unit, at a $4M valuation. Once the business is open, 80 percent of profits will be put toward investors pro-rata until 100 percent of their principal is returned. From there, according to the campaign page, "Hopster’s will then distribute 20 percent of their profits every year to investors in perpetuity" with investors being paid as such once per year. "If Hopsters is acquired or goes public," the site goes on, "you’ll receive a payout equal to your ownership percentage."
"Lee used a security that is often used by breweries and restaurants that makes it easy for investors to understand how they will makes money if the business performs well," said Norman. "That $550,000 was committed from accredited investors also made it easier for smaller dollar investors who may not have understood the specifics of all of their terms to feel confident that someone else who was putting much more at stake had looked everything over and made a larger commitment."
The average investment for Hopsters was also twice as large as Wefunder's sitewide average, said Norman, "which implies that the specifics of offering itself was exciting for investors in addition to the opportunity to support a company they already love."
Which brings us back to the question of what this all means for Hopsters' planned opening in Fort Point. Given the success of the campaign, Cooper told me, he's aiming to open the doors in early spring of 2017.
There's a lot that needs to go right between now and then. But Cooper told me he's raised what he needs to forge ahead.
"It goes to show with sensible finance laws and the community on your side, anything is possible," he said.
Image provided.
