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Jun 08, 2022 View:

finally - Sec Moving In The Right Direction For Investors

Just saw that the SEC has begun to move forward (after about a year of delays)...

This is good news for those looking to attract accredited investors, but as it pointed out: a) not yet effective and the date hasn't been announced, and still requires significant filings and responsibilities on the part of the company raising funds.

I still think this is a great step towards a more open investment marketspace and access to capital.

Those of you seeking funding, how does this help/hinder your plans?


It doesn't affect my plans, but I like the move as a matter of principle.


This only really applies if you are offering stock sales to the public, right? Or is there more to it than that?



A future SEC change (yes I'm optomistic) will allow better and easier direct stock sales to the public via the crowdfunding model. This current change allows a company to publically advertise for accredited investors - huge opportunity for a startup if you do not have a rolodex of high net worth individuals that you can ask for referrals.


The biggest changes I see include the ability to come out of the shadows when looking for investors. Instead of quietly networking, you will be able to use the equivalent of a megaphone to broadcast your investment opportunity to the world by advertising. Theoretically you will reach more investors this way.


The bigger advancement might be in a few months, when they review the definition of "accredited investor". It may disappear, or be refined to include more of the population.


I think the problem with this approach is that you would have to give out too much proprietary information in order to attract investors. In other words, you'll have to spell out exactly why your product is better than what is already out there -- what differentiates you, what your marketing plan is, etc. Any investor is going to want to know these things, and I would not be comfortable sharing them with the wide world.

Also, I've found that our investors are all people who know me. As one said, "there are a lot of good ideas out there. That's not a guarantee of success. You need good people too." In other words, an investor has to know that the good idea is going to be executed well, and that the people doing the work are going to work hard (not just a vanity project, e.g.) and do excellent work. It would be a harder sell for strangers to get comfortable with management, I would think. (though, it could be done for sure, just that it might be a bit harder).

We are halfway through our raising capital phase, so this is very much on my mind!


In my opinion, worrying about sharing too much of your plan should be low on your list of risks. As you mention in your second paragraph, people are the key. Even if two businesses start out with the exact same business plan, the chances are extremely high that by the time they are up and running, they will have diverged significantly due to their different interpretations of the written plan. I think you're correct that investors will want to know just as much about you and your team as they will care about product differentiation. In this stage of the craft distilling game, the tent is still very large and there is room for many interesting variations like aged gin, pine liqueur, crazy grain whiskeys, vodka made from pumpkins, and anything else you can dream up. I think locality is just as important as a creative product.

I love how open everyone is on this forum and in this burgeoning industry in general. It's a good time to start a distillery.

Very best of luck on your capital raise Leslie!



I forgot to add that we just completed a capital raise using a variation of crowdfunding.

CNBC wrote a nice little overview of our process:

We used a local investment firm called Localstake to pitch our investors. We have both accredited and non-accredited investors in our round, many of whom had never before invested in a private company, much less a startup. That's a risky proposition in that we have to manage expectations very clearly, but a majority of the less-experienced investors are friends or family, so we were comfortable going this route.

I'm happy to discuss the process if anyone is interested.



By all means, Quirk, elaborate.



I saw that you raised $850,000 and according to the article that represents about 1/3 (33%) ownership of the company. Are those numbers from the article correct?

If so, did your business plan actually value the new company at $2.5 million that early? Why?

I am not challenging that valuation or anything. I fully understand where you are coming from and the potential for this type of business.

The reason I ask is because we have been raising money also to fund our expansion. We have reached over 50% of our goal. But our situation is a bit different. We have two years of history now, products selling, etc. When discussing such things as valuation with potential new investors, they want to know why the current owners believe the business is worth $$$.

I pose the question to you because I am interested in your reasoning for the valuation you started with.



Hi James, our valuation was done by Localstake, the investment firm. They really helped us determine a fair valuation for us and our investors. In terms of methodology, I can't say exactly how it was calculated, but it was a combination of comparables, EBITDA projections, and factoring in what the founders were willing to sell off.

We went through a fairly deep vetting with Localstake, and we feel that they really helped us refine our plan before presenting it to investors in the form of a PPM. They did charge a fee for their services, but we feel it was very fair considering the amount of work they put into the deal, and the investors they brought to the table.


Jedd, definitely happy to elaborate. Anything in particular you want to know that wasn't in the article?


Hi Adam

I wonder if you might advise what percentage of "total fixed, and first years operating capital" the $850,000- raised for the 1/3rd share represents as a percentage of your own (founders) start-up capital ? I assume as a start up you didnt come Into the deal with significant "sweat equity or product/brand goodwill"?

Congrats on the funding




It takes a hell of a lot of bottles to pay that money back. I think it is all ways easier to start small and go big later. Besides know one wakes up and instantly has a super product.

I would highly suggest that you know the basics of what you're doing.

If you need a start up consultant I can help you with that.

Drop me a line at [email protected] or call 515 559-4879.

Best of luck!


sorry ms

[email protected]


Roger - the founders contributed a few years of work researching and planning, and a small amount of capital (five figures).

Dehner - We like to think we know the basics of what we're doing.