Camden Town Brewery defends £75m crowdfunding valuation: Camden Town Brewery has defended the eye-watering £75m valuation, more than 50x current Ebitda - it has placed on itself after launching a crowdfunding campaign to raise £1.5m in return for 2% of its equity. The campaign, launched yesterday, has raised £181,000 already. Asked to justify the £75m valuation, Camden Brewery's finance director, Patrick Franzen, who was an original investor in the business and also co-founded Barworks, said: “Camden Town Brewery has grown more than ten times in the last three years, which is a pretty fantastic rate of growth. We took the decision to value the business on the basis of where we see ourselves at the end of the investment plan, while considering the Ebitda forecast for 2015 as the anchor. We are trying to avoid talking in multiples at this early stage for reasons of high growth rate. Having said that, we are expecting Ebitda for 2015 to be around £1.45m. Current sales support this as we are above the curve for sales so far this year. This number includes the volume of beer that we are having to contract-brew because of our limited capacity at our current brewery. This volume, unfortunately, earns us a much lower gross profit than we see on ‘in-house’ produced beer. When we add back this volume and add the costs that we would incur if we had produced it ‘in house’, we end up with an Ebitda closer to £3m for 2015. We feel very strongly that any valuation today needs to factor this in. We took the decision to do that. Additionally, we have decided to add in the value of the perceived brand strength and the fact that we are going after the much bigger lager market as opposed to the relatively smaller ale market, which is the norm for smaller craft breweries due to the costs around lager production. We feel that craft lager has a fantastic growth opportunity globally. We are looking to produce a return for our investors by building the brand aggressively over the next five years. We are expecting that we will achieve an annual growth rate of just under 40%. This compares to an annual growth rate of around 110% to date, and so should be achievable over the investment period. Capital investment during this time will increase our beer production to 250,000 HL by 2020. This will drive an Ebitda of just under £13m and an equity value of around £151m using a very conservative industry multiplier of 11. This will give a compounded annual return of around 12.4% at exit at the current valuation. We strongly feel that a craft lager manufacturing business has a great future in a market where around 75% of beer sold in the UK is lager. The fact that we invest a lot of money to enable us to produce a craft lager is what we think will set us apart from the competition at exit, which in turn will help drive a high multiple. On the basis of this I am confident that we will see a multiple closer to our ‘high multiple’ scenario of 19 by 2020. This would give over 3x return on investment and a compounded annual return of around 22%. So in summary, we decided to use our current run rate adding back the GP lost due to contract brewing, and using the higher industry multiplier. We then added a value to the brand and our position as one of the few craft lager breweries in the UK. The management team strongly believe we will deliver an equity valuation around £250m at exit. All this in combination drove the £75m valuation. We genuinely believe that this valuation will drive a great return for our new investors in 2020.”