Fruitless search for funding
I was at a barbecue last weekend, and a male friend of mine asked: “Did you hear Woman’s Hour this week? Didn’t it make you want to cry?”. This was an unusual conversational gambit for so many reasons – I mean, sure, we’re new men, and it’s the 21st century and all, but, really? Woman’s Hour? Cry??Strange as it may seem, the answer to both of his questions was yes – I had heard Woman’s Hour, and it did make me want to cry. But not for reasons that you might expect. The article was about beer and how more women are drinking it. This marked yet another mainstream part of the media that was talking about the rise of quality beer generally, and women drinking beer specifically.
It made us want to cry because my friend G and I have spent the past year (well, 18 months on G’s part) trying to raise money to start a small chain of specialist beer off-licences.
Now I know what you’re thinking – it’s a bad time to try to borrow money, because the banks are to busy feathering their own nests to lend it to anyone. And you’re right, which was why we didn’t go to the banks.
We approached various private investors – groups and private individuals – all of which didn’t quite get what we were trying to do. Despite the fact that retail contributes considerably to employment and GDP in the UK, retail is very much a niche investment area, and niche retail is even more niche. Technology or manufacturing – no problem. In fact, after a couple of group presentation evenings, we could see people like us sitting down and going over figures with potential investors. But not us.
We even had the cheek to approach some medium-sized family and regional
brewers for funding. Given the slow but persistent trend from on-trade to off-trade, we assumed they would be falling over themselves to get a slice of the take-home action. But no, quite the reverse. It turns out what they tend to be good at is brewing beer and running pubs, and their steady success with this has made them less inclined to diversify.
In some ways, I can understand this, and in others, I can’t believe they wouldn’t want to diversify into a growth market of which they already have a share.
Not only would they have made money by selling their own beers, they would have made money by selling other breweries’ beers too. If that’s not a win-win situation, then pin a tail on me and call me Percy Pig.
So it’s been an interesting year. Very early on, we learnt that people who have already made their million have a tendency to be very protective of it. They got their money initially by being swashbuckling entrepreneurs, and working hard and respect to them. But when it comes to backing new ventures, it turns out they quite like hanging on to it.
With the banks unwilling to lend, and other sources viewing our proposition as too niche, it seems unlikely we will secure funding any time soon.
Although the trend of drinking quality beer is continuing to grow, and the trend towards home drinking does the same, the combination of economic uncertainty and niche investment means our project has been put on hold. Unless we find the needle in the haystack – a business angel who believes in retail.