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Brewery & Distillery
Craft Brewery
If you — like many other small business owners — sourced from individual or institutional investors,
were able to obtain at least a portion of your orig- as opposed to investing in companies using cap-
inal capital through friends, family, or other inves- ital sourced from public equity markets like the
tors, this may not be a possibility further down the
road. This is where that “finance” hat comes into
play once more. In order to emerge from uncer-
tainty with a brewery or distillery that is ready to
continue growing, you as a founder or owner are
required to find alternative means of raising funds,
especially if your overarching aim or goal is to land
an eventual, profitable exit. But where do you
start?
Here are some ways that you can use as means of
obtaining additional growth capital for your small
brewery or distillery business when reaching back
out to friends and family is no longer an option.
Understand the Realm of
Private Equity Investments
As the Managing Director of Bacchus Consulting
Group and its capital management fund, I have
more than twenty years of experience managing,
consulting for, and investing in more than a handful
of small, independently-owned brewery and distill-
ery businesses. I have helped dozens of businesses
in the industry understand their options when it
comes to raising growth capital through VC invest-
ments, the separate stages of fundraising, and the
impact that each fundraising option has on those
businesses.
Private Equity Funding
When the time comes to look into raising growth
capital for your small brewery or distillery busi-
ness, the most prominent option you will run into
is private equity (PE). To put it simply, PE involves
investing in companies using capital that has been
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NASDAQ or New York Stock Exchange.
For the sake of insight, the general thesis of any
PE investment is three-fold. A PE investment is
made to: firstly, purchase a company (or portion of
a company) using significant leverage and a mini-
mal amount of equity; secondly, utilize the industry
expertise and synergies of the PE investor(s) in
order to maximize the growth and efficiency of the
acquisition or investment made, and; thirdly, to sell
that acquisition in an approximate period of 3-7
years based on the company’s improved metrics
and lowered levels of debt.
A common misconception with PE funding is that
giving away equity in return for capital is “free,”
but this could not be further from the truth. Selling
equity for capital is simply a means of delaying pay-
ment. With PE funding, there’s no true cap on what
you can give away in return for the growth capital
you want or need. If you believe in your business,
you’re better off acquiring debt rather than selling
a portion of your equity. When you give away equi-
ty, you’re giving away infinite returns in perpetuity.
Alternative Lenders
(Non-Bank Financing)
Some sources of alternative financing include:
● Merchant Cash Advances (e.g., Quickbooks cap-
ital, Shopify capital, AMEX Merchant Finance,
etc.);
● 2nd Lien Lenders (similar to a 2nd lien on a
home mortgage) and;
● Unitraunche Lenders: a hybrid lending model
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