King's College London

When BrewDog sold for £33 million earlier this month, it marked a dramatic fall from its $1bn valuation just a few years earlier. But the real story is not the valuation drop. It is who lost out.

More than 200,000 retail investors, BrewDog’s self-styled “equity punks”, had collectively invested around £75 million into the company. They received perks, discounts and a sense of belonging. What they did not receive was any return when the company was sold.

As someone who studies crowdfunding, I was asked to comment on the case for The New York Times. But BrewDog is not an isolated failure. It exposes a deeper problem in how equity crowdfunding is designed, marketed and understood.

The pitch was the brand

BrewDog’s fundraising blurred the line between investment and identity. Investors were not just buying shares. They were buying into a movement.

That distinction matters. When people invest in a story rather than a set of financial fundamentals, they tend to ask fewer difficult questions. Is the company profitable? What protections do shareholders have? What happens if things go wrong?

In BrewDog’s case, the answers were clear, but easy to overlook. Retail investors held ordinary shares. They had no special protections, no meaningful influence, and no ability to challenge the terms of a sale. When the exit came, they were passengers.

What the research shows

In ongoing research with Lars Bo Jeppesen at Copenhagen Business School, we examine when crowds of mostly non-professional investors can make effective financial decisions.

The finding is not that crowds are irrational. In fact, they can be remarkably good at separating promising investments from poor ones, but only under the right conditions. Investors need access to clear financial information and a diversity of perspectives in how decisions are made.

When those conditions are not met, the dynamic changes. When investors are guided by the same values, their judgements become more aligned. And when everyone is thinking in similar ways, the crowd’s ability to distinguish good opportunities from bad weakens.

When a pitch leans heavily on community, identity or shared values, investors making diverse assessments. Enthusiasm becomes contagious. Critical judgement is crowded out.

BrewDog was a textbook case — investors were united by a shared vision, and financial scrutiny never caught up.

What needs to change

The immediate response will be calls for tighter regulation. That may help, but the more important issue is design.

If companies want to raise money from retail investors, the risks need to be impossible to miss, not buried in small print. Financial information should be standardised, prominent and clearly separated from marketing.

Crowdfunding can work. But only if investors are given the tools to think, not just the reasons to believe.

BrewDog’s equity punks were invited to the bar. They just weren’t told they had no say in last orders.