finding investors to go commercial

[BoomTown]

I realize this is a 'hobby shop' blog, but knowing I'm not the first hobbyist to want to go commercial, I'm wondering if anyone here has ever explored finding outside investors to help them finance the first hurdles?

We've been dancing with friends and relatives, and we're at the point where we need to explore bringing in outside investors to beef up the 'cash-on-hand' part of the business plan. We'd like to know if anyone else ever explored this frontier, and if so, how they went about it. Having read a recent WSJ article about David Byttow who worked this approach successfully, and a different article about the Balcones Distillery in TX, we want to understand the path better before striking out along the path.

Feel free to PM me if you like, or simply post your experience here, and I'll get back to you.

[DAD300]

Check out ADI if you haven't.

You have to be careful about raising capital. There are some weird rules for a distillery.

[Jimbo]

+1 to DAD's comments.

Its common to raise capital, its how most start up, shouldnt have too much problem if you have a solid business plan and can compel someone youve got the steps to success figured out and have a reasonable chance to follow through on the plan. There's plenty of people around with too much money and looking for something, almost anything, better than the shite interest rates these days or the stock/futures market game.

The bigger problem will be watching your own interest. The folks with money are cunning and shrewd. Its why they have the money to begin with. Dont be greedy, and dont give away controlling interest, or you might find the same fate as Chip at Balcones.

[DAD300]

They only buy 30%, but then they assume some debt or pay for equipment and bang...they own more than you do...

[Jimbo]

They only buy 30%, but then they assume some debt or pay for equipment and bang...they own more than you do...

+1 again. Be careful boom. Another way they can fornicate you, is buying someone elses interest, to end up with >51% and suddenly, its not your stillery anymore, and if they dont like you, they might even fire you, ask Chip how that feels.

[Bushman]

Check out Teton Distillery in Idaho, I believe they started with family but wanted to expand and went public. The owner has been open on several of the hobby distilling forums along with ADI.

[MichiganCornhusker]

Another way they can fornicate you,....

Ah, Jimbo, such a way with words, never seen it used quite like that...

I heard a story a while back about a guy that had a dream to revive a scotch distillery. I think it was Bruichladdich. He got together a bunch of investors and they pulled it off.
And then they sold off to someone like Remy, or something. He didn't really want to sell, but didn't have the say at the end. Great story though...

[BoomTown]

yep, there are potholes along this road, which is why I'm hoping anyone who's seen them will continue to tell me where they are. Also would love to hear from someone who made it work for them...it's easier to follow a success model than avoid the potholes...

Boom

[Red Rim]

Good Luck Boom.

I am rooting for you!

I have a friend that has offered to help out, but I really need to get my ducks in a row.

Each of us are chasing this dream, to do what we love. To do what excites us. To take our rare skills and eventually eeek out a living without bankrupting our family. Soon, very soon, I hope to make this announcement as well, but I am being patient.

I would love to discuss your distillers school with you, and perhaps Jimbo too. It would be nice to compare notes and see what you have learned.

Good luck my friend!

[bearriver]

I have politely declined interest from a wealthy friend on such matters. Friends and business rarely mix well.

[Red Rim]

Agreed.

However, I have had a friend who wanted to be partner in a Dutch Bros business. I ran away screaming..... Because he was all about the money. I would lose no matter what.

This other friend just sold his robotics business in Boulder for 5 M.. Kind, meek, brilliant, is hands on helping on a remodel on an investment building. A friend who you can talk carpentry or SCR controllers. Choose your friends wisely, but some times, your friends choose you, honored to call him a friend.

[Snowe]

I'm pretty late, and don't know how you're structured, but if you're incorporated you could try selling different classes of stock. Keep the voting stock for yourself and sell off a class B stock. It won't fly if you're looking for angel investors, but that's probably who you want to avoid anyways.

I've also seen some breweries sell seats and mugs at their place for $1-2k. They basically give special discounts to 'club members' in exchange for the investment, but without having to deal with stock or ownership.

[BoomTown]

I'm pretty late, and don't know how you're structured, but if you're incorporated you could try selling different classes of stock. Keep the voting stock for yourself and sell off a class B stock. It won't fly if you're looking for angel investors, but that's probably who you want to avoid anyways.

I've also seen some breweries sell seats and mugs at their place for $1-2k. They basically give special discounts to 'club members' in exchange for the investment, but without having to deal with stock or ownership.

Thanks Snowe, we're very pleased to get your ideas, and may even try a couple. We are selling stock, and would welcome an angel if one were to reveal itself. We aren't locked in to being a traditional corporation, and would consider an employee owned structure...with stock ownership being a condition of employment - that sort of thing. Meantime, we are trudging along, bootstrapping the operation from savings and owner provided labor.

We anticipate that we'll have the green light to start producing product next month, but our ability to produce enough product to justify the the costs is hinged on investing a big wad of money right away. We think since we're up and running, attracting the money to fund the expansion ought to get easier.

Thanks for your ideas...we're considering a model similar to how brewers have sold 'memberships' for discounts and other recognition, too - while still selling Class A stock. We don't have any illusions about sharing voting rights relative to investor exposure.

[Snowe]

Yea, that was a piece that I've struggled with especially after the Balcone's incident. I'm also a little bit of a control freak, so I'm looking at some inventive ways to raise capital

[3d0g]

I'm having good luck so far with SBA. Doing a 504 for land / construction.

[BoomTown]

OK folks, this ship is launched! We finally got out credentials from both the state, and feds, and our Trademark, and now our Label approved.

We are good to go!... Still hoping for an A level investor, but what the hey....you only live once! Hope to see many of you at Jedfest II!

Boom

[jedneck]

OK folks, this ship is launched! We finally got out credentials from both the state, and feds, and our Trademark, and now our Label approved.

We are good to go!... Still hoping for an A level investor, but what the hey....you only live once! Hope to see many of you at Jedfest II!

Boom

[Truckinbutch]

[WhiteDevil504]

Congrats boom, that's great news!

[BoomTown]

Thank you! All of you. It's been a long road, and it looks like we've only just gotten to the bottom of the hill, but its been fun too.

Boom

[RandyMarshCT]

Congratulations!!!

[bearriver]

Whoo!

Congratulations Boom. I'm really happy you're getting a dream off the ground.

[hellbilly007]

Congrats Boom. I wish you the best at chasing the dream.

[raketemensch]

Makin' it real, nice work man.

[ShineonCrazyDiamond]

Boom, I am so proud and happy for you. I remember you telling us your plan this time last year at Jed fest. Best wishes and congratulations.

[woodshed]

Way to go boom. Long road it is. And it is just starting. Enjoy the journey.
It's worth it. Congrats.

[Jimbo]

So happy to see you make it Boom., With a good dose of luck Windy and I will follow in your path soon. Its a daunting task for sure. CONGRATULATIONS BUDDY!!! This is cause for some serious celebration, you coming to S3:16?

[bitter]

Awesome Boom!!!!!! Congrats!!!!!

B

[BoomTown]

So happy to see you make it Boom., With a good dose of luck Windy and I will follow in your path soon. Its a daunting task for sure. CONGRATULATIONS BUDDY!!! This is cause for some serious celebration, you coming to S3:16?

Thanks Jimbo!.. not sure about S3:16, though that would be nice! I graduated H.S. from Leadville, CO., so there are several reason's we'd love to make that trip, but this next 3 business quarters are really packed with building out our PA Distillery's equipment line, and getting registered to distribute into several states. I'm really choked for bandwidth, but I sure regret not having made the trek this last year.

The Lady Di and I do plan to attend Jedfast II, though we've not yet figured out how or where we'll sleep. We gave up our camping gear several years ago, and I'm just hoping Jed can find us a place on a couch....We plan to drive up on Friday PM. which will put us up there around or just after suppertime. We're planning on being around all day Saturday...

Jed, Looks like I'll have to bring some more store bought bread, cause I just don't have enough bandwidth to spend any time in the kitchen. See you all soon!

[jedneck]

Boom are the kids coming along also? And far as I know I still have a camper coming that you claimed.