Beverage Business INSIGHTS:
First Beverage Capital, whose profile just rose dramatically when core investment Activate drew substantial commitment from Tata Group, is ready to think small, too: it’s hanging out shingle of bev-incubation fund that will make investments from $250K to $1.5 mil in promising bev concepts, providing bridge between angel level and private-equity shops that typically want to deploy $3 mil or more. And to better capitalize on distribution-centric focus – issue cited by nearly every BevNet speaker as new-brand bottleneck – co also is venturing into consulting with The Beverage Intelligence Group, with beer wholesalers looking to move into NAs among prospective clients. Here are details offered to BevNet Live crowd by First Beverage chmn/ceo Bill Anderson:
First Beverage Incubation Launches in Jan Unit will move into operation in Jan – don’t send plans quite yet, Bill pleaded to audience filled with capital-starved early-stage entrepreneurs. It aims to fill problematic gap between friends/family and angel investors, at small end, and institutional investors who typically need to deploy capital in multimillion-dollar chunks. Fund is starting with $10 mil raised from current and former distributors and will be seeking 10-15 targets to receive equity checks in $250K to $1.5 mil range. Fund aims to address situation of founders who may have started with $300K from parents but find themselves unable to land institutional round on favorable terms, just as they’re seeing encouraging proof of concept. It also will seek to employ its industry expertise to help startups operate more efficiently, say by encouraging them to share back-office functions.
Consulting Unit Will Emphasize Distribution as Strategic Issue Beverage Intelligence Group launched 3 mos ago and currently numbers 5 unidentified clients. Unit also draws on recently announced alliance with Bump Williams Consulting, and has distribution-centric focus, addressing key strategic issue that, as Bill described it, too often gets short shrift from early-stage entrepreneurs. In acceding to request to carry brand by 1 distrib, for instance, they may not realize that it carries implications for markets across country – say, if same family operates houses elsewhere.
First Beverage Capital Background Tho First Beverage Capital is still relatively unproven in segment, over 16 mos of its existence so far it’s perused 200+ biz plans and held face-to-face meetings with 60 entrepreneurs, giving it broad insight into bev sector. Its first investment was cap-activated Activate line, new twist (literally) on enhanced waters that’s drawn lotta interest. Co recently helped with $6 mil round that included $3 mil from Indian tea giant Tata, which made follow-on commitment of $15 mil more. It also has taken stake in Thomas Kemper Sodas. It’s also active in alc sector. Why so few investments so far? “A number of not-so-great business plans” out there, replied Anderson. He likes to see sound management team, differentiated product and well-thought-out distribution plan, often based on nailing core region before expanding. “We’re not a big fan of going thin and wide,” Bill observed. Certainly, Activate has followed region-by-region plan, starting in LA.
In contrast to other PE shops working space, which may have broad consumer packaged goods focus, or at least segments like food/bev, pharma and services that can be grouped as “healthy lifestyle” subset, First Beverage only looks at bevs, with special emphasis on distribution issues. Brain trust includes execs who formerly had substantial distribution responsibility at Coors and Anheuser-Busch; tho it’s lighter on NA vets, operations expert Joth Ricci was gm at multisector powerhouse Columbia Distributing and for a spell ran Jones Soda. Related operations within LA-based group include First Beverage Realty Partners and First Beverage Financial, which recently orchestrated sale of Southeastern wine/spirits distributor to McLane, potentially ushering in new chapter in convergence of NAs and alc bevs.