One Tucson-based company, Ten Fifty-Five Brewing, staked its claim to a unique piece of Arizona business history: being the first to seek out investors under the state’s relatively new equity crowdfunding law.
Signed by Gov. Doug Ducey just last year, the new law allows for companies to seek out investors and sell shares to Arizona residents via online platforms, greatly increasing chances of raising much-needed capital. Under the legislation, companies are able to raise up to $1 million without having to undergo a financial audit, and up to $2.5 million if an audit has been completed within the previous fiscal year.
In light of the rise in the crowdfunding trend started by organizations like Kickstarter, Indiegogo and GoFundMe, allowing business to search for capital via the internet is considered by many to be the next big innovation within the process of starting a business.
Ten Fifty-Five Brewing co-founder and General Manager Chris Squires said that pursuing capital via equity crowdfunding “was just the right option for us. It had no limitations on the number of investors, and it allows non-accredited investors to be involved as well, which has been a large portion of our investors so far.”
Squires and Ten Fifty-Five Brewing co-founder and head brewer John Paul “J.P.” Vyborny, were first turned onto the online process after speaking with attorneys specializing in brewery capital fundraising. Squires said they went over every different option, eventually landing on the equity crowdfunding.
The process began for the partners two months ago, but their business has already netted over $200,000 in investment. Squires said a majority of those interested in becoming part of the business are non-accredited investors, which he said is just another benefit to equity crowdfunding—it’s open to anyone, as long as they live in the state.
Potential investors are limited to no more than $10,000 in capital, unless the purchaser is an accredited investor pursuant to the Securities Act.
Squires said the state has been great to work with. With Ten Fifty-Five being pioneers in equity crowdfunding in Arizona, there has been some give and take along the way.
“It’s been good,” Squires said. “It’s a first for everyone, so we’re both kind of learning as we go. There’s been questions that we had, that our attorneys had, through this process since it’s never been done before, in terms of paperwork, in terms of reporting things, and sometimes the answer from the state was, ‘we don’t know, let us go look and figure it out.’”
While equity crowdfunding may seem like a similar process to services provided by websites like GoFundMe, there is a world of difference between the two concepts.
While he by no means dismissed the benefits of reward-based or donation-based crowdfunding, Squires said the company’s goal is to find business partners who share in their vision of where downtown Tucson is going and would like to be a part of it.
Squires and Vyborny aim to open a larger brewery downtown, which would increase their production exponentially and would facilitate more distribution throughout the state. With the larger space, the company would also aim to include expanded seating, craft sausages and outdoor space.
Though Ten Fifty-Five still has some way to go before reaching the nearly $2 million goal, the company has started off strong within a new process and expects to be making the move to downtown after several years of successful operation.
If Ten Fifty-Five realizes its goal, Squires said they intend to keep the existing facilities at 3810 E 44th St. operating for smaller batches, experimental brews and more aggressive fermentation processes.
Though the monetary success the company has experienced speaks to the success of the brand, Squires said the more impressive mark is that over 20 businesses in Tucson carry Ten Fifty-Five brews.
“I think the success that we’ve seen, and are grateful and humble for, is out in the community,” Squires said. “Getting our beer on tap at all of these wonderful places and taking part in all these great beer events we saw last month with Arizona Beer Week—I would say that’s a better validation of our concept than anything else.”
For more information on Ten Fifty-Five Brewing, including investment information, visit www.invest.1055brewing.com or call the brewery at 461-8073.