Do you want to be part owner of Rambling House Cocktails? The ready-to-drink cocktail maker is forging into a new market with a new form of crowdfunding that takes investing out of the world of accreditation and into the every day.
Rambling House Cocktails is live on regulation crowdfunding platform WeFunder, aiming to raise between $100,000 and $500,000. But instead of trading dollars for perks, crowdfunders can invest as little as $100 for an ownership stake in the company.
Before an SEC ruling in 2015 legalizing regulation crowdfunding, private companies could not solicit investments from non-accredited investors. Accredited investors are a select group defined as those with a net worth of at least $1,000,000, excluding the value of their primary residence, or an income of at least $200,000 each year for the last two years (or $300,000 combined income if married).
Anyone can get in on a regulation crowdfund – but there are limits to how much an individual can invest in a 12-month period based on net worth and annual income. According to the SEC:
If either your annual income or your net worth is less than $107,000, then during any 12-month period, you can invest up to the greater of either $2,200 or 5% of the lesser of your annual income or net worth.
If both your annual income and your net worth are equal to or more than $107,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $107,000.
Rambling House Cocktails – which is a separate entity from the Old North music venue and bar – is one of the first Central Ohio companies to mount a regulation crowdfund. The platform may be new, but the idea of crowdfunding is not for Founder John Lynch. The soda arm of the operation has seen both successes and failure through traditional outlets like Kickstarter and micro-lending platform Kiva.
There is both an emotional and practical appeal in exploring a new route through equity crowdfunding.
Equity raises the stakes from a handful of owners and business partners, to an army of supporters with literal ownership in an operation. That’s potentially hundreds of people ready to do lip service for a brand – investors that want to talk about it to their friends and family. In an emerging market like ready-to-drink cocktails, hundreds of personal connections to a brand becomes a valuable marketing asset.
On the practical side, Rambling House Cocktails is trying to raise significantly more capital than traditional non-equity crowdfunding – a minimum of $100,000 and up to $500,000 – compared to successful $5,000 and $10,000 loans backed through Kiva. Plus, in a traditional crowdfunding world that often includes pre-sales and products as a perk, alcohol isn’t eligible.
Lynch says he sees the potential in equity crowdfunding when a business has an amazing idea or a loyal following. Rambling House Cocktails finds itself with both.
The soda maker has built its reputation through its bar and music space at 310 E. Hudson St. The bar has been the perfect testing ground for Rambling House’s sodas, and now, its cocktails.
Lynch says the ginger beer has been popular right from the very start, outselling all other flavors about 10 to one. That love extends to the cocktails, with the Moscow Mule a popular order, rivaled by an even more popular Bourbon Mule.
Lynch was initially looking for ways to get his soda to more fans through retail sales. However, the craft soda industry proved to be difficult to break into based on retail price points. The cost to scale up Rambling House’s soda production to hit a price the market would bear wasn’t feasible for the business.
Instead, Lynch started experimenting with ready-to-drink cocktails, taking cues from drink orders at the bar to start with a Moscow Mule. Rambling House found a partner for its vodka with Watershed Distillery and started exploring options to blend and bottle the drink.
The first bottles of Rambling House Cocktail’s Moscow Mule started rolling off the line in February of 2017.
“Because it’s an emerging market retailers have been really receptive to a craft product,” Lynch says.
Rambling House Cocktails are available at nearly 200 retail locations throughout the state. Lynch secured a deal for state-wide presence with Kroger, and the product is also available at several other retail locations throughout Columbus.
While Lynch says the shelf space is there, the consumer demand for a bottled cocktail product is catching up. When most people walk into a store, they think beer or wine.
“It’s creating this third idea of when someone walks into a retailer of a cocktail product,” Lynch says.
Sales have been steady and Rambling House Cocktails has already secured a distributor in Southern Glazer’s, the largest wine and spirits distributor in the U.S.
The pieces are in place. Now it’s time for growth – which is where WeFunder comes in.
“We definitely need the WeFunder to help us with a marketing budget so that we’ll have the ability to actually grow sales,” Lynch says.
Rambling House Cocktails has outlined plans for the funds depending on how much it raises. If the cocktail company raises $100,000, 50 percent of the proceeds will go towards marketing. Staffing and product development for their next product, the Bourbon Mule, round out the budget (outside of WeFunder fees). A $500,000 raise and the marketing budget drops to 45 percent, with a nearly equal percentage of proceeds – 40 percent – going towards hiring. Both plans keep the same major focuses – marketing, staffing and product development.
Lynch has been pleased with the response so far. Rambling House Cocktails is just shy of the $32,000 mark from 74 investors with the campaign running until February 2019. He says that if people are familiar with the regulation crowdfund, they’re excited about the opportunity. It might take a learning curve, but Lynch looks forward to sharing more about the opportunity to invest.