Brewdog’s Original Backers Skeptical of Founder’s Promised Free Shares in New Brand

Investors doubt Brewdog founder s shares – Brewdog’s original backers are expressing skepticism toward the promises made by one of its co-founders, James Watt, regarding free shares in his upcoming beer brand, Second Best. Watt, who co-founded the craft beer company with Martin Dickie in 2007, is now seeking to rekindle trust by offering former investors a stake in his new venture. However, many remain unconvinced, questioning whether the proposal will truly compensate for the losses incurred during Brewdog’s collapse. The company, once valued at over $1bn, has since been sold to US-based Tilray, leaving investors with uncertain returns and a sense of disappointment.

From Growth to Collapse: Brewdog’s Journey

At its peak, Brewdog operated four breweries, managed approximately 100 pubs globally, and had ambitions of becoming a major player in the beer industry. The company’s rapid expansion was partly fueled by its Equity for Punks crowdfunding initiative, which allowed beer enthusiasts to invest in the business and claim a share of its future success. This scheme raised £75m, enabling Brewdog to enter international markets and offer perks like discounted beer, free birthday brews, and invitations to its high-energy “Annual General Mayhem” events. These perks were designed to entice participants, promising them a unique connection to the brand’s growth.

However, the company’s financial strategy eventually led to its downfall. After sourcing additional equity from external investors, US-based TSG Consumer Partners acquired a 22% stake in Brewdog. This gave them preference shares, ensuring they were prioritized in any sale or liquidation. When Brewdog collapsed, TSG was first in line to recover their investment, leaving other shareholders with minimal returns. The sale to Tilray, completed in March, included the UK brewing operations, brand, and 11 pubs for £33m. While this preserved 733 jobs, it also resulted in the loss of 484 positions and the closure of 38 bars not part of the rescue plan.

A New Venture: Watt’s Promise to Former Investors

Despite the collapse, Watt remains determined to fulfill his commitment to investors. He has announced that nearly 20% of shares in his new company, Second Best, will be allocated to those who suffered financial losses in Brewdog’s Equity for Punks scheme. This pledge is intended to provide a sense of closure, but many investors are still wary. They argue that the promise of a “free stake” in a new brand may not offset the £12,000 they lost when Brewdog was sold. Some question whether Watt’s new venture will deliver on his promises, given the company’s history of overexpansion and financial missteps.

Watt’s proposal hinges on the idea that investors will be treated as “second founders” rather than shareholders. He claims that their equity in Second Best will hold equal value to his own, with no upfront costs or hidden conditions. “No catches, no cash required, and your equity in Second Best will always rank alongside my own,” he stated in a social media post. “You’ll own it. I’ll fund it. And I’ll dedicate myself to building it.” Yet, the skeptics point out that the stakes are not as clear-cut. Gareth Fitzgerald, a former investor who spent £1,000 on Brewdog shares, said he would sign up for the new scheme but would remain cautious. “I’d be foolhardy not to, but I’ve got to say I’ll be a very, very passive investor,” he remarked. “I won’t be buying any of his products, but it would be silly not to sign up. 19.3% sounds good—but 19.3% of nothing is nothing.”

Similarly, Pete Berryman, who invested around £3,000 on behalf of himself and his children, voiced cautious optimism. “It’s a nice idea that potentially we’re not going away with nothing,” he said. “I’m just wondering what strings are attached.” He emphasized the need to scrutinize the details, stating he would “follow up on the proposal” despite being “very cynical” about the scheme. These sentiments reflect a broader concern among investors that the new plan may not fully address their grievances.

Watt’s Resignation and the Aftermath of Brewdog’s Collapse

Watt stepped down as chief executive of Brewdog in 2024, acknowledging the company’s “many mistakes” in its rapid diversification. He admitted that the ambitious expansion, including ventures into cannabis and other markets, may have contributed to its financial instability. In his resignation statement, Watt expressed regret for the impact on staff and investors, vowing to rectify the situation through his new brand. “Thousands of people trusted me to build a brilliant beer business and create value for them,” he wrote. “It was an obligation I took very seriously. And I, for one, am not done with that obligation.”

The Equity for Punks scheme, which once seemed like a revolutionary way to democratize investment in the beer industry, now stands as a symbol of both opportunity and risk. Watt’s plan to offer free shares to former investors is framed as a gesture of goodwill, but the cynicism among participants persists. They recall how Brewdog’s initial promise of shared success was overshadowed by its eventual financial struggles. “You’re not shareholders this time. You’re second founders,” Watt insisted, yet the phrasing has not quelled doubts about the company’s long-term viability.

While Watt’s new venture is still in the process of securing necessary licenses and legal approvals, he has outlined a cautious approach to its launch. The company plans to start with an “alcohol adjacent concept,” a strategic move to avoid the same pitfalls that led to Brewdog’s collapse. This initial phase will allow Watt to test the waters before committing to a full-scale beer brand. However, the timeline for a formal launch remains unclear, with Watt noting that the process “may take some time.”

Industry Implications and Investor Sentiment

The fallout from Brewdog’s collapse has broader implications for the craft beer and crowdfunding sectors. Investors in Equity for Punks now face the challenge of whether Watt’s new scheme will deliver on its promises. Some argue that the venture could serve as a redemption arc for Watt, while others remain skeptical. The case highlights the risks of relying on investor enthusiasm during rapid growth phases, as well as the importance of transparency in financial commitments.

Watt’s strategy to position himself as a “second founder” may also signal a shift in how equity is perceived in the industry. By offering free shares, he aims to create a sense of partnership, but the question remains: will this be enough to restore confidence? The Equity for Punks investors, many of whom have already seen their investments devalued, are now watching closely to see if Watt’s new brand can provide a tangible return. For them, the promise of a free stake is a hopeful but hesitant step toward recovery.

As the details of Second Best unfold, the narrative around Watt’s leadership and the future of the craft beer industry continues to evolve. While the company seeks to rebuild its reputation, the skepticism from former investors underscores the delicate balance between innovation and financial accountability. The success of Watt’s new venture will depend not only on its product quality but also on its ability to meet the expectations of those who once believed in its potential. For now, the story of Brewdog and its founder remains a cautionary tale of ambition, market forces, and the challenges of maintaining trust in a rapidly changing business landscape.