Little-known Idaho program pairs willing investors with budding entrepreneurs

Bogus Brewing Inc. turns to Idaho’s Small Company Offering Registration investor program for startup capital.

zkyle@idahostatesman.comNovember 12, 2013 

Collin Rudeen may be the mastermind behind Bogus Brewing Inc., which he plans to open in the spring at 521 W. Broad St. in Downtown Boise.

But Rudeen isn’t the only owner. He shares that distinction with 149 investors (so far) who have chipped in $327,000 to help get the Boise brewery off the ground through a little-used public investor program authorized by Idaho law.

It’s called the Small Company Offering Registration program, or SCOR. The program provides a way for businesses to accept money from qualified Idaho investors, who later receive dividends if the business makes a profit.

Most startups need to secure capital either through bank loans or from wealthy angel investors, Rudeen says.

“That doesn’t really fit with our idea of inclusiveness and community,” he says. “Since we could have an unlimited number of investors, we could make the minimum investment approachable for a normal-type person.”

The minimum for Bogus investors was $1,000. The most provided by a single investor so far is $30,000.

Scott Ki, of Boise, hopes to make money on his $5,000 investment in Bogus Brewing. More than that, he wants to feel ownership in a project he supports.

“How often do you get a chance to part-own a brewery?” Ki says. “I like beer. My wife likes beer. We decided to listen to (Rudeen’s) pitch and go from there.”


The Idaho Department of Finance has received 76 applications for the SCOR program since its creation in 1990, including 22 from the Treasure Valley. Not all of the businesses received investor money or got off the ground. Nineteen applications were either withdrawn or abandoned. Because the state doesn’t require businesses to submit an end-of-application report, records don’t indicate which were nonstarters.

But SCOR helped start some prominent and successful businesses, including Bardenay Restaurant and Distillery in Eagle.

Kevin Settles, Bardenay’s manager and majority owner, started the Bardenay in Boise with a partner. He sought a different financing route for his next venture and turned to SCOR to raise capital (he declines to say how much) to open the Eagle restaurant in 2002 and again for a third Bardenay in Coeur d’Alene in 2006.

Settles says the offering removed some of the financial and legal liability from his shoulders. The application process requires specific information that only well-researched business plans can provide. The program also provides a legal framework for successful applicants that sets the terms of the investment relationship between the applicant and shareholders.

“SCOR gives the investors protection that I’m not going to be an idiot with the business,” Settles says. “It gives me protection that if something outside my control causes us to go out of business that they can’t come after me.”

Another Boise SCOR applicant is coffee company White Cloud Mountain Co., which raised $475,000 in 1992. Sapidyne Instruments Inc., which makes high-tech biology equipment, raised $343,668 through its 1999 offering.

The state would like to see more companies take advantage of the program, says Gavin Gee, director of the Idaho Department of Finance.

“We would welcome many more filings using the SCOR program in order to help more small businesses and grow the economy,” Gee says. “We are happy to work closely with the owners and management of small businesses to provide them with hands-on assistance with these SCOR applications. If we had more applications than we could manage effectively with existing staff, we would seek additional staffing.”


Rudeen pours a weirdly red pink saison into taster glasses for himself and Lance Chavez, who left his assistant brewer position at Sockeye Brewing to be head brewer at Bogus. The pair look at the debris piled in the middle of their future 4,000-square-foot brewery and tasting room and plot the coming months: $250,000 worth of brewing equipment will arrive in November; the construction and finishing touches on the 50-seat tasting room should make the room ready to open in March or April.

The Bogus Brewing community funding started before the SCOR application with an online Kickstarter campaign, which raised the first $30,992. Unlike SCOR, Kickstarter money is a donation, not an investment. The Kickstarter contributors received swag such as Bogus Brewing T-shirts, mugs and growlers, but no financial return.

The enthusiastic response via Kickstarter built Rudeen’s confidence.

“[The] $30,000 is awesome, but it won’t start a company,” he says. “It’s an indication of support. That’s 223 (Kickstarter donors) who are suddenly interested in the company.”

Like Settles, Rudeen used the SCOR system to feel out how much investor support was available. If too few shares are sold, the SCOR application dies, investors get their money back and applicants can abandon the project or seek other funding avenues.

Rudeen, who quit his job as a lead engineer on wind-energy projects to pursue the brewery, says the SCOR application was a moment of truth, answering whether or not investors would buy into his plan.

“That was the scary part,” he says. “I’d been working on this for a year and a half. Everybody thinks their own child is the smartest and the most beautiful.”

The offering, which will remain open until January, will cover about half of the brewery’s startup cost. Rudeen said he’s working to secure a bank loan for the rest, a process made much easier thanks to capital in hand and assets — the brewing equipment — already purchased.

“A lot of equity and a lot of collateral makes it an easy sell,” Rudeen says.


Rudeen and Settles have different ideas about shareholder involvement.

Inclusion is the thesis of Rudeen’s business plan, starting with what he calls Community-Supported Brewing, a program that entitles shareholders to monthly growlers (half-gallon containers) of new and sometimes experimental beers. Bogus shareholders also will have the power to elect the board of directors and are encouraged to be involved in the dialogue about brewing and business decisions.

Rudeen says he doesn’t want Bogus to become a corporate giant. He wants community members to feel like they have a say in the operation, and he’ll look for opportunities to draw from their businesses and collective expertise. He wants to buy from one shareholder’s honey farm. He wants to bring business to others who are certified public accountants and computer experts.

Chavez, the head brewer, hopes that inclusion encourages shareholders to be regulars at the tasting room.

“It’s a base clientele already,” Chavez says. “We have 100-plus owners who want to support us who are going to bring their friends. That’s word-of-mouth right there.”

Settles has a different situation.

He is the majority owner. His investor pool is much smaller: 12 investors in the Eagle restaurant and 20 in Coeur d’Alene. He writes them quarterly financial reports. Settles won’t discuss profit margins. He says the businesses are paying dividends.

“I’ve had tremendous support from my shareholders,” he says. “I think they are pretty happy.”

But he doesn’t want too many hands in the pot. He will talk with investors if they have a problem with a business decision, but otherwise, he mostly communicates with investors through quarterly letters and financial reports.

“I have passive shareholders,” Settles says. “They can’t walk in and get a free beer. They can’t fire anybody. It’s just like buying a share in an Applebee’s. There’s no difference in the way they get treated at the restaurant.”

Zach Kyle: 377-6464@IDS_zachkyle

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