Creative Financing for Kombucha Companies

It costs money to start a business. Funding your business is one of the first — and most important — financial choices most business owners make. Every business has different needs, and no financial solution is one size fits all. Solutions range from bootstrapping with your own savings, hitting up family and friends, all the way to rounds of venture capital investment for established businesses looking to super-charge growth. But outside of the usual source of bank loans or private investors, there are often-overlooked sources of FREE money.

Here’s some case studies of kombucha companies around the world who found creative ways to finance their business. One of these solutions might also work for you.

Aussie kombucha company’s quarter-million dollar government grant

Western Australia-based Margaret River Kombucha Company, which produces the popular ‘rok Kombucha‘ brand, commissioned a new bottling facility supported by a 2019 AUS$250,000 (US$200,000) grant from the state government. The money came from an Agribusiness Investment Attraction Fund set up to help Western Australian agribusinesses invest in job-creating projects. The grant paid for around half the cost of upgrades that include a filling line and associated equipment for bottling, pallet turntables, a carton packer, chilled storage equipment, conveyors, and a forklift.

Agriculture and Food Minister Alannah MacTiernan commented:

Margaret River Kombucha Company is a regional success story for our State, producing a premium, value-added product in the region which is now sold in cafes and shops around the country. The upgrades will create six new full time jobs, with further growth over the next three years as the company continues to expand.

Texas town supports kombucha company expansion

Texas-based KTonic Kombucha held a groundbreaking for its 4,380-square-foot production facility and taproom in Hutto on April 15 this year.

In an exclusive interview with Booch News, owner Greg Goodman shared details of the support they received from the city government. Before starting KTonic with his brother-in-law Bryan Schmitz, he worked as a public transit grant writer and learned that grant applications must demonstrate key benefits in terms of economic development.

KTonic wanted to move from brewing in leased commercial kitchens into their own facility. They chose to build a new brewery and taproom in the small town of Hutto, 30 miles north of the Austin metro area.

Greg drafted a grant application and presented to the Hutto Community Development Corp which is actively trying to bring new businesses to the area. Whereas big cities like Austin aim to woo major corporations such as Tesla, which was lured to the region to build a new ‘Gigafactory’, smaller cities are better able to fund smaller companies. Sure enough, after making two presentations to the city, Greg secured a $120,000 grant to support the construction of the new facility and purchase bottling equipment. He has made a commitment to hire up to 19 locals over five years as his business expands. Greg notes:

The manufacturing jobs that we will create are more attractive to cities than retail or restaurants since they are seen as more stable over the long run. So do your research and be prepared to make your case.

New Mexico women-owned business grant

In contrast to the largely male-dominated craft beer industry, there’s a growing number of women-owned kombucha companies. There are a variety of funding options specifically available for women entrepreneurs.

Author Teddy Nykiel reports that back in 2016 Ayla Bystrom-Williams, the owner HoneyMoon Brewery faced the challenge of a student debt burden and less-than-perfect credit. She was hesitant to take on small-business loans to finance her kombucha company. The Santa Fe, New Mexico-based entrepreneur relied on a less expensive but more time-consuming financing method: a small-business grant. She took the time to research the options that are available for women entrepreneurs.

Bystrom-Williams spent up to 30 hours a week researching grant opportunities and attending networking events she hoped would lead to grant money. Her persistence paid off. She learned of funding through Los Alamos National Laboratory near Santa Fe. A $25,000 grant through the lab’s technical assistance program paid a lab researcher to help her develop kombucha. Later she won a $500 Amber Grant from WomensNet, an organization that awards that amount to a different business each month.

She also participated in pitch competitions that offer business services, office space and other non-cash resources as prizes. She was a finalist in BizMIX, a business plan competition in Santa Fe. After making it to the last round, she won consulting time with an accountant, bookkeeper, and a lawyer — expenses that would otherwise have come out of her budget.

Interested in finding out more? Here’s a list of 10 go-to spots for women entrepreneurs looking for grant money.

More generally, here’s a list of the 8 best small-business grants (for men or women) in 2021 (United States only).

Looking outside the USA, there’s a number of inspiring stories that highlight creative ways to secure additional funds without taking on debt.

Booch and Brew’s Kickstarter campaign

Since my profile of Altrincham, Cheshire (UK)-based Booch and Brew, owner Emma Thackray has completed a successful kickstarter campaign to crowdfund her growing business. They launched their campaign at the end of 2020 and reached their original target of £10,000 in less than a day. In fact between Nov 9 – Dec 7 they report raising £14,635 ($20,600) to reach 146% of their original goal from 214 backers with an average donation of £68.

Key to success was offering a range of incentives:

  • Pledge £10 or more – Booch Fan (VIP info on new flavors)
  • Pledge £20 or more – 6-Bottle Booch Taster Case
  • Pledge £30 or more – Make Your Own Booch at Home Kit
  • Pledge £35 or more – EARLY BIRD Big Booch Case (30% off RRP)
  • Pledge £40 or more – Big Booch Case 24 Bottles (20% off RRP)
  • Pledge £40 or more – The 12 Days of Christmas – 30% off RRP
  • Pledge £75 or more – Personalised Booch Collaboration (own flavor)
  • Pledge £99 or more – Startup Booch (3-month supply RRP £150) A big box of 24 Booch posted direct to your door each month for 3 months.
  • Pledge £150 or more – Gut Health & Live Booch Workshop for 4
  • Pledge £175 or more – Super Booch (6-month supply RRP £300)

The funding will be used to invest in a new fermenting vessel and an eco-heating system.

Laid Bear Kombucha’s Crowdfunder goals

Staying in the north-west of England, over in Manchester, Laid Bear Kombucha has launched a crowdfunding campaign support their move to a new facility. They’ve relocated from nearby Congleton, where they were based when we profiled them last July,

They started a crowdfunding campaign to:

  • Build a fermentation room for their new microbrewery.
  • Purchase more comprehensive brewing equipment so that they can still brew small batch, but on larger scale.
  • Increase their stockist portfolio and have a delivery infrastructure to be able to deliver further afield.
  • Nurture sales of the kombucha on tap, working on installing kegerators in bars and restaurants, refill stores, serviced offices/shared working spaces, and even in peoples homes.

With a relatively modest £5,000 goal they have so far raised just under £1,000 from a handful of supporters with plenty of time left to attract more ‘booch fans from this vibrant city.

Goodie Guts Scottish Highlands campaign

Frenchwoman Clara Larrieu has been living in the Scottish Highlands for two years. She hopes to raise £50,000 to launch Goodie Guts Kombucha in Inverness. Her goal is to raise 50% of the funds through crowdfunding. She has already raised £20,033 with 63 supporters in 23 days. Her crowdfunding page has full details of the campaign, background on the company, and a promotional video:

She also applied for funds from the Scottish Edge competition which helps fund new businesses. This competition occurs twice per year and has supported 395 early stage Scottish businesses with over £15m in award funding.

Even though her application was not successful, she found the process helpful:

Unfortunately I did not get an EDGE grant. They did give me excellent feedback though which helped with my confidence and the strategy I was going to adopt in commercializing my Kombucha. Through the Scottish EDGE, I also have been in contact with 2 consultants that work for Highlands & Island Entreprise and that help me on a regular basis to reach Goodie Guts’ goals. It’s all very positive!

I am growing slowly but surely, and will definitely enter a Scottish EDGE round again if I need funding, as they did say they would be happy to see me enter again once I’m more established 🙂

Cowbarn Kombucha’s EU grant

Staying in the UK, Cowbarn Brewery, in Brackenfield, Derbyshire received a European Union (EU) grant to “to re-purpose a semi-derelict barn into a kombucha production unit.” The grant (which obviously pre-dated Brexit) was secured from the Bolsover North East Derbyshire (BNED) Leader program.

They received £30,000 ($42,000) to help with the renovation of the barn and get it up and running as a kombucha brewery. This included buying tanks and bottling and labeling machines.

Owner Sarah McRow tells the story of the grant application:

I originally came across BNED Funding when I visited the Farm Innovation Show in Birmingham in 2017 and I immediately thought of renovating the disused cowbarn as a kombucha brewery. I knew that to be able to produce kombucha on a larger scale required considerable investment and as we were building a house at the time the amount needed was not something we could stretch to. So I enquired about funding and was asked to submit a high-level overview for initial approval, if the application was successful the grant would cover 40% of the renovation of the barn and the purchase of labeling and bottling machines and 4×700 liter brewing tanks.

The full blown application process was pretty challenging, the spreadsheet was as big as it was complicated and took considerable time and effort to complete but eventually we received funding and were able to begin work on the barn. We can now produce 500 – 1000 liters of authentically brewed kombucha on a weekly basis and having the farm means we can also grow some of the ingredients that we use to flavour the kombucha.

Lively Up Kombucha’s Michigan incubator space

Apart from cold hard cash, small businesses can also benefit from in-kind support. This includes securing space in tailor-made food and beverage production facilities.

Lively Up Kombucha is the first tenant of Michigan’s Food, Agriculture, Research, Manufacturing Center (FARM) food processing incubator. It was built on Muskegon Community College’s campus to provide space for food entrepreneurs creating products from fruits and vegetables.

FARM was designed specifically for Stage 2 food processing businesses that are ready to scale beyond a home kitchen or shared kitchen incubator, but not ready to operate in their own food production facility. The facility complies with all U.S. Department of Agriculture and Food and Drug Administration requirements, and includes features such as refrigeration/freezers, energy efficient waste and water handling, and loading docks. Tenants are expected to furnish their own processing equipment, and to eventually grow and move into their own facility. FARM is also suitable for large food processors that need space for pilot/R&D programs or overflow production, as well as food technology companies interested in testing new processing equipment.

Lively Up owner Zack Smith started selling fermented tea at the Muskegon Farmers Market four years ago, and his business now distributes to 80 stores around Michigan.

The FARM facility is operated by the West Michigan Food Processing Association with support from Greater Muskegon Economic Development, Muskegon Community College and Michigan State University.

“This is going to help incubate us through our middle ground period,” Smith said. “We’re bigger than what we can handle in our space but we’re not ready to take on our own space.”

Smith currently makes his product out of a commercial kitchen. He plans to be fully operational at the FARM space by June.

He hopes the incubator facilitates the growth of his company and eventually paves the way for Lively Up Kombucha to open a retail tap room.

“As soon as I walked into FARM, I knew it was our next home,” Smith said. “This facility and the support we’ll receive here will allow us to expand beyond our current Michigan distribution network. I don’t know if the next phase in our business would be possible if we had to do it all on our own. Moving into FARM gives us a lot of confidence, not only because of what the building offers in terms of our production capacity, but because of the expertise of the people we’ll be able to interact with on a regular basis.”

Cover image: Business Stock photos by Vecteezy

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11 Responses

  1. the_editor says:

    Pleased to see that the Michigan Commission of Agriculture and Rural Development supported Cultured Ferments with a grant:

    Cultured Ferments Co. LLC of Traverse City will receive $10,000 for a $110,061 project that will help the organic kombucha tea producer expand its product line to include cultured hard kombucha—a low-carb, low-calorie beverage with minimal residual sugar. In addition to cultured hard kombucha, the company also plans to launch a new line of cultured hop teas, IPA-inspired beverages that contain no alcohol, carbohydrates, or calories. The hop teas will be brewed with Michigan hop pellets and native botanicas. The project will add two new jobs to the existing three.

  2. the_editor says:

    Frederick County, Maryland has seeded the expansion of a kombucha brand with a grant:

    The Kombucha Lady has been selling fermented tea under that label for five years, and now she’s eyeing expansion, foregoing the church kitchen for a new facility that’s all her own. Earlier this year, owner Liz Dodson became one of 14 recipients of Frederick County’s first round of agricultural innovation grants. Altogether, $306,000 was awarded to local farming operations, with each receiving at least $5,000.

    Read the full story.

  3. the_editor says:

    The Guardian notes that the UK government invested an undisclosed amount in Better Tasting Drinks Co Limited, the owners of LA Brewery via it’s Future Fund. The company is one of 158 that “have had their loans converted into equity stakes in August after they successfully raised money from private investment that at least matched government funding.” The government support ranges from £125,000 to £5 million and is administered by the British Business Bank.

  4. the_editor says:

    UK-based Equinox Kombucha launched a major campaign on Crowdcube, initially seeking £950,000 ($1.25m). At a 10.19% equity rate this puts a pre-money valuation of £9,439,850 on the company with a share price of £1.43

    Insider Media reports that on March 31, 2022, it had already surpassed its initial target and is now overfunding, with about three weeks left on its campaign. In fact, with just 19 days left they have already raised £1,071,021 ($1,404,658) from 339 investors.

    The business plans to use the funding to help expand its reach with further listings in UK and EU supermarkets.

    Of interest are the financials reported:

    • High growth of 19.9x rev since 2016. Revenue of £2.55m and EBITDA -£920k for 2021
    • Only B Corp kombucha brewery in Europe, stocked in Waitrose & Asda
    • + 8.6m units sold since 2016, 5m units sold since the start of the pandemic

    It also plans to expand its team in the UK and EU (Brexit be damned, eh?), and invest in net-zero carbon and food waste projects with non-profit Surplus to Purpose.

  5. the_editor says:

    Mia Kombucha is the first ever Italian brand to do equity crowdfunding in the kombucha sector. Founded during the 2020 lock-down they aimed to raise a minimum of 80,000 Euro. With 49 days left they have raised 170,000 Euro and are well on their way to reaching the maximum goal of 300,000 Euro. Mia recently expanded to bring production capacity to more than 10,000 liters per month.

  6. the_editor says:

    Booch Organic Kombucha, Ontario, Canada was selected as one of the lucky recipients of a Desjardins Group GoodSpark Grant.

    Out of 3,800 applicants, they were one of the chosen 150 businesses to receive the CAN$20,000 (US$15,000) grants to small businesses across Canada.

    Booch Oranic Grant Received

  7. the_editor says:

    Sault Ste. Marie, Canada, newspaper SooToday reports that Bloom Kombucha has received a government grant.

    Federal funding was announced Thursday to help activate the commercial kitchen space at the Harvest Algoma Food Resource Centre on Second Line, just one week after it was taken over by the Sault Ste. Marie Innovation Centre and its Rural Agri-Innovation Network (RAIN) division.

    The funding will offer supports for local agri-food producers and entrepreneurs, including mentorship, help with product development and the use of the Food Resource Centre’s commercial kitchen for testing and development.

    The $450,000 in FedNor funding over the next three years was announced Thursday at the Food Resource Centre by MP Terry Sheehan.
    Brittany Park has tapped into other RAIN funding streams when developing her business Bloom Kombucha. A nutritionist by trade, Park and her business partner have developed northern Ontario’s first kombucha distillery.

    Bloom Kombucha has benefited from previous FedNor-supported funding streams through RAIN for product testing and development, as well as getting its facility up and running.
    Through the new funding, Bloom and other agri-food entrepreneurs will be able to get additional support and also support each other, said David Thompson, director of RAIN.

  8. the_editor says:

    The London-based Centre for Entrepreneurs has a podcast that addresses getting financing for small business start-ups. They review the promise and pitfalls of loans, angel investment, crowdsourcing, grants, and full-on venture capital. Guests Yang Liu (Co-Founder and CEO of JustWears) and Ashley Staines (Founder and CEO of Volunteero) weigh in with their thoughts.

  9. the_editor says:

    Vancouver Is Awesome reports that Clarity Kombucha, located in Cumberland on Vancouver Island, BC, Canada run a small business despite the challenges of being neurodivergent.

    Small Business BC, is an independent nonprofit that receives funding from the provincial and federal government, said there’s a strong interest from employers about accessibility and accommodations for those who are neurodivergent and/or disabled.

    The organization is currently in the research phase for a report on this topic.

    What it currently offers and invites small business owners to apply for is a “workplace accessibility grant.”

    Small business owners in British Columbia can be reimbursed up to $5,000 on an accessibility project. The definition of such a project ranges from a physical ramp in a well-lit hall to website changes for those with low vision or who use screen readers.

  10. the_editor says:

    UK trade publication The Grocer reports that LA Brewery seeking £1m from crowd to meet low & no demand.

    Kombucha maker LA Brewery is launching a £1m crowdfunding campaign amid fizzing consumer demand for alcohol-free alternatives.

    The Suffolk-based brand will use the cash in a digital marketing drive to reach new customers and challenge the bigger players in the low & no category.

    The crowd round is set to go live to the public on Crowdcube on 20 February, with the business aiming to hit a £500k target and overfund up to £1m.

    “Our first crowdfund enabled us to unlock our potential, allowing us to invest in a lifestyle brand that has gone from strength to strength,” said founder Louise Avery, who launched the brand in 2017.

    “This second raise comes at a time when the no & low industry is booming. We have an exciting 2024 ahead of us.”

    The latest crowd round follows LA Brewery appointing Meg Ellis as managing director in September 2023. Ellis, who has more than 20 years of experience in retail, consumer and hospitality, including four years with foodservice chain Honest Burger, joins LA Brewery founder investors and board members Mark Palmer and William Kendall.

    B Corp accredited LA Brewery makes drinks using a natural fermentation process with blends of ethically sourced tea, plants and flowers at its Suffolk micro-brewery.

    It is available to order from the DTC website and has retail listings with Planet Organic, Amazon, Ocado, Selfridges and The Wine Society. It is also stocked by foodservice operators such as Dishoom, Hawksmoor, Hakkasan, Leon, Itsu and Nando’s.

    The business said it was capitalising on the elevated demand for alcohol-free drinks, with its customer research finding that more than a third (34%) of Brits claim to abstain from alcohol completely and a quarter identify themselves as “sober curious”.

    LA Brewery previously raised £1.3m in a crowdfunding round in 2021 after smashing a £500k target.

    The company added its revenues increased by 88% last year and forecast similar growth for 2024.

    UPDATE: The campaign raised £718,733.61 from 238 investors. They reported £1m revenue in 2023 (EBITA -£900k) with 88% YOY Growth 22-23.

  11. the_editor says:

    The Oct/Nov 2023 issue of Beverage Master Magazine has an article on ‘Innovative Strategies to Secure Funding for Beverage Companies in a Competitive Market’ (p.14-17) Author Jay Avigdor of Velocity Capital Group discusses

    • The Problem with Bank Loans
    • SBA Loans
    • Angel Investors and Venture Capitalists
    • Crowdfunding
    • Merchant Cash Advances
    • The Advantages of a Long-Term Approach

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