For beer brewer Richard Jeffares, his business is personal.
After a diagnosis of coeliac disease, the craft beer enthusiast mourned that he could no longer have a schooner at the pub with friends, given that a key ingredient in most traditional beers, barley, contains gluten.
“Somebody said to me, ‘Why don’t you start a gluten-free brewery?’” Mr Jeffares recalled.
Eight years on, the businessman is on a mission to “ensure that every liquor licence in the country offers their consumer a gluten-free beer”.
To grow its sales team to achieve that dream, his Victorian company raised about $2.5 million from 993 investors in a matter of days through a method called crowd-sourced funding, also known as equity crowdfunding.
As the name suggests, it works like a crowdfunding platform (think Kickstarter or GoFundMe), but instead of a donation, contributors invest.
It’s a way for smaller, private companies that aren’t listed or floating on the stock exchange to raise money by selling shares during a limited campaign period.
CSF, as it’s known, has only existed in Australia since 2017.
In the age of social media, it’s a method that thrives on brand strength and popularity.
Many of those who tipped into Mr Jeffares’s company, TwoBays Brewing, are diehard fans and keen drinkers of the beers themselves.
To Mr Jeffares, they’re not just investors but “brand ambassadors for us all around the country”.
“I had a gentleman from Orange yesterday giving me leads into two venues in Orange and in New South Wales,” he said.
“So they are [trying to] get our product – and I, when I talk to them, I tell them, ‘It’s your product now as well’ – into local venues so they can have a beer with their friends.”
A bid to bust business archetypes
Kirstin Hunter, the CEO of Birchal – one of the larger CSF platforms in Australia, the other being OnMarket, which carried the TwoBays campaign – champions crowd-sourced funding as an equaliser in the stereotypically male-dominated world of start-up businesses and the firms that fund them.
Australia, she says, has “a bit of a problem in the venture capital ecosystem when it comes to allocating funding to founders who are outside of a particular kind of narrow archetype”.
Birchal chief executive Kirstin Hunter. (ABC News: John Gunn)
As an example of the difficulties some entrepreneurs face, Birchal detailed a recent campaign for sex toy brand Normal Co.
Its founder, Lucy Wark, says the business couldn’t hurdle investment house internal policies “designed to restrict socially harmful investments” even though the company aimed to have a positive social impact.
“The free online sex education resources which are funded by our toys have now been viewed tens of millions of times in over 40 countries,” Ms Wark said.
“But when we actually passed the investment committee at a major VC fund, we ended up being blocked by vice clause concerns.”
According to Birchal’s annual report on the Australian crowdfunding landscape, 32 per cent of all crowdfunding capital went to teams with at least one woman founder, more than double the 15 per cent representation seen in venture capital.
The report also shows that the food and beverage sector is the largest in terms of funds raised this way.
Richard Jeffares’s company TwoBays is one of many alcohol brands, including craft brewery Philter and distillery Prohibition Liquor, to bring their fans on board.
But Birchal reports the sector has been volatile since the 2022 tech boom, when total funds raised across all platforms peaked at $86 million.
It suffered a crash in the 2024-25 financial year, falling from $65 million in the previous period to $33 million.
Kirstin Hunter said that echoed a tightening across the broader venture capital landscape due to the cost of living, but that the second half of the 2026 financial year was “looking much, much stronger”.
Meanwhile, not every crowdfunding campaign ends with a success story.
Big raises don’t always translate to big business
When Clinton Schultz launched a crowdfunding campaign for his alcohol-free brewery Sobah, he said he had the best of intentions.
As an Indigenous business owner seeking backing for his brand, which utilises native ingredients, he said it was difficult to “attract mainstream investment (and] get non-Indigenous entities to believe in and back” his business.
“Equity crowdfunding gives people an opportunity to dip their toes in (to investing) in a way that’s reasonable and affordable,” he said.
Sobah co-founder Clinton Schultz. (Supplied )
Sobah’s campaign raised more than a million dollars from the brand’s supporters.
But Mr Schultz said the notoriously competitive craft beer landscape – “dominated by the duopoly” of beer giants Kirin and Asahi – brought Sobah undone, with the company going into administration in September.
“It’s been very stressful,” Mr Schultz said.
“We’re trying to find a way forward.“
He said he was hopeful of reviving the company.
But in the meantime, it’s not yet clear how much creditors will get back, including those who tipped into Sobah’s crowdfunding campaign.
This year, Australian Distilling Co. also went under and has been forced to put its South Australian property – where it had plans to build a “Cathedral of Gin” under its Old Young’s brand – up for sale.
The company had crowdfunded nearly $2.7 million to support the project, but administrators anticipate that those unsecured investors are likely to receive “approximately 3 to 17 cents in the dollar”.
It comes after the demise of Zero Co, the laundry and soap company which closed this year after six years in business and Australia’s largest crowd-sourced raise to date, which hauled in $5 million.
“Any kind of investing is always risky, and crowd-sourced funding is no exception,” Kirstin Hunter said.
“As the licensed intermediary, we remind them on multiple occasions, and the crowdsourced funding offer document has a long risk disclosure as well.”
Buyer – and business – beware
Daniel Eason is the accounting director at BlueRock, a firm that previously worked for Birchal and continues to help businesses run crowd-sourced funding campaigns.
He believes CSF can work well for businesses, provided companies have made the right preparations.
BlueRock accounting director Daniel Eason. (ABC News: Patrick Stone)
That includes locking in 60 to 70 per cent of their fundraising target before the campaign even goes live – a task that involves some serious networking.
Then there are greater accounting costs to manage.
“The minute you go CSF, you effectively become an unlisted public company (in that you have] obligations under the corporations act to prepare general purpose financial statements and have them audited,” he said.
“Everyone thinks the raise is going to blow their socks off … but they’re [also] putting themselves into a higher cost environment going forward.”
Mr Eason said it was “the price of success, with his advice to companies looking to raise funds using CSF: go big or go home.
“The real shame is the ones who go into it who only raise 200k and go insolvent two years after,”
he said.
He also said there was a level of “buyer beware” for people looking to invest in crowdfunding campaigns.
Unlike buying shares in the more traditional way on the stock market, it often takes longer for CSF investors to see a dividend after they invest, as the companies tend to reinvest profits.
“They deploy the capital to buy that new bottling line … until they can [eventually] build that market share, make a profit and start paying dividends,” Mr Eason explained.
It can be appealing for people looking for a quick and easy way to invest, he said, “but the liquidity is also not there if, in two years, they need to sell those shares.
“That’s why CSF works better for brands that you know and love, or products that you can get behind, or industries that you understand.”
TwoBays Brewing founder Richard Jeffares. (ABC News: Darryl Torpy)
Richard Jeffares said his crowdfunding campaign took years of careful calculations, waiting for the business to reach the right level of growth, securing support in advance of the raise, and heavy marketing investment.
“It’s not a cheap exercise to go through this, from dealing with PR companies, dealing with the intermediary, and campaign managers,” he said.
“So we really felt we wanted to lean into it strongly and ensure that we didn’t leave any stone unturned.”
He acknowledges that achieving his dream of a gluten-free beer in every Australian watering hole could mean one day being bought by a larger company – which would see shareholders take their cut – but he believes his business has more room to grow first.
“We hope that these investors coming on board are proud of their shareholding and that with that growth in the business, we’re able to give them a return at some point in the future.”