Crushpad Syndicate Brings Crowdfunding to Wine
on 15/07/11 at 2:26 pmWine
Crushpad, with locations in Sonoma and Bordeaux, today introduced the beta of Crushpad Syndicate to provide prospective wine brand owners a tool for raising money by distributing investment across communities of investors. Using techniques pioneered by companies such as Kiva, Kickstarter and ProFounder, Syndicate leverages the power of communities to achieve the financial strength necessary to operate a commercial wine brand while providing a network of motivated investors to ultimately drive sales. This symbiotic relationship between winery and investors has been a successful formula for larger wineries and now Crushpad is offering brands producing as little as 50 cases the same financial tools to create their own investment syndicates.
Started in 2004, Crushpad’s mission was to democratize winemaking. With over 5,000 unique wines created, it has since emerged as the world’s largest custom wine producer for both hobbyists and small commercial wine brands. In 2006, Crushpad Commerce was launched to provide world-class wine distribution and sales services to new boutique wine brands and it has since launched over 200 small commercial wine brands, many of whom have received scores in the 90-95 range from wine critics and publications such as Robert Parker, Wine Spectator and Wine Enthusiast. Crushpad Syndicate extends the mission of democratization to financing: wine enthusiasts can raise money rapidly, produce wine from top vineyards and operate a profitable commercial wine business without quitting their day job. Syndicate can be used to raise money from 5 to 500 investors.
An example of today’s crowdfunded model is Savant Cellars, headed up by wine enthusiasts Stephen Barrett, Alvin Murgai and David DePoyster. David DePoyster from Little Rock, AR told us, “Our business plan calls for 175 investors from all across the country to take part in the brand. In exchange for their investment, these individuals become members of the Savant society called Eleveurs. The Eleveurs can share in the profits as well as a number of other benefits including investor-only reserve bottlings, an invitation to our annual Black Blazer & Blue Jeans event, and some pretty nice Savant Cellars swag. We’re building something of a wine society that we think will be fun, potentially profitable and prestigious.”
Syndicate provides tools for business planning, financing and regulatory reporting. Because raising capital is a highly regulated activity, Syndicate ensures that federal and state guidelines in all 50 states are complied with and that paperwork is filed in a timely manner. Syndicate provides all of the necessary documents and clients can elect to do the work themselves or outsource the entire process to Crushpad. Syndicate supports different financing approaches, including debt, equity and revenue share models.
A typical business model for a small-production winery might include eight investors at $5,000 each, for a total capitalization of $40,000. If the wine brand owner uses the revenue share model and dedicates 20% of revenue to investors over seven years, each investor could receive $7,500 for a total profit of $2,500 (10% annualized). For more information and sample scenarios, visit www.crushpadwine.com/sell/syndicate/examples.
In addition to financial benefits, Crushpad Syndicate provides investors with the pride of ownership and the numerous social benefits that come with being in the wine business, including the ability to entertain people at Crushpad’s Sonoma and Bordeaux locations, the ability to purchase their wine at cost, and access to logo merchandise. Investors can also serve as a sales driver by extending the winery’s presence among their social network. There is very little risk for investors, and in the worst case they receive wine.
“We have noticed a very clear trend in our client base,” said Michael Brill, Crushpad CEO. “Clients who are groups of people make more wine, sell more wine and have more fun. Wine is an inherently social product and Syndicate not only helps obtain the necessary startup capital and provides a built-in marketing team, it also makes the whole thing a lot more fun.”
Founded in 2004, Crushpad is a luxury winemaking service where wine enthusiasts, restaurateurs, wine retailers and boutique wine brands can craft small lot wines of 25 to hundreds of cases per year. With locations in Sonoma and Bordeaux, Crushpad sources fruit from highly regarded vineyards in California and Bordeaux, and provides winemakers, advanced facilities and label design to fashion world-class wines, and innovative online tools that enable wine enthusiasts from across the globe to participate in the winemaking process. For more information on Crushpad visit www.crushpadwine.com.