After $10 million in sales, Liquor Loot is using crowdfunding to launch its international expansion

Liquor Loot — a startup that provides its customers with ‘tasting boxes’ containing three small bottles of either whisky or gin — only exists thanks to angel investors and venture capitalists. Liquor Loot’s precocious founder, Joel Hauer, may have launched several businesses by the tender age of 28, but he wouldn’t have been in a position to capitalise on the craft distillery boom without capital supplied by the likes of Koala co-founders Dany Milham and Mitch Taylor, among others

Six years after first launching as Whisky Loot, Liquor Loot is going gangbusters in Australia. The company has reached $10 million in sales, big name retailers including Dan Murphy’s, Aldi and David Jones have stocked its seasonal gift boxes, and its team has grown from four people to 12.

Hauer is now eager to launch a campaign of world domination, starting with Hong Kong and Singapore. He needs ideally $3 million dollars to set up shop in southeast Asia. He’s hoping to get much of that money from an equity crowdfunding campaign. 

The upsides of crowdfunding 

Hauer concedes that one of the reasons he’s turned to crowdfunding is because traditional sources of funding have dried up since the startup bull market turned decidedly bearish in early 2022.

“Some investors have mandates against investing in alcohol-related businesses, even ones that encourage alcohol to be consumed mindfully,” he said. “We’ve had to diversify our sources of equity to ensure we can continue to meet our growth targets.”

But Hauer says he was toying with the idea of a crowdfunding campaign even before the market downturn.

“There have been several successful crowdfunding campaigns in Australia for alcohol-related business over recent years,” he said. “Retail investors have previously expressed interest in owning equity in, for instance, craft breweries. I’m confident that plenty of Australians, especially the tens of thousands of them who are our satisfied customers, would be interested in having part ownership in Liquor Loot.” 

As Hauer points out, crowdfunding is a way for fans of a brand to, quite literally, have a sense of brand ownership.

“Whether or not they are an existing customer, people can buy a share of our business for as little as $250,” he said. “Ideally, lots of individuals will make a relatively small investment then be incentivised to talk up Liquor Loot’s offerings to their friends and family members.”

Less hassle, same strict regulations

Hauer is quick to point out that crowdfunding isn’t an easy way for opportunistic founders to separate young or naïve investors from their money.

“As it should be, ASIC is there to make sure people aren’t being taken advantage of,” he said.

“Through the [ASIC-licensed] Birchal website, potential investors express an interest in purchasing equity in our business then receive access to a Crowd Sourced Funding (CSF) offer document. Obviously, it’s then up to them how much due diligence they undertake, but they are supplied with all the financial data they require to make an informed investment decision. Liquor Loot has been around since 2016 and did over $5 million in revenue last financial year, so it’s not like we’re some fly-by-night outfit.”

All that noted, automating the capital-raising process does have its upsides.

“Potential investors decide whether to invest a few hundred or possibly a few thousand dollars without me needing to be involved in any way,” Hauer noted. “Retail investors don’t expect to have coffee meetings with you before making a financial commitment.”     

Can crowdfunding scale? 

Hauer agrees that it’s probably easier for a startup with a strong brand and community following, such craft-whisky subscription business, to source capital through equity crowdfunding. However, he sees no reason any startup providing an impressive product or service couldn’t follow in Liquor Loot’s footsteps.  

“I think it would be difficult for a startup to raise money through crowdfunding if it didn’t already have some runs on the board,” he says. “But it doesn’t haven’t to be selling a glamorous product or service. I don’t see any reason why, say, a cybersecurity startup couldn’t raise money through equity crowdfunding.”