Aussie ready-to-serve cocktail business Sofi Spritz has raised $650,000 through equity crowdfunding to underpin an international expansion, exceeding its minimum target by 162%.
The company, backed by Shark Tank investors Steve Baxter and Glen Richards, will look abroad after several years of strong growth in Australia, selling into music festivals such as Groovin’ the Moo.
Run through equity crowdfunding platform Equitise, Sofi Spritz fell short of its $1 million maximum after delaying its campaign several times leading into October, but founder Tom Maclean says the funds will be more than enough to achieve his goals for the business.
“We’re stoked,” the founder tells SmartCompany.
“We’ve got a really good mix of larger and smaller investments.”
Through sheer coincidence, Maclean was also awarded entry into a Queensland University of Technology (QUT) accelerator program recently, which will involve a six–eight-week training course and a foot in the door for a meeting with executives at UK supermarket Sainsbury’s in February.
Maclean will spend the next three months preparing, hoping to position the business for a successful expansion into the United Kingdom in 2020 — ideally, with supermarket backing.
It’s a long way from where it all started. Originally selling his products at farmers markets in Bondi NSW in 2013, Maclean soon found an interested customer base and received multiple offers when he appeared on Shark Tank in 2016, eventually signing the dotted line on a deal with Richards and Baxter, who retain a stake in the business.
Sofi’s prepackaged wine cocktails were developed by Maclean with the 20–34-year old-female demographic in mind, using natural ingredients and skipping on added sugar, while marketing has focused on popular live music events and other trendy bars.
Customers have flocked to the products amid a broader shift in drinking habits among young Australians, delivering the company 50% revenue growth year-on-year in 2018 across about two million product sales.
Off to England
Baxter and Richards remain bullish on the company’s prospects, telling SmartCompany they’re prepared to invest more in the business to supercharge its growth.
“It’s an exciting company. The product is gaining market share and the brand has a certain sophistication and ambience that’s relevant to a global audience,” Richards says.
“It has relevance to some of the big global corporates,” the investor adds, after being asked what an exit strategy for the business might look like.
The most recent raise is the fourth time Sofi Spritz has run the crowdfunding gauntlet — an avenue which has become particularly popular for entrepreneurs trading in grog — following three separate Pozible campaigns between 2014–2018.
Using those funds Maclean and his backers have already started exporting into the South Pacific and are looking to open up to global markets, primarily the UK.
There the entrepreneurs hope to replicate Sofi Spritz’ Aussie success, but possibly at a larger scale in a much bigger market.
While there’s considerable uncertainty over the prospects of the UK market with Brexit hanging over the country and news of a general election in December, Baxter says he’s not worried.
“I don’t think any market is easy,” Baxter says.
“There’s a fullness of options. You have to understand the pluses and minuses, as well as the market conditions.”
While pursuing international expansion, the business has also recently found success selling its cocktails by the keg to bars and other events. A recent test at Bondi’s Bucket List generated $120,000 in revenue on a 90% gross profit margin.
The crowdfunding gauntlet
Baxter says Sofi Spritz is well positioned to capitalise on international shifts in alcohol consumption, particularly as younger people look for alternatives to traditional wine, spirit and beer offerings.
The investor explains equity crowdfunding was a natural fit for Sofi Spritz.
“We have a certain appeal to a certain audience, so crowdfunding is a good option, particularly where you have a good product,” Baxter says.
Sofi Spritz delayed its crowdfunding round several times before launch, which Maclean says was due to the extensive compliance work the company needed to undertake.
There’s a big difference between reward-based crowdfunding and equity, particularly relating to dotting i’s and crossing t’s, he says.
“[Equity crowdfunding] still requires more education,” Maclean says.
“A lot of people aren’t cognisant about what an investment involves and what returns they might get.”