Artisan Spirit: Fall 2021

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Since 2015, just 2.4 percent of venture capital financing in the United States has gone to Black and Latino founders, and just 2.3 percent of venture funding worldwide has gone to female-only founders since 2020. Responding to these trends, Diageo and Distill Ventures (DV) announced a $5 million investment in 2021 to fund the first year of a “pre-accelerator” for spirits businesses that are at least 51 percent owned by women and people of color. The program is intended to help overcome barriers to access to early-stage funding, with the goal of positioning diverse drinks entrepreneurs for successful successive rounds of capital raise. Participants, at least for now, must be located in North America or the United Kingdom. Heidi Dillon Otto, managing director of Distill Ventures North America, traces the roots of the inequities in VC financing back to reduced access to early-stage seed funding — which is often raised through personal networks — for women and people of color. Undercapitalized businesses often don’t meet the traditional metrics for investment, even if the concept, company, and founder are worth investing in. “We designed the pre-accelerator to connect with those founders to get their first round of capital so we can work with them to develop their ideas, build up proof points, connect with consumers, get some early commercial points, and then get them ready for what would be our typical process of coming to an investment board,” said Otto. Finalists are coached through the development of a six-month business plan to present to Distill Ventures and Diageo. Awardees receive initial funding, usually between $250,000 and $500,000, as well as the opportunity to work in close collaboration with Distill Ventures to bring their plan to life, learn more about and prepare for the pitch process, build out a team of mentors and outside counsel, and potentially develop longer-term partnerships with DV and Diageo. “It’s not just the amount of funding. It’s the tools we’re focused on giving to founders to unlock the potential of their business,” said Alexandra Sklansky Clough, publicist for Distill Ventures. Participating in the pre-accelerator doesn’t commit the founder to continuing on with Diageo in the future. “We want brands to be connected to capital no matter what. We would love it if, through the pre-accelerator process, we find a great fit and can do further rounds of funding, but there’s many reasons why the fit can change over time,” said Otto. “What we really want is that folks have a better network.” Since the program’s launch in June 2021, Otto said the response has been so robust that Distill Ventures is expanding their internal team to increase the program’s capacity. “We want to make sure we have a broader range of individuals to connect with the founders to learn their story. That connects to the work we’re doing internally — do we have the diversity of humans on our team so we can connect with founders?” she said. Applications are open and rolling, and the pre-accelerator is expected to be a permanent component of Distill Ventures’ business. “We’ll expand every year,” said Otto. While diversifying DV’s portfolio is one goal, she added that she sees the potential impact of the pre-accelerator program as extending well beyond the individual founder or business. “When we’re looking at founders, we’re thinking about what role do we see each of our founders playing as a mentor in the industry, and in their communities,” Otto said. “That ultimately brings a broader representation. If you can get seed funding to underrepresented groups, it just ripples from there.”

Margarett Waterbury is a drinks writer who lives in Portland, Oregon. Her first book, Scotch: A Complete Introduction to Scotland’s Whiskies, released in fall 2020. W W W . ARTISANSPIRITMAG . C O M