Distill Ventures COO Dan Gasper uses lingo far more common at a Genius Bar than at a dive bar. He hesitates when asked to describe, in language geared toward a bartender, what exactly the spirits incubator does. “I’m used to speaking to entrepreneurs,” he admits.
But to summarize in common parlance: the Diageo-backed startup accelerator invests money and time in developing spirits companies into global brands. Recently, they turned their focus to the U.S. market. As Gasper notes, “The U.S. market has been a catalyst for the start-up craft spirit movement. Europe is six years behind, Asia even further.” Currently, two-and-a-half years in, they work with ten brands around the world, offering expertise in growing drinks companies, funding, and coaching for the entrepreneurs behind the brands.
After working in the spirits industry with premium brands such as Courvoisier, Maker’s Mark, and Jose Cuervo, Gasper worked as a business development consultant with all types of start-ups. He noticed a common theme, with Italian furniture, street-food markets, and soft drinks: around year three or four, the companies would start expanding globally and the challenges started piling up. They needed to know about international trademarks, have strong financial skills, and be able to manage teams in multiple markets. What worked in one country wouldn’t in another. The route to market changed, how the consumer saw the product was different. Gasper pitched Distill Ventures to Diageo as a unique way to push companies over that hump.
Distill has spoken with more than 900 spirits entrepreneurs to find the right fit for its programs, which offer initial investment of at least $253k, about the global business benefits of being involved with a major spirits brand (Diageo), and business coaching for the individual entrepreneurs. Of course, there’s a catch: Diageo reserves the right to purchase the entire business.
David Vitale, the founder and director of New World Whiskey Distillery in Melbourne, Australia, found a good fit for his company with the Distill Ventures investment. Following the model of Australian wine (and using its barrels), he began his distillery with the goal of creating an iconic Australian whiskey for export. After struggling to locate investors who understood the unique difficulties of the whiskey business — especially the timeline for aging to achieve a premium product — he found Distill not only grasped the issues, but helped to clarify the focus of the brand as he worked to globalize his award-winning whiskey.
For Vitale, who came from a business background and plans to sell the company eventually, Distill’s plan is ideal, but only because both he and they were looking toward a sale. He was warned early, “If this is going to be a family business, this isn’t the right fit.” The biggest challenge for Vitale was just coming to an agreement with Distill, which took more than a year. “The critical thing is to know your product,” he said of how he would advise another company looking to work with Distill. “You need to understand why you’re looking for money. Clarity of purpose around application of funds is as important as your whiskey.”
Gasper agrees that the focus is not necessarily on the great product (though, obviously, that is part of the equation), but about finding the right entrepreneur. “It’s about having identified a great opportunity. Having a vision. Are they the person with determination and motivation to take this product to the global market?” Furthermore, he says though they are looking for people who plan to sell their company, the right person is not just money-focused, but is “driven by passion and love of what they do. People who love the industry.”
Once Distill invests, Gasper calls their process “bespoke acceleration,” tailoring the program to each company’s needs for growth. They do an intense assessment of each business, pulling out strengths and weaknesses, then, using the deep pockets (fiscal, intellectual, and experiential) of Distill and Diageo, make a plan to expand the spirit company. Though Distill is new enough that they haven’t finished their work with any companies, he estimates their involvement at five to ten years to grow each spirit start-up.
Growth is the number one focus of both Distill and the companies it is involved with. Gasper is unwilling to even put a number to how many companies or how much Distill plans to invest in the coming years, instead citing how dynamic the industry is, with no signs of slowing down. “Entrepreneurs drive innovation in drinks industry. As long as there are entrepreneurs, we hope to be there to support them.”