My wife and I just started a small distillery. Some of our friends have expressed interest in investing, and I have no idea how to set that up. We’re an LLC, and honestly, we’re not worth much at the moment since our first sales are next month.
I tried looking things up on Google, but it’s all very confusing. If someone invests, when am I supposed to pay them back? How does equity work for investors? Are there options like non-taxable, interest-free loans?
Thanks in advance for any advice.
As an investor, I’d stay away from the beverage industry. It’s more about passion than profit. Does anyone interested in investing actually know what they’re getting into?
Basically, it’s like this:
‘I value my business at $500k. If you invest $5k, you’ll own 1%. You won’t see any money until we sell the business or go public. Until then, your money is just sitting there.’
@Lennox
I get it, but there is profit potential in alcohol. That said, I don’t think my friends are expecting something huge like that lol.
Aris said:
@Lennox
I get it, but there is profit potential in alcohol. That said, I don’t think my friends are expecting something huge like that lol.
True, there’s potential, but you could also burn through that friendship if the business doesn’t take off.
Good luck, though! It’s definitely possible to make it work, but the beverage industry is super trend-based. What’s popular today might be gone tomorrow.
You should talk to a lawyer before doing anything. And honestly, mixing business with friendships can get messy.
I don’t have the money for a lawyer right now, that’s why I’m asking here for advice lol.
Seriously, get a lawyer, especially in the alcohol industry. It’s not worth the risk of trying to do this on your own.
Do you actually need the capital right now? If so, there are a couple of ways to go about it:
If you can’t get a bank loan, you could offer unsecured debt to private investors. For equity, you’d be adding members to your LLC.
Yeah, we need capital. We need to grow so we can move into larger production and distribution.
A lot of food and beverage businesses raise money from friends and customers through creative perks. You could offer things like special edition barrels, memberships, or discounted refills in exchange for investment. It makes your supporters feel special without giving away equity or making things complicated.
Yeah, I’ve been thinking about something like that—maybe a founder’s club or something.
From your question, it seems like you’re confusing giving away ownership (equity) with borrowing money (debt). They’re not the same thing.
Umm, yeah, that’s why I’m asking for help!
If you need capital, selling bonds or debt is the simplest way. Only get an investor if you actually need the money.
We definitely need the money!
You could go with personal loans from people you know. A lot of real estate investors do deals with private individuals at around 12% interest. You could use a similar setup for your distillery.