Yellowhammer Brewing’s first foray into investment happened by accident says General Manager Ethan Couch.
“Our banker was at lunch with a local business owner, and we happened to be sitting a few tables over,” he recalls. “They stopped by our table to say hello. The businessman said he liked our IPA and asked if we were ever looking for investment to let him know.
“He is now the majority owner of our brewery, and the business has grown substantially. Since he came on board we have had another fundraiser with eight new investors.”
Although not always as anecdotal, finding ways to grow can work outside of just adding to capital loan debt, it can be by diversifying with investors.
Couch said the brewery benefits the city of Huntsville, Alabama by providing entertainment, quality beer, and a place to socialize and have meetings.
“Most business owners and city planners see it as a way to keep a younger workforce,” he added.
For most of the new owners at Yellowhammer, which produced just over 3,000 barrels in 2017 — a double digit increase in volume for four of the last five years — this was as much an investment in the community as a traditional ROI decision.
“Everyone we pitched raised great questions about the future of the business,” Couch said. “They all wanted to know the five year plan, and the exit strategy if one exists. Our business plan is long-term in nature with no quick exit strategy. This bothered some potential investors who were looking for a quicker turnaround.
“We’ve been fortunate in that our investors have a variety of experience in business. They bring a lot more to the table than just cash such as financial guidance, social and political connections, marketing advice, and so on.”
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