Keep Calm and Carry On
I struggled the entire time to keep my emotions level, but it’s impossible not to have some reaction to a successful or failed pitch. Towards the end, when I was confident the deal would get done one way or another, I hated hearing “no” mostly because it meant I had to spend more time fundraising. “Maybe” was the absolute worst answer: it almost definitely means months of disappointing follow-up calls ultimately ending in a “no.” Only one “maybe” became a “yes” for me.
What the Hell Is Craft Beer?
Another unexpected challenge I encountered is that most of the people I spoke to had very little understanding of craft beer. Hell, some people had never heard of “microbrew” and found the idea of starting a small brewery completely exotic. One person asked, “Are you prepared to giveaway truckloads of the stuff before anyone will buy it?” When that’s the starting point for a discussion, it’s hard to convince a potential investor that bearded men will stand in a sweltering parking lot for 4 hours to buy a single bottle.
You Are The Investment
Something else that caught me off-guard was the variability of people’s interest in the offering documents and business plan, which I had agonized over for months with the help of various attorneys and accountants. Some potential investors asked pointed questions about language choices and grilled me about the particulars of various obscure clauses. Others showed a lot more interest in me than in the documents. As one investor explained, “I’d rather sign a bad piece of paper with a good person than a good piece of paper with a bad person.”
Most Investors Are Not Beer Geeks
Along the same lines, very few potential investors displayed any interest in tasting the beer itself. Most were self-aware enough to confess that they couldn’t tell good beer from bad, and I even ended up with two investors who don’t drink at all (though both are well-seasoned in the ways of money). I had started the fundraising process thinking that the beer would be the biggest selling point; it turned out to be a footnote (incidentally, this helped me understand why lousy breweries still get funded).
In the end, fundraising was not only different than I’d imagined, it was much, much more exhausting, expensive, and challenging. A process I thought would take 3 months took 6, and by the end, I was so sick of it I couldn’t wait to dive into the fascinating world of building codes, which, by comparison, are significantly more relevant to actual brewing.
Ultimately, what made it work was not the beer, nor the documents, nor craft beer’s gaudy numbers – though they all helped. It was my ability to convince people it was a good investment, that I could execute the business plan, and that I wouldn’t screw them over. Other people helped get my foot in the door with potential investors—for which I am eternally grateful—but once the conversation started, I had to sell them on it.
Fortunately, it worked, and now I can get a little closer to making beer.
—
Very interesting! Best of luck to Modern Times Beer.
As an entrepreneur also seeking to persue dreams…this article shows that it is possible…all while showing the challenges along the way
I look forward to enjoying Modern Times Beer after your entire plan manifests!
Pingback: How I Raised $1.25 Million to Start My Brewery | Modern Times Beer
Bravo Jacob! I wish you all the success in the world and look forward to buying your beers once they go into production.
Good luck amigo!
Congrats, Jacob! Given the relative lack of beer knowledge among your investors, I’m curious to know how you structured the decision-making process. Are all of them passive investors? Or does their business acumen give them the ability to shape your business?
You may not be able to answer this publicly, but I know personally that this is an important issue to address prior to raising money — so both sides know their role once the business takes shape.
Cheers and best wishes!
Sean
Pingback: How Much Does It Cost to Start a Brewery? | Modern Times Beer
Pingback: How much does it cost to start a brewery? Startup founder chimes in | BeerPulse
Pingback: 2012: The Year In Review | Modern Times Beer
I have a question as one that is considering a brewing venture, did you raise all 1.25M in cash? Were there any bank loans/small business loans involved? What kind of ROI/Benefits did you offer your investors? How many total investors did you end up needing and what was the mean investment amount?
Thanks!
Yup, all cash. No loans involved at this point, although I’m certain there will be eventually. Can’t comment on the exact deal I offerred investors, but the reality is that you’ll need to offer whatever gets you the capital. We have 12 investors, amounts ranged dramatically.
Cheers,
Jacob McKean
Modern Times Beer
Jacob, congrats on finalizing your funding. I have been following you and cheering on your efforts. I am too looking at a similar fund raising effort. My question is around equity, if you are so willing to divulge, how much by % of the company did you have to give up? What was your valuation number? Good luck and look forward to tasting the product soon!
Thanks for your time,
Gary
Thanks for this article, and congratulations on your fundraising efforts!
How much total equity did you end up giving to investors in order to lock down the 1.25mil? If you can’t give the exact amount, please share just a range, ~10%? ~20%, ~50%?? More?
It’s awesome to read this considering that I am drinking your brew as we speak.
Pingback: Today in Beer Laws: No Contract Brewers at Beer Festivals | It's Not Just the Alcohol Talking
hello Jacob , I want to take over a state owned brewery in my country that is currently not producing . can you help me with interesting investors?
please respond .
Thanks for this article!