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he alcoholic beverage industry
One last element that can also
presents the start-up with two
be extremely beneficial is having a
difficult challenges: coming up with a good
brand name that is not already trademarked, and
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ITT
physical prototype developed. As sexy and
intriguing as your documents may look, people
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raising money. For those of you who are raising capital, like to be able to hold and taste something.
the good news is that private equity deals in the industry have become very active lately. New entrants to the distilling industry are benefiting from their
ILL
ER
After you have all of these elements in place, it is time to start going through your Rolodex and putting the feelers out there. Presuming this is your first round of capital, it is best
predecessors who helped to pave the way. Even just a few years
to approach/hound/attack the ‘Four F’s’; Friends, Family, Fools,
ago potential investors often didn’t understand how a new spirits
and Fanatics. Other ideal initial investors include those who have
company could exist due to the dominance of such behemoths
some direct knowledge of the alcoholic beverage industry such as
as Diageo. “You do not have the next Grey Goose,” one potential
restaurateurs, liquor store retailers, as well as service providers
investor barked at me back in the day. (On a side note, it also
that work with those types of business, such as accountants.
turns out that a guy who wears more hand jewelry than his wife
Investment from other members of the three-tier system may
is not likely to invest in you either.)
be possible depending on which person or organization is listed
So I wanted to share some insight that I have gained during my
on the various licenses. Successful entrepreneurs are also ideal
years of raising capital for both my own ventures and for others. investors as they often find this industry very appealing because I have found that there is a general format to follow that often
of the margins and the excitement inherent to the industry.
leads to success.
Potential hybrid approaches include major equipment financing
First and foremost: be polished and buttoned up. You only have one chance to make a proper first impression. Regardless
and state/local grants. If I were you, I would start with those sources and completely
of whether you are asking your best friend or a seasoned investor, ignore the SBA and angel forums. Well, that is unless you like it is vital that you are prepared. What follows is a list of most of
filling out forms and being asked for free samples from an
the key elements that you should have completed before you ask
investor who says he is really interested while his true interest
for a dime:
lies in the mini deli sandwiches he is stuffing into his mouth. For established distillers, raising subsequent rounds of capital
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Executive summary
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Business plan
or accessing additional capital is often a little easier as you now
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Project timeline
have a track record. Exploring relationships with progressive
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Financial forecast
banks for vehicles such as lines of credit, equipment loans, and,
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Key personnel needs identified
to an extent, even inventory factoring, will help buffer you from
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Vendors and professional service firms selected
the large swings in cash flow that many distillers face. To raise
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Idea of valuation
relatively large amounts of capital (more than three million) you
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Answers to the tough questions
may also wish to connect with a professional who raises capital
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Investment docs ready to be drafted
for small ventures. Approaching local governmental leaders can
22 WWW.ARTISANSPIRITMAG.COM