The Lost Forest Round — EFP Tomorrow Investigation
Equity for Punks Tomorrow — September 2020

THE LOST FOREST ROUND

How 73,802 investors were sold a carbon dream — and lost everything

£30.2m
Raised
73,802
Investors
£0
Returned
£33m
Sold For

Section 01 — Evidence

What They Were Told

Side by side: the marketing pitch vs. what actually happened.

The Marketing Pitch

"Every single penny raised will be spent on ground-breaking sustainability projects"

— BrewDog EFP Tomorrow marketing, September 2020 (Craft Brewing Business)

"BrewDog is now carbon negative — every single year we're getting twice as much carbon out of the air as we emit"

— James Watt, August 2020, one month before the raise

"Own part of BrewDog" / "Share in our future growth" / "Your very own equity stake"

— EFP marketing materials (BBC News)

"For every pack we plant a tree in the BrewDog Lost Forest"

— Lost Lager packaging (later removed)

Plant 1 million trees by 2022, 3 million by 2025. Forest would sequester "up to 550,000 tonnes of CO2 each year."

— BrewDog sustainability claims (Parks Watch Scotland)

The Reality

Lost Forest subsidiary accounts show BrewDog withdrew £1.8m FROM the subsidiary. Scottish Forestry's public grants funded most planting — not investor money.

— Lost Forest subsidiary accounts (Parks Watch Scotland)

Carbon negative claim withdrawn July 2024. ASA found the advertising misleading. BrewDog admitted it was "unsustainable without offsetting."

— ASA ruling, 2024 (Peters & Peters)

Sold to Tilray for £33m on 1 March 2026. All 220,000 retail equity holders wiped out entirely. £0 returned.

— Administration, March 2026 (European Business Magazine)

BrewDog later denied "tree-per-pack" was their claim. Marketing was removed.

— (The Drinks Business)

Over 50% of planted trees died. Some species experienced 90%+ failure rates. Only 9,300 acres — not the "12,000+" initially claimed.

— (Parks Watch Scotland FOI, 2024)

Section 02 — Disclosure

The Prospectus vs The Pitch

What the legal documents actually said — buried in small print where most retail investors would never see it.

The Pitch (What Stood Out)

Marketing

"Own part of BrewDog" — investors were repeatedly told they would share in future growth. James Watt discussed an IPO as the eventual exit.

(BBC News): "Richard genuinely believed Brewdog would go public, get listed on the stock exchange"

Valuation

Shares sold at £25.15 per B Share — implying a company valuation of over £2 billion.

Sustainability

"Every single penny raised will be spent on ground-breaking sustainability projects." Carbon negative centrepiece raised excitement and media coverage.

The Prospectus (What Was Buried)

Risk — page 14

"Just over 22% of the issued shares of BrewDog are Preferred C Shares which are entitled to a liquidation preference over the B Shares"

(EFP Tomorrow Prospectus)

Risk — preference terms

"C Shareholders will be entitled to a sum equal to… subscription price + 18% compound annual return"

Risk — total loss

"The Directors have the right to refuse to register any transfer of shares" / "It is our current policy not to pay any dividends"

"B Shareholders could find their entitlement to the proceeds of a liquidation or total capital return reduced or nil"

— Securities Note dated 9 September 2020 (EFP Tomorrow Prospectus)

Section 03 — The Hidden Math

The Preference Waterfall

TSG Consumer Partners invested £213m in 2017 for Preferred C Shares with an 18% compound annual liquidation preference. This is what that meant for EFP investors.

£213m
TSG Investment (2017)
~£350m
TSG Pref. When EFP Launched (2020)
~£944m
TSG Pref. at Administration (2026)
£33m
Actual Sale Price

TSG's 18% Compounding Preference vs. Actual Sale Price

The arithmetic was impossible. By 2020, when EFP Tomorrow launched, TSG's preference alone was ~£350m. BrewDog would have needed to sell for over £350m — just for TSG — before a single penny reached EFP investors. The actual sale price was £33m. (European Business Magazine, MoneyWeek)

Section 04 — Financial Performance

Five Years of Losses

BrewDog reported its last profit in 2019. From 2020 to 2024 — the entire period EFP Tomorrow investors held their shares — the company lost £148 million.

-£148m
Cumulative Losses 2020–2024
-£59.2m
Peak Loss (2023)
5
Consecutive Loss Years
2019
Last Profitable Year

Annual Pre-Tax Profit/Loss (£m) — 2019 to 2024

Cumulative Losses from 2020 Onwards (£m)

Sources: 2023 loss figure from K2 Partners; 2024 loss of £36.7m from AGCC and Scottish Financial News.

Section 05 — The Centrepiece

The Lost Forest

The Kinrara Estate in the Scottish Highlands was the centrepiece of EFP Tomorrow's marketing. Here is its complete timeline from purchase to disposal.

£8.8m
Purchase Price
9,300 ac
Actual Size (Not 12,000+)
50%+
Trees Died
£700k+
Public Grants Used
2020
BrewDog buys Kinrara Estate for £8.8m. Claims "12,000+ acres" — actually 9,300 acres.
August 2020
Announces "carbon negative" status. One month before EFP Tomorrow launches.
Sept 2020 – Jan 2021
EFP Tomorrow raises £30.2m from 73,802 investors, with the Lost Forest as the centrepiece.
2022
Scottish Forestry awards up to £1.23m in public grants. The subsidiary had zero staff costs. BrewDog withdraws £1.8m FROM the subsidiary.
2022
HSBC lodges two charges against Kinrara land. Last trading day for EFP shares.
2023
Half of 500,000 planted trees die. 92,436+ confirmed dead. Some species 90%+ failure rate. Mounding destroyed peatland, releasing carbon.
Feb 2024
Parks Watch Scotland FOI reveals extent of tree deaths. (Parks Watch Scotland)
July 2024
BrewDog withdraws carbon negative claim — admits "unsustainable without offsetting." ASA reprimands for misleading advertising.
Oct 2025
Kinrara Estate sold to Oxygen Conservation. Terms undisclosed. £2.1m in government grant liability transferred to buyer. (Just Drinks)
March 2026
BrewDog enters administration. Sold to Tilray for £33m. All 220,000 retail equity holders wiped out.

Section 06 — Rebuttal

Why "EFPs Knew" Is Wrong

"It said in the prospectus your shares could go to zero. Investors accepted the risk." — Here are seven reasons that argument fails.

1 The Prospectus Said One Thing — The Marketing Said Another
  • Prospectus risk section (small print): "B Shareholders could find their entitlement reduced or nil"
  • Marketing material (large print): "Own part of BrewDog" / "Share in our future growth"
  • James Watt repeatedly discussed IPO as the eventual exit
  • The BBC reports: "Richard genuinely believed Brewdog would go public"
  • Under UK financial promotion rules, the overall impression matters — not just whether risks are mentioned somewhere
2 The Preference Structure Was Obscured
  • TSG's 18% compounding preference was mentioned but NOT quantified or explained in accessible terms
  • No worked example: "If BrewDog sells for £500m, here's what you get: nothing"
  • No cap table scenario analysis was provided to investors
  • The implied valuation (>£2bn) was already below the level needed for any EFP recovery
  • Many investors had no understanding of what "liquidation preference" means in practice
3 The Company Actively Encouraged Large Investments
  • Minimum investment: £50 (affordable entry — suggests beer perks)
  • Online maximum: 500 shares (£12,575) — this is NOT a beer discount
  • Paper applications had NO maximum — people could invest unlimited amounts
  • The BBC reports investors putting in £12,000+
  • Marketing repeatedly emphasized growth, future value, community ownership
4 There Was No Way Out
  • Shares traded once per year via Asset Match with 6% fee
  • Last trading day: 2022 — after that, no exit mechanism at all
  • Directors had absolute right to refuse share transfers (Prospectus)
  • No dividend policy — returns only possible via share price appreciation
  • When the company started declining, investors were completely trapped
5 The Timing Was Strategic
  • Launched September 2020 — during COVID lockdowns when bars were closed and the company was losing money
  • "Carbon negative" announced ONE MONTH before the raise, creating positive press coverage
  • £30.2m raised was a fresh capital injection during a period of financial stress
  • By this time, the TSG preference structure (2017) had already made retail recovery near-impossible
6 Management Had Full Knowledge
  • As CEO, James Watt had full sight of financials, TSG preference stack, and debt structure
  • BrewDog's own lawyers argued to Ofcom (2022) that TSG's investment was "superior" to EFP investment — they knew
  • The EBT "£100m in shares" announcement (May 2022) used the same playbook: structurally worthless promises
  • James Watt personally cashed out tens of millions in the 2017 TSG deal. Retail investors had no comparable exit.
7 No Tax Protection for Investors
  • EFP was NOT part of EIS, SEIS, or VCT — no tax relief
  • No income tax offset, no CGT deferral, no loss relief
  • A £10,000 EFP loss = full £10,000 loss (vs ~£3,850 net cost via EIS for a 45% taxpayer)
  • This was a deliberate structural choice by BrewDog that maximized investor downside

Section 07 — Outstanding Questions

What Needs Investigation

31 questions across seven categories that regulators, administrators, and investigators should be examining.

Financial Promotion & Mis-selling 5 items
  1. 01 Did EFP marketing constitute a misleading financial promotion under FSMA?
  2. 02 Were the carbon negative claims used to promote a securities offering materially false?
  3. 03 Did the implied valuation (>£2bn) have any reasonable basis?
  4. 04 Was the TSG preference structure adequately disclosed for retail investors?
  5. 05 Were risk disclosures sufficiently prominent given the marketing?
Use of Funds 4 items
  1. 06 Was EFP money actually spent on the sustainability projects as promised?
  2. 07 Why was BrewDog withdrawing cash FROM the Lost Forest subsidiary?
  3. 08 How much of the £30.2m went to general operations vs stated projects?
  4. 09 Were stretch goal projects (French brewery, Asian brewery) ever pursued?
Director Conduct 5 items
  1. 10 What did James Watt know about finances when EFP Tomorrow launched?
  2. 11 Did the "carbon negative" timing constitute market manipulation?
  3. 12 Why allow a raise at an impossible implied valuation?
  4. 13 What personal benefit did directors derive while retail investors were locked in?
  5. 14 Why no independent board representation for 220,000 shareholders?
Lost Forest Specifically 5 items
  1. 15 Were the environmental claims (550,000 tonnes CO2) ever verified before publication?
  2. 16 Who authorized the mounding technique that destroyed peat?
  3. 17 Why were £700k+ in public grants obtained for an investor-marketed project?
  4. 18 Why was the subsidiary used to repay BrewDog rather than fund conservation?
  5. 19 Should the sale of Kinrara require shareholder approval?
EBT & Employee Shares 4 items
  1. 20 Was the £100m employee equity announcement genuine or a PR exercise?
  2. 21 Why was the EBT run by insiders rather than independent trustees?
  3. 22 What happened to the £562,000 owed by the EBT to BrewDog PLC?
  4. 23 Were employee share certificates legally compliant?
Regulatory Failures 4 items
  1. 24 Why did the FCA not intervene given 220,000 investors and £75m raised?
  2. 25 Should this have required FCA authorization as a collective investment scheme?
  3. 26 Were ASA's misleading carbon findings referred to the FCA?
  4. 27 Did the Insolvency Service investigate director conduct as required?
Administration & Sale 4 items
  1. 28 Was £33m the best achievable outcome or primarily for secured creditors?
  2. 29 Did AlixPartners have any conflicts of interest?
  3. 30 Were retail shareholders given adequate notice of administration?
  4. 31 Should the TSG preference be challengeable under s.994 Companies Act 2006?