Funding

[GreginND]

As I take my baby steps toward my commercialization, I could use some help in figuring out how to fund my winery. You need money to make money. Most of my money will be tied up in buying my property. I have a few questions.

Has anyone tried or had any success in crowd source funding such as Kickstarter? I see many breweries raising capital this way but I haven't seen any wineries be successful yet.

What kind of grant opportunities have folks found to help? I know this differs by state and region, but I would like to know what has been successful - for both establishing vineyards and a winery.

Any suggestions on how to convince a bank to loan money without putting up a house or something for collateral?

Thanks!

 

[SLOweather]

If you are not borrowing against the land to buy the land, you might be able to use the land as collateral, but in this market, that might be tough.

Crowd sourcing is an interesting concept. Is there an active amateur wine making presence in your area? You could incorporate, and then sell shares to people, which would entitle them to come help and then get a deal on wine. Think of it as wine co-op, or wine club on steroids. It would take some bookkeeping, but could be fun. Just make sure that you control 50% +1 of the shares so you don't lose control. Once the winery is successful, the shareholders get dividends in the form of wine, $$ or both.

I know one winery around here is actively courting investors.

 

[TxBrew]

http://www.homebrewtalk.com/f41/i-am-opening-microbrewery-soon-wish-me-luck-259579/

Austinhomebrew is opening a brewery and used Kickstarter it seems successfully.

 

[BARBQ]

http://www.homebrewtalk.com/f41/i-am-opening-microbrewery-soon-wish-me-luck-259579/

Austinhomebrew is opening a brewery and used Kickstarter it seems successfully.

I remember that one. I got a beer glass!

 

[Duster]

I do not know much about it but you may want to check out Sam Adams Brewing the american dream fund.
I believe it is a fund set up to help small breweries get started.

 

[hobbyiswine]

Kick starter is worth a shot but you don't see any of the $$$ unless your goal is reached by the date. Depends on how much money you need. The brewery noted a couple posts above was on kickstarter for about 12k but I assure you that was a Very small portion of the startup costs. They are putting together a pretty big operation with a lot of brewers involved. I wouldn't try to fund an entire project through kickstarter but use it more as a marketing tool. Typically on sites like kickstarter you give "freebies" to your donors such as stickers, glasses, tasting parties, etc. yes you would see some return but I see most of it as a marketing tool rather than a way to actually gain $$$ for startup costs. For that I think the old fashioned route of a solid business plan and an investor or the bank is the best way to get real $$$ for your startup. Good luck!

 

[AmberLeBeau]

In Woodinville, WA quite a few new wineries have dabbled in a big of negociant winemaking to get some early cash flow going with wine they can sell out of their tasting room while they get their main winemaking operation up and running.

Personally, I always thought this was a great idea since it does get you a product that you can get to the market sooner and, if you want to do it under your own label, gives you a jump start on building brand recognition.

 

[Midwest Vintner]

From my experience, even WITH collateral, a bank is unlikely to give you a loan. We were looking for a small loan. They wanted 20% of it in cash and 120% of the rest in collateral (basically the house). My mother decided to cash in part of her 401k, which is risky. It just seemed getting the loan like that seemed foolish if you have any other option. Let's just say we were not happy with the few banks we talked to. Both my mother and I have VERY good credit AND decent paying jobs.

IMO, an investor is your best bet, but try to work a deal on paying back to where they are out after the money is paid. I'd rather not have another entity owning the winery, IMO. Make sure everything is in writing and have it legally done with witnesses.

Your other option, which a winery here locally did for a long time, is to grow the grapes and sell them to wineries. Use those funds to continue to build the vineyard and eventually you'll have enough to get started.

It's a long and tough road. We did a LOT of work ourselves to save money, but we still spent about 30-40k more than we thought. We built everything on the property (well, tasting room, septic) to be big enough to handle the MAX amount of wine would wanted to produce. We could have gone cheaper, but it would cost us again to rebuild/ build it bigger. There are things that eat your budget alive. Example, we were told by zoning that our "line of sight" from where we wanted the exit to be on the highway (it's a short road actually owned by the state onto a country highway), but they said it was not safe. So, we had a farm access that they wanted us to convert to commercial grade highway exit. That meant 24' wide with 8" of concrete AND it had to continue up to our property (15' over the ditch?). Not cheap.

 

[GreginND]

Thanks. I've been following you as you have established your winery. Congrats! It' looks great and it's always a good idea to build bigger than your current needs.

I have used much of my savings and a home equity line of credit to get the property and to get the house renovations completed. It is going to be better than I expected, actually. But I don't have much left to purchase equipment. Fortunately I will be able to borrow some of the equipment from a friend's winery and we can share some things like crusher/destemmers and presses for now until I can get some cash flow. I just have to get off my butt and get my TTB application submitted or I won't be making wine this fall.

I still plan to do a small kickstarter campaign once I get my licenses in place to try to raise some money to buy tanks and barrels. Haven't worked out the details yet. But if it is small enough (say $10,000) I think I could raise the money. It will help.

 

[Midwest Vintner]

Thanks.

I hope it gets going. It's a lot of work, but when you get open, it's worth it. We are already looking to expand here in the near future, but that was planned. We going to build a bigger production building with a 15' basement adjacent to the tasting room. I can't wait.

I wish you luck on your winery and don't give up!

 

[CHVDionysus1]

What is "Crowd Source Funding" such as "Kickstarter"and how does it work?

Thanks in advance,
Debbie Patterson
Cave Hill Vineyard

 

[GreginND]

http://kickstarter.com

 

[jswordy]

You need to get with your state ag folks. Here's stuff I found with a cursory Google search:

http://farmprogress.com/story-nd-farmers-receive-research-farm-grants-9-97001

http://www.business.nd.gov/businessInformation/apuc/

http://www.nal.usda.gov/afsic/pubs/agnic/susagfunding.shtml

http://www.northcentralsare.org/Grants/Apply-for-a-Grant

Here in TN, they give grants for all kinds of stuff involving small ag, alternative ag (like grapes and wine), ag improvement (they'll pay half of a bull or new hay barn), etc. Get with your state to see what you can qualify for. It can mean the difference between success and failure. Also get with your local Soil and Water Conservation District to see if they have anything for you as far as helping fund how you use the land. Vines may be a way to use highly erodable land and conserve it, qualifying for some funding, for example.

Signed,
Jim the Farmer

 

[GreginND]

Thanks Jim. Those are all great suggestions but unfortunately it has been a problem of politics to get state help with wineries and grapes. They have supported some of our research programs for the ND Grape and Wine Association but here it is the huge farms growing wheat, soybeans and corn that control all of that. So, I won't make any inroads there.

 

[grapeman]

Sounds like here in NY Greg. It is all the mega farms that get the funding. They say they help the small farms out, but then the regulations make the average person give up. Let me know what you find for funding sources. I haven't had any luck with any and must grow very slowly.

 

[jswordy]

Thanks Jim. Those are all great suggestions but unfortunately it has been a problem of politics to get state help with wineries and grapes. They have supported some of our research programs for the ND Grape and Wine Association but here it is the huge farms growing wheat, soybeans and corn that control all of that. So, I won't make any inroads there.

SARE is a federal program administered by multi-state regions.

As a rich old man once told me when I asked him his secret to success:

"If you think you shouldn't, you don't. If you think you can't, you won't. Success is all in your state of mind."

 

[jamesngalveston]

I was knew a girl that got 90,000 from the feds a year to study armadillo mating habits...she had like 4 in a pen, she never studied anything.

 

[DaveL]

I am pouring concrete at a neighbors alpaca farm next week. They got money from the forestry dept to control manure run off. Pays more than %100. After we pay costs of project we will each pocket $ by doing the work ourselves.
Fed program and small farmer. All that is needed is that you make and sell a product from the property and it must stay in place for 10 years even if you move or close.