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Diageo-Backed Distill Ventures Searches For Tomorrow’s Hot Brands

August 15, 2017

Diageo-backed Distill Ventures is a “drinks accelerator” that seeks out entrepreneur-driven spirits companies and offers investment money, mentorship and the connections afforded by working with Diageo. Distill Ventures works mostly behind the scenes, allowing entrepreneurs and founders a place in the spotlight. So far The Distill portfolio has included Denmark’s Stauning Whisky and Australia’s Starward Whisky, among others. SND assistant editor Shane English recently spoke with Distill Ventures co-founder and COO Dan Gasper.

SND: What is a “drinks accelerator” and how is it different from a traditional investment from Diageo?

Gasper: It’s about helping entrepreneurs make better decisions, fewer mistakes and deliver their vision. We look for companies with strong, bold founders who want to lead their brand with the support of one of the world’s top drinks companies. We’ve invested in 15 businesses so far. That number should double within the next 18 months. We’ve invested over $70 million, in amounts ranging from $175,000 to $10 million. Beyond those investments, we break down our assistance into three areas—expertise, coaching and mentoring—and offer clients a network of 350 experts to help with specific issues like importing or exporting in certain markets, brand activation in different parts of the world and so on. Diageo has 20,000 staff globally, and we offer access to all of them. We work with entrepreneurs to prepare their brands for Diageo to take a minority stake, usually 20% to 40%. Ideally, our relationship with a brand will last from four to six years. Our board is made up of a collection that Diageo manages, including their CMO, their CFO and generally one or two regional managers depending on which area in the world the investment is in.

SND: What guidance do you give a new brand over the first few years of a partnership?

Gasper: We talk about the first year in terms of “learning.” For year one, financially speaking, you probably need about $500,000. In that year, you need to learn about what it takes to grow your brand in one area over a few accounts. You need to learn what it takes to have 30 accounts go from selling one bottle a month to selling four bottles a month. The second phase in year two is called “evaluation”: you learn more about your home market, your home state, and you apply that knowledge in a different state or area. You probably need somewhere between $1 million and $1.5 million. Once you’ve validated your learning and you’re into years three, four or five, you need significant money to put your knowledge into play in multiple markets—perhaps six or seven states or three or four countries in Europe. That’s when you’ll need somewhere around $2-$3 million. The crucial bit in the journey is maintaining control. Distill Ventures is about having the right amount of money to succeed while maintaining control so that the founders can deliver their vision.

SND: What do you look for in an entrepreneur?

Gasper: A myriad of skills comes to mind: One is passion. You can’t be in this industry just to make money. You’ve got to do it because you love it. We look for entrepreneurs with a strong vision. We want people who are able to take interesting bits of advice and guidance and incorporate them into that vision. It’s an immense personal journey, and we work with the founders day-in and day-out to help them identify their strengths and weaknesses.

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