In order for your business to thrive, securing financing is essential. With a variety of methods available to help you reach your goals, it can be overwhelming to determine the best option for you. Let's explore some of the different avenues to acquire the capital you require.
"Angel" investing is a significant form of investment in the food, beverage, and alcohol industry and is expected to continue growing in the coming years. The term "angel" originates from patrons who supported Broadway shows in the past. Today, these accredited angels typically have an annual income of over $200,000 or a minimum net worth of about $1 million. The amount these investors contribute depends on the business, circumstances, and their interest in the venture. While some are willing to give out money to projects they believe in, others provide loans that turn into convertible debt, or equity. If you’re interested in learning more, you can visit the Angel Capital Association website.
Venture capital comes with a lot of different nuances, so it’s easy to get confused when you’re reviewing this as an option to finance your business. In essence, a venture capitalist invests in ideas, nurtures these ideas, and then eventually exits. While that sounds relatively straightforward, it can get complicated. The firms that provide funding typically target companies with a solid business plan in the advanced stages of building their infrastructure. These companies are expected to reach a certain size for potential acquisition by a corporation or gain enough credibility for the public equity markets to take over from the venture capitalist. Working with this type of deal can offer significant benefits for the adult beverage industry, with individual firms offering valuable connections to support the growth of your business.
Bank loans offer a traditional form of financing, allowing you to retain control of your business. While the downside is the interest you'll pay, Small Business Administration SBA loans are accessible to alcohol beverage industry owners. These loans provide the opportunity to secure the necessary funds without sacrificing equity. If you're in need of a quick credit line, this type of financing could be the perfect fit for your business.
When the 2012 JOBS Act was passed, it created new opportunities for the adult beverage industry to engage in crowdfunding. There are various crowdfunding options available to assist in raising the necessary capital.
Rewards-Based
When utilizing rewards-based crowdfunding, you can secure the necessary capital even without a physical product. Campaigns typically run for 90 days, with each participant setting a financial "goal." By offering a reward that your company establishes at the start of the campaign, you can incentivize donations. It's crucial to choose your reward wisely, as it can greatly impact your success. Achieving your goal allows you to keep all the funds raised, providing revenue for your business without taking on debt or equity.
In comparison, debt-based crowdfunding is akin to obtaining a loan from a bank, but with the added benefit of lower interest rates and increased flexibility. In this method, investors receive shares in exchange for their investment, with the potential for dividends on profit shares. These investors also have the opportunity to sell their shares at a higher value as the company grows more profitable. While it may seem similar to equity, the main distinction, as noted by Investment Bank, is that it involves working with a firm to strategically distribute investments across a targeted market segment that aligns best with the startup's objectives.
One of the latest crowdfunding sources in the market, it is also rapidly expanding. This platform offers companies the chance to raise up to $1 million online within a 12-month period. Every investor receives a share or a percentage of ownership. What makes this method unique is that anyone can become an investor. Thanks to the JOBS Act, individuals over the age of 18 can now participate in an equity offering.
Choosing the best investment opportunity for your business can be a bit overwhelming. That's why it's crucial to collaborate with a financial advisor who can not only navigate you through the various options but also grasp the unique challenges of the alcoholic beverage industry.
At Brindiamo Group, we’re here to help you find success. Learn more about our financial solutions by visiting our website.