How to Find Investors for Your Craft Brewery
Take a moment and visualize your dream brewery — a bustling taproom, your favorite music pumping out the speakers, a food truck out front or delicious food coming out of your kitchen, and of course fabulous brews of your own recipe. Sounds great, right?
You can’t wait to see this dream become a reality, but in order to make that dream come true, you’re going to need to find some money.
Starting a small brewery can cost you between $500,000 and $1 million, so unless you’re already independently wealthy, it’s most likely you’ll need to find others to invest in your business.
We’ve already covered what you need to have prepared when looking for investors, where to find investors, and what to look for in a good investor in a different blog post, so for this one, we’re going to dive a bit deeper into brewery-specific investors and strategies you can take to attract them!
Why do I need investors?
As we mentioned before, starting up a brewery costs a pretty penny. But what exactly is that money going toward? Well, if you’re a homebrewer already, you know that equipment doesn’t come cheap, so just imagine what that looks like scaled up!
A startup brewery will need kegs, kettles, a bottling or canning line, refrigeration, fermentation tanks, storage tanks, cleaning equipment, tap handles, labeling machines, and more. And this is just for production!
You’ll also need ways to distribute, pay your employees, build out a taproom if that’s your plan, and pay for licensing and insurance.
Most brewery owners do end up putting some of their savings into starting up their business and typically do so with their business partners to a sizable amount. Still, your savings most likely will only scratch the surface of what you need, so you’ll eventually need to find funding in other places.
Who wants to invest in a brewery?
There are many different kinds of people who wish to invest in a brewery. Some might be more suited to an equity relationship, while others would rather do debt lending — you can learn more about the difference here. Let’s walk through a couple of investor profiles.
A very common investor type are professionals in other fields who have always wanted to own a brewery but have never had the time, skill, or energy to put the work in themselves. For these investors, the return on their investment may be less important (but still important!) in comparison to the feeling of partially owning a brewery — and the potential perks such as free beer. These investors will usually want equity and will want their opinions to be heard, but often they’re great opportunities for lots of money at once. However, another major perk to this type of investor is that they often will become brand advocates and encourage their network to come to the brewery, creating more loyal customers.
Brandon Beer Buff
The second kind of investor is your favorite craft beer nerd. There are so many hobbyists out there who are not only passionate about beer, but they’re also passionate about their communities and keeping local breweries afloat. You can commonly find a Brandon on a beer forum like BeerAdvocate or Reddit. Not only would they potentially be interested in investing financially, but they could also be a great resource for building your brews as well as promoting your brewery to their friends and family. Many Brandons are already members of breweries through mug clubs or similar programs, so there’s a potential that they might be interested in deepening that relationship as well.
Another common kind of investor is those who are already in the industry themselves. They could be established brewers looking to support an up-and-comer, they could be working in the malting industry, or maybe they sell hops! Often, these kinds of businesses want to invest not only for their own financial gain but also because they know that by supporting you they’re supporting their own business’s strength.
One of our more recent campaigns, Western Reserve Distillery, received an investment on their Honeycomb campaign from a farmer looking to support high-end distilleries such as theirs. It was the largest single investment in Honeycomb’s history, showing that Industry Ivans are serious about investing in businesses they believe in. If you’re looking to find an Industry Ivan, look to suppliers you know of who might be interested! Chances are they’re as passionate about the industry as you are and they might be willing to invest in you.
What about crowdfunding?
A fantastic way of jumpstarting your brewery is by running a crowdfunding campaign! Crowdfunding through Honeycomb Credit is a version of debt funding where you can garner funds from community investors, who in return will earn interest on their investment rather than own equity of your brewery.
There are many reasons to consider crowdfunding to fund your brewery, the first being that it can help strengthen your brewery’s customer base before you even open your doors!
Take Back Alley Brewing Company, for example, which raised $200,500 through their Honeycomb campaign. Back Alley Brewing was started by a group of five friends who are all passionate homebrewers. They noticed that their neighborhood was seriously lacking a good brewery, and they decided to open one up themselves.
Before they’ve even opened, Back Alley Brewing has been able to grow their social media following as well as their potential fan base, thanks to the 190 investors who contributed to their campaign as well as the press and attention that the campaign generated.
Once they open, Back Alley Brewing will already have a line out the door, full of customers including their community investors, who are eager to taste Back Alley’s brews and see what their money has helped to create.
Find brewery investors who care about you through Honeycomb Credit
As we’ve seen, different investors have different motivations as to why they want to put their hard-earned cash into a small brewery, whether it’s to signify their love of the craft or strengthen their own business in the process.
What makes Honeycomb investors unique is that you’re tapping into people who invest because they believe in putting their money where their Main Street is. There are so many people in your personal network, as well as the neighborhood where your new brewery will reside, who will want to invest in your brewery and see it succeed.
To learn more about how Honeycomb is helping small craft breweries open up and scale up before toasting “bottom’s up,” check out www.honeycombcredit.com/beer