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Wednesday, October 12, 2011

Kickstarting a Brewery: Short Snout

A little while back, I mentioned an oddity about how nearly all the breweries in the Portland metro area are located in the city. Suburbs have none or very few. Last week, I was alerted to a project to help correct this issue--Short Snout's Kickstarter campaign. Kickstarter is a site that puts people with money together with people who need it for creative projects. A project is open for a certain amount of time; if it fails to meet its goal, donors don't give their money. It's a quasi-nonprofit model, because the donations don't earn donors an ownership stake. It's like public broadcasting--you give because you value the project.

Short Snout has a goal of $15,000, and they've raised just over $3600 with about a month to go. No donor has pledged more than $250 [this turns out to be inaccurate--see comments for more.] The project:
Over the past few months, there have been a lot of conversations about how Portland, OR is home to an amazing 40+ breweries, all within the city limits and how the surrounding suburbs could only lay claim to a small handful. It is my quest to help change this, and bring craft beer back to Milwaukie. Short Snout Brewing will be a 1.5 barrel brewery focusing on unique flavor combinations…Blackberry Sage Porter, Harvest Wheat (an American style wheat made with Riesling) just as examples….and high quality, hand crafted beers all based out of Milwaukie, OR.
I'm not necessarily promoting Short Snout, but I find the kickstarter idea interesting. Short Snout isn't the only brewery soliciting funds this way: Broken Bottle (Albuquerque), Whip It and Rogness (Austin, TX), Turtle Stone (Vineland, NJ), Penthouse (Covina, CA), and Flatrock (Napoleon, OH).

Looking through those listings, I'd say the success rate is going to be low--very low. But the idea isn't inconceivable. If you live in an area bereft of local beer (or, I suppose, are a pug lover), tossing a Ben Franklin into the hat isn't such a huge expense. Short Snout looks to have a decent shot. I'll keep an eye on it and let you know how it goes.

15 comments:

ElGordo said...

Can someone please enlighten me as to why traditional fundraising sources won't work for this particular brewery? If it doesn't pencil out for a bank or other source of capital, why should anyone believe the brewery would succeed once it's up and running?

Win said...

Jeff,

Great post--for a (hopefully) successful Kickstarter story, see Erik Lars Myers take on it at (http://www.topfermented.com/2011/07/20/mystery-brewing-company-the-long-winding-path-to-startup/). He is starting Mystery Brewing in Hillsborough, NC.

ShortSnoutBrewing said...

ElGordo...Not sure where you are getting that traditional fundraising sources wouldn't work. It's just not the first option I went with. Why is traditional the only way to go? There are so many positives to going the Kickstarter route that we had to give it a shot. I do have folks that are interested in being investors. I do have the option of going to a bank. All possibilities currently being discussed and are on the table if Kickstarter doesn't work.

Jeff...FYI, there were some pledges above $250. When you make your pledge you have the option of having that kept "private" and/or if you even want the reward.

Thanks for the post!

ElGordo said...

Using Kickstarter to fund a commercial enterprise just strikes me as a backup plan. I suppose there's all sorts of positives to the business - hell, you're getting donations instead of capital that you'd have to pay back! I just don't see a compelling argument to donating money to a business, other than the fact that it's run by friendly people who make good beer. And, no offense, I know plenty of breweries like that in Portland already that didn't seek donations to get off the ground.

Shawn said...

ElGordo, did ShortSnout kick your dog or something? Why the hate and disdain? ShortSnout is trying to do something a little unconventional. Does everyone have to follow your guidebook to starting a business? I certainly hope not.

ElGordo said...

Nah, no hate here, I wish Short Snout well and have heard great things about their beer so far. The financing any particular brewery chooses is its own business, as shown by the absurd thread about Base Camp Brewing over at The New School.

The thing is, I'm an economist. I'm interested in the financial motivation of someone to invest in a business and receive no interest in return. I suppose if I lived in a neighborhood that didn't have any decent spots to get a beer I'd throw some money towards a place that was starting up. That's all.

olllllo said...

The thing that kills breweries is debt. Kickstart allows a brewery to have lower debt at startup.

I'd want a neighborhood place to start out with as clean a slate as possible.

As far as motivations go. Take a look at what a Green Bay Packer shareholder gets.

http://www.packers.com/community/shareholders.html
A total of 4,750,937 shares is owned by 112,158 stockholders none of whom receives any dividend on the initial investment.

Not using a bank has a certain appeal these days given the tarnish of bail outs and the mortgage crisis.

olllllo said...

Oh and waydago Brian!

Jeff Alworth said...

I think ElGordo makes an obvious point, and one it's not easy to dismiss. Short Snout looks like it has a shot at a winning campaign, but many of the others look DOA.

Using the commons to support a nonprofit venture makes intuitive sense--there's no "owner" and no one makes a profit. The incentive is less obvious in the case of a for-profit. The one thing that leaps out is that Short Snout would become the first Milwaukie brewery--something that would intrigue me (and benefit me) if I lived in Clackamas County.

Barm said...

How much brewery can you build with $15,000? Not much unless tanks and cement are very cheap locally ...

Kevin said...

First off, congrats Brian! As a fellow pug owner (owner might a strong word), hopefully-soon-to-be-nanobrewer and follower of Short Snout on HBT, I wish you the best of luck!

Now, on to Kickstarter. I have been entertaining the Kickstarter idea myself for a while, but I keep coming back to the exact issue ElGordo raises. Why would a pledger(?) hand over their hard-earned money to my for-profit business?

Being a fiscal Conservative, or tight-ass, or whatever you want to call it, I sure as hell wouldn't be making any pledges out of the goodness of my heart. I would want some kind of ROI, even if it was just stickers and T-shirts.

Of course, as a pledgee, printing stickers and screening T's is going to take a big bite out of the funds raised, especially after Kickstarter takes their cut.

If I were to use Kickstarter, I would want to make sure my rewards out-valued my pledge requests, but did not have to be delivered at the time of funding. Something like, pledge $100, get $100 worth of grain at cost once the brewery is up and running. Or a growler fill every month for a year for the non-homebrewers. Then it is less generosity driven and more like pre-paying to receive a later discount. To me, this kind of setup seems the most appealing for both sides.

Personal pessimism aside, the Kickstarter platform does seem to be working. In addition to the breweries listed in the post, several have been fully funded (Wilderness, Brickside, TwoDeep, HiJinx). Natian even used Kickstarter to raise $1500 back when they opened.

Cheers!
Kevin
Beer and Coding

Paul said...

I was thinking about using kickstarter for a nano! Hope these guys make it. Screw tradition guys! True entrepreneurs find a way to make it work regardless of what the last guy did.

Brewmance said...

I think it's a great way to get the local community more involved in the project as well. I think that is most likely the bigger point to make. The more connected people are with a brewery, the more support that brewery will obtain currently and over time. I think it is a great idea, and I am fully behind it all the way. I would hope this gets the word out, and more folks hop on board. It's a really good investment in my mind, even if there isn't anything in return for me. What ever happened to good old fashioned volunteerism? It's an investment in more good beer from a deserving beer geek. Good luck, and I hope my donation goes through in the end.

Shawn said...

Brewmance: "hop on board" - nice pun!

Sean Inman said...

I have donated to two of the Kickstarter breweries that were mentioned. Wilderness and Mystery. I also donated to the Love of Beer movie campaign too. Am I doing it to get rich or more beer swag? No. I am doing it to help bring more craft beer into the world. That is my sole reward.

It may not be an economic win for me but I certainly believe there will be some beer karmic ROI.

I am now heading back to Kickstarter to lend a hand to the snout!

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