Dealt a Good Hand: Lucky Sign Spirits Crowdfunds Distillery Expansion with Honeycomb Credit
In Millvale, Pennsylvania, just across the river from Pittsburgh, a new distillery has appeared and thrived, despite the challenges of the pandemic.
Lucky Sign Spirits is a veteran-owned, small local distillery that has a wide variety of spirits across the board, from standards like rye whiskey and gin to exciting liqueurs like limoncello and aquavit.
Read on to learn more about where Lucky Sign Spirits finds inspiration for their unique spirits, how crowdfunding helped to validate their new business, and their plans for the future.
Owners Christian Kahle and Matt Brudnok opened Lucky Sign Spirits in the middle of the coronavirus pandemic, but they were able to turn a profit in their first year, and started making plans to expand to a new location. This led them to Honeycomb, where they ran a smashing crowdfunding campaign, raising about $122,000 from 77 investors!
Validated by crowdfunding
For Matt and Christian, the decision to crowdfund with Honeycomb was one of necessity. Many traditional financial institutions such as banks or the SBA won’t lend to businesses that have been around for less than two years, which makes getting funding a challenge.
“The biggest part is because we're such a young company, we don't have that many appreciable assets. If we wanted to go through equity or direct investors, we can't really promise much of anything other than, ‘Hey, it might happen,’” says Christian.
Rather than encourage their customers to take a gamble by equity investing (ironic, for a luck-themed distillery), Matt and Christian wanted to give their local community an opportunity to invest in smaller increments through crowdfunding.
“It's easier to work through crowdfunding, because we know we can provide a certain amount [to our investors]. It allowed us to put our numbers in an easy-to-read format for someone that wanted to invest in us. The difference is, when we do the crowdfunding loan, it's a lower risk for the people that are investing, you know, and we were able to handle that operational expense of managing that loan.”
The other benefit that Matt and Christian both recognized in their Honeycomb campaign was that it gave them evidence that their business idea was being acknowledged by the public.
“We had a bunch of investors who we’d never heard their names before,” said Christian. “It's great to feel the support from friends and family, it's great to have them back you, but when there's people you don't know and they read your story and they invest in you - that's real trust.”
“It's easier to get funds, even if it's smaller amounts, from family and friends because they want to be a part of it,” says Matt. “But when someone we don’t know invests, it means they took a cool, calculated look at getting their money back, and they think that we're worth investing in.”
Distilling inspired by community
While they were initially brainstorming the kinds of spirits they wanted to create at Lucky Sign Spirits, Matt and Christian looked to their community for ideas.
“One of the things we've done is talk to a lot of bartenders, people that like to do like bartending and mixology, saying, ‘What are the things you like to use, what are the things that you've never tried, what are the things that interest you?’” says Christian. “We try to understand, not just the flavor of something we're making, but the actual experience of drinking.”
Consulting with these industry professionals and hobbyists led to some real innovation in Lucky Sign Spirits’ offerings. For example, they heard from bartenders that they didn’t like using limoncello because it’s cloyingly sweet and syrupy. So, Lucky Sign Spirits decided to remedy that by incorporating their rye whiskey. The tannins in the whiskey barrels counterbalanced the sweetness, and now limoncello is one of their bestsellers.
Lucky Sign Spirits wants to bring unique and global flavors to the Millvale and Pittsburgh communities, and among their offerings are Scandinavian aquavit, Turkish raki (an anise flavored spirit), and their Italian limoncello.
“We both really like Millvale. We like the people around the community, all the different organizations that help out around the community, and we're doing our best to help them out,” says Christian. “We've done things like making hand sanitizer for the volunteer fire departments and police department. We try to get back to the community and try to be a positive part of the community as much as we can.”
Unlock potential to expand and innovate with crowdfunding!
A key reason Matt and Christian decided to raise capital was to expand their production. That way they could continue to produce their big hitters and also experiment on fun drinking experiences.
“The key part there is we have core offerings: our bourbon, rye, or gin. We need to make sure that we never run out because these are the things that we sell to restaurants, and customers walk in off the street and they just want to have,” says Christian.
This led to their decision to expand into a new production and retail space, and renovate the Millvale location into more of a craft cocktail bar and retail shop.
“Efficiency allows us to produce two to four times more of the same spirits, up to our quality standards, without really having to do anything else,” says Christian.
“The flip side of always having these core spirits is that people also want to have new things all the time,” notes Christian. “And that's one of the keys, we have people coming in, they want to know what’s new. When we go into a new space, we'll be able to get some more people to hire, some people to help us produce. This will allow us to go on to things like creating an experience that is a little more exciting for the customer too.”
Matt is also looking forward to the chance that expanding Lucky Sign Spirits will give him and Christian a chance to relax. “I'm happy with the way things are going, but with a toddler right now, and the business, I’d like a solid two days a week, where I can actually catch up with her,” he says.
“Increasing our efficiency will even help our creative process so that we're not so focused on the day to day,” continues Matt. “We can hopefully get someone who's gonna be a manager, and at some point we can really turn over the real basic retail and bartending stuff to them. And then we can really focus on more value creation.”
Spirited growth for successful distilleries starts with crowdfunding
Matt and Christian didn’t need a bank’s approval to expand their business - instead, they got 77 investors to validate their business’s growth by putting money on them. Countless skilled entrepreneurs are left out of funding because they’re just getting their business started and banks don’t want to lend to them - why not crowdfund that capital instead?
Learn more about Honeycomb Credit crowdfunded small business loans, and sign up below to receive more information!