Hats off to you! Starting and growing a craft or regional brewery requires passion, dedication, and, most importantly, capital. As an aspiring brewery owner, securing funding and raising capital is a critical step in turning your dreams into a successful reality.
In this blog, we will explore essential aspects of becoming investor-ready from including crafting your story to devising your exit strategy, determining potential returns for investors, and formulating effective go-to-market and marketing strategies.
Where do you start first?
1. Crafting Your Story :
Investors are not just looking for a business plan; they want to connect with your passion and vision. Your story should convey why you are starting the brewery, what makes it unique, and how it fills a gap in the market. Share your background, experiences, and the inspiration behind the brewery. A compelling story can make your pitch memorable and create an emotional connection with potential investors.
2. Developing a Solid Business Plan:
A comprehensive business plan is a roadmap that outlines your brewery’s objectives, strategies, and financial projections. It should include market research, competitor analysis, your target audience, marketing plan, and sales strategy. Highlight your competitive advantage and how you plan to scale the business over time. A well-structured and data-driven business plan demonstrates your understanding of the market and your ability to execute your vision.
3. Preparing a 3-Statement Financial Model:
A robust financial model is crucial to showcase the brewery’s financial viability and potential profitability. It should include the income statement, balance sheet, and cash flow statement, providing a clear picture of revenue generation, cost management, and cash flow projections. Investors want to see how their capital will be utilized and what returns they can expect. In the words of a recent investor (who shall remain nameless) “a business plan without numbers is a novel”
4. Creating an Information Memorandum:
An Information Memorandum (IM) is a comprehensive document that provides detailed information about your brewery and the investment opportunity. It should include the company’s history, products, market analysis, financial projections, risk factors, and the terms of the investment. The IM should be well-organized, visually appealing, and easy to navigate.
5. Delivering a Compelling Pitch:
When presenting to potential investors, your pitch should be clear, concise, and engaging. Focus on the key points of your story, business plan, and financial projections. Highlight your unique selling points and demonstrate your passion and knowledge about the brewing industry. A compelling pitch can leave a lasting impression and prompt investors to take the next steps.
6. Identifying the Right Investors:
Different investors have varying objectives, risk tolerances, and investment horizons. Identify investors who align with your brewery’s vision and are interested in the craft beer industry. You can approach individual angel investors, venture capital firms, private equity groups, or even seek funding from friends and family. When looking to raising capital ensure that the investors’ values and expectations match your own to foster a successful partnership.
7. Devising an Exit Strategy:
An exit strategy outlines how investors can eventually exit their investment and realise returns. Common exit strategies include selling the brewery to a larger company, going public through an initial public offering (IPO), or conducting a management buyout. Having a clear exit strategy demonstrates your commitment to ensuring investors’ interests are taken care of in the long run.
8. Determining Potential Returns for Investors:
Investors are interested in the potential returns on their investment. Outline the expected return on investment (ROI) and the timeline for achieving these returns. Be realistic and transparent about the risks involved and how you plan to mitigate them. Demonstrating a clear path to profitability and ROI will increase your appeal to investors. Typically Private equity or Venture capital will be looking for a 3X on any capital invested over the duration of the investment period.
9. Formulating Effective Go-to-Market and Marketing Strategies:
The success of a craft or regional brewery depends on effectively reaching and engaging customers. Your go-to-market strategy should outline how you plan to distribute and sell your beer. Consider both on-sales (selling directly to consumers through your taproom) and off-sales (selling to retail outlets and distributors). Your marketing strategy should focus on branding, social media presence, events, and community engagement to build a loyal customer base and create buzz around your brand. Most retailers in the current market will view followers on social platforms one matrix on deciding whether to stock your product or not, how times have changed!!
10. Test And Assess
Marketing strategies do not always work first time. They are assessed, remodelled, re-engergised and re-launched, taking all of the elements that worked, and changing the elements that had no impact on your target market. You will only know what worked by measuring your activity against your goals, when you find what worked for you, expand on it, quickly before your competitors do.
In conclusion, raising capital for your craft or regional brewery requires careful planning and a compelling presentation of your business vision and financial prospects. Being investor-ready means having a solid business plan, financial model, and information memorandum that showcase your passion, understanding of the market, and potential for growth.
By identifying the right investors, formulating an exit strategy, and offering potential returns, you can attract the funding necessary to turn your brewery dream into a successful reality. With a well-crafted go-to-market and marketing strategy, you can then bring your unique craft beers to the masses and build a strong and loyal customer base.
Remember, the journey to securing funding may take time, but with persistence and dedication, you can find the right investors who share your passion for brewing and believe in the potential of your craft or regional brewery. If you would like to have a conversation with our brewery expert Richard Smith or any of our team on raising capital for your business, we would be delighted to hear from you. Fill in the form below and one of the team will be in touch to discuss how we can help.
