Thanks to new contributor Danika Peterson for this one. Catch her on Twitter at @Danika_Peterson
Update: Blacklist Brewing Co. just completed a successful Kickstarter project a few days before deadline. Congrats guys.
Lucid Brewing was the first brewery in Minnesota to run a successful Kickstarter campaign. Last November, Lucid was able to raise $10,590 toward the expansion of the brewery and a community brewing space. Since then, two other breweries in Minnesota have run successful Kickstarter campaign: Bemidji Brewing, and Jack Pine Brewery.
It hasn’t always been that easy to raise money. As recently as last May, Steel Toe Brewing attempted an ambitious $35,000 Kickstarter fundraising drive. Their drive did not succeed. This means even though they took in $10,783 in pledges, they got nothing out of the fundraising, because Kickstarter is an all or nothing deal. Either you raise the money or you don’t. There is no in between. All pledges they received were refunded.
Lucid admits to taking a strategic position on fundraising by reviewing all of the successful brewery fundraising drives on the books, and taking ideas and points from each of them. Lucid Owner Jon Messier also says that at least one other Minnesota brewery seeking Kickstarter funds contacted him. Patrick from Jack Pine Brewery came to their Minnetonka brewery for a tour and a conversation while Jack Pine was still in the homebrew stage. Lucid says they were more than happy to share their knowledge and experience with an up-and-coming brewery.
Lucid already had a brewery and a business plan, so their Kickstarter fundraising was all about building a community brewing space where future breweries or the next great homebrewer could flourish.
Currently Badger Hill brews their beers under Lucid’s roof, but Messier says that he hopes they can encourage and mentor dozens more breweries in the future. “The goal of our Kickstarter was to build creative community around the brewing industry.”
“Our goal is to have three, four, five breweries in the building, and kind of create a creative atmosphere for brewers,” said Messier as he described their goal for their community space.
As a part of their community brewing vision, Lucid, Northern Brewer and others, is a part of the Iron Brewer Competition that is underway right now. Homebrewers and aspiring breweries have the chance to have their brews brewed by Lucid. Until August 9, go-getting brewers can fill out an application at www.ironbrewermn.com. And then by August 10, up to 24 potential brewers will be chosen for the competition. The winner of the entire competition will have 60 kegs of their beers distributed to local bars and restaurants, but perhaps more importantly be distinguished as “The Iron Brewer Minnesota.”
Even though Lucid broke incredible ground by being the first brewery in the state to be funded in such a way, they say that the money doesn’t go nearly as far as someone may think. They raised just over $10,000, but ended up spending about $4,000 on the printing and shipping or the rewards for their donors. Their rewards included t-shirts, pint glasses, stickers, the naming rights to one of their fermenters, the first run of growlers and more.
Even if rewards were not an issue, money in a brewery doesn’t go too far. This (photo on left) is Lucid’s upgraded electrical system. Jon pointed to about four of these one-inch squares when asked how far $10,000 really goes. Those electronics run just one tank. Based on the high costs of running a brewery, Messier doesn’t think that anyone will ever be able to raise enough money to completely fund a brewery. “You’d be hard pressed to raise $100,000 on Kickstarter for a brewery.”
But, even more than the money, Messier thinks that the greatest benefit to a successful Kickstarter driver is incredible community interest. “It’s great to build a loyal fan base, and some loyal customers.” But, Messier admits creating a business off of donations may be difficult, “I wouldn’t start a business based on results of Kickstarter.”
Right now, Blacklist Brewing is just days away for the conclusion of their Kickstarter drive. Their drive ends on August 10. What makes their fundraising drive different is not only the merger of brewing and art, but that once you reach a certain donation level, you can receive a minimum of six unique 22-ounce bottles, which are planned to come out of their brewery monthly. These beers may not be available in stores, allowing you to have a very rare beer in a very rare bottle.
As for right now, Kickstarter appears to have a moderate interest from breweries in the state, even if it may be for smaller projects. So, even if Kickstarter may not be fully funding anyone’s business model anytime soon, they can still provide both the brewer and the donor a significant benefit.
This still doesn’t explain how Lucid has gotten so much notoriety for brewing such bad beer…
Bad beer? I had Dyno and Air on draft last weekend. I enjoyed them both very much, especially the Dyno. I dont think they brew bad beer.
Yeah there beer is mediocre
While I have contributed to a couple of these Kickstarter breweries, I’m not so sure I’m huge on the idea. First, lets stop calling them donations. I’m fairly sure that most of those “donating” are picking the level of their “donation” largely on what they get in return (t-shirt, bottle opener, etc). Put two $50 options on there. One where they get a pint glass and t-shirt and another where they get just a thank you letter, and see which one sells more.
As the article says, $10,000 was raised but $4000 of that went to buying the stuff people are mostly donating for. For stuff on Kickstarter like electronics gadgets, almost all the money generally goes towards production of the final product. With breweries like the example above, 40% of the money raised is gone before the first step is even taken. That’s huge.
I do worry about the soundness of the business plans with Kickstarter startups too (not just breweries but all of their fundraising projects). With a traditional business, people must have an iron clad business plan when applying for loans and grants. There is also more risk should they fail. Kickstarter project fails and they don’t owe anything to those that kicked in. The same isn’t true of those that take loans from banks and other places. That increased risk can mean really thinking things through more thoroughly and considering all of the consequences of every action.
I have heard some say lately that it’s impossible to get a loan to start a brewery now days. From what I’ve heard from other brewers that have recently acquired loans, this is simply untrue. Banks will almost always finance ventures if they can be shown that the risk to them is manageable/minimal. I’m not sure if those that have been unable to acquire loans don’t have enough money of their own to put down, don’t have a solid enough plan, or what the case is. Seems those that have saved up a nice chunk of money on their own are still able to get bank financed loans.
I wonder how people will respond should these ventures fail. For many it seems that a brewery is a sure bet right now. But there have been plenty that have struggled for many reasons, be it poor management, sales, quality, practices, etc. What will it do to the stigma of Kickstarter projects if people donate thousands of dollars only to see the business fail and their money lost?
I guess we’ll see how people respond to the increasing number of businesses choosing to use Kickstarter and others.
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