What was the inspiration behind theCaledonian Distillery and Twa Dogs Brewery?
Growing up in Scotland, I was immersed in whisky culture and came to love every aspect of it. I have many a fond memory of Hogmanay parties (a Scottish New Year’s Eve celebration) and sneaking a sip of whisky from my older brothers. In fact, my first job was working in the Black & White whisky factory as a bottler! These experiences inspired me and set me on a course that would eventually lead to opening Macaloney’s Caledonian Distillery & Twa Dogs Brewery.
Tell us a bit about your background in the whisky industry.
My childhood experiences led me to pursue microbiology and fermentation at University in the hopes of eventually working in a distillery myself. However, I loved the subject matter so much that I overqualified myself for any operational distilling job by attaining a PhD in Fermentation.
So, I turned to the next best fermentation field; pharmaceuticals. Over the course of my career I worked my way up through Fortune 100 pharmaceutical companies and even started my own biotech business. Instead of brewing beer or whisky washes, I was producing antibiotics and other medications for clinical trials. Biotech exposed me to venture capital financing and I even helped start-up an ‘angel investor’ network to help screen local investment deals for local high-net-worth investors to invest in.
Eventually, I realized that I’d never achieve my dream of working in a whisky distillery unless I created my own job, so I founded Macaloney Brewers and Distillers Ltd. However, with a background experience in venture capital and angel investing, this had to be a venture with a potentially lucrative ROI.
We’ve raised over $8M in equity, received $2.4M in government funding, and now have over 550 Canadian investors from coast to coast who all share our passion for great single malt whisky and craft beer, whilst anticipating a handsome return on investment. We’ve also attracted world class expertise in the form of our 3rd generation Scottish Master Distiller Mike Nicolson and Scotch industry legend and maturation expert, the late, great Dr. Jim Swan.
I’ve been absolutely amazed by the passion of the community! For many of our investors, it’s not just an investment but also about being involved in something they really care about. For instance, one investor used our single malt spirits to create a single malt infused maple syrup. Countless others have taken it upon themselves to introduce our beers and spirits to all their friends and family.
The positivity is amazing, and it gets even better when we will fill a room with all these passionate people. Instant friendships are made and the banter is wonderful. It’s not just a community you’re joining, it’s a family! Plus, what other investment gives you perks like discounts on beer and whisky?
And the most challenging?
Like with any start-up business there are always going to be challenges and difficulties. We’re not immune to making mistakes, but I’d like to think that we’re quick learners and very capable of adapting.
One of the bigger challenges we’ve faced is the speed at which the craft beer market has changed within the last 3 years. When we opened, the market was dominated by bottled beer sales. This changed dramatically with a big swing toward 473ml cans. COVID-19 temporarily shut-down our bar and tourism, however we quickly adjusted to take-away alcohol sales with free delivery, and also produced some hand sanitizer.
With revenue sources spanning whisky, beer, bar, tourism, and contract manufacturing we have a diversification that helps us come through such hiccups. It also helps that alcohol sells well in good and bad times!
What do you do when you’re not at work?
Aside from enjoying a nice dram of whisky, I’m passionate about genealogy. There’s something fascinating about discovering your roots and learning about your ancestors. I’ve discovered that my Macaloney name can be traced back as one of the names oldest in Europe via Islay and Ireland. These roots inspired me to do big peated whiskies and Irish-style triple-distilled whiskies, which coincidentally represent lucrative, high growth markets.
Had you tried to raise money before using FrontFundr?
The current raise is actually our second equity crowdfunding campaign on Frontfundr. Our first campaign, in 2018/19 was Canada’s first distillery equity crowdfunding campaign. It was a big milestone for us because it allowed us to reach many more smaller investors that were previously inaccessible.
Our previous (pre-crowdfunding raises) always had a $10,000 minimum investment. Now, our ongoing Frontfundr raise only has a $500 minimum investment which opens the door to a lot of passionate beer and whisky enthusiasts who couldn’t previously invest.
How did your previous efforts go?
Our first Frontfundr campaign went very well. We raised just under $700,000 and attracted over 170 new investors! Our current campaign is also going extremely well. In spite of COVID-19 and the crash in public markets we’ve surpassed our half million dollar funding goal and are now 116% funded! This is a massive vote of confidence in our business plan and we are continuing to move quickly. There are just under 4 weeks left to invest for anyone interested in joining the fun.
Why are you now running a crowdfunding campaign?
The driving force behind our business model is our ability to produce world class single malt whiskies in very short time frames (only 3-4 years of maturation compared to the typical 8-10 years at other distilleries). In fact, our single malt spirits (1-2 years old) have been receiving scores usually reserved for 15-18 year old Scotches and our unmatured new make was just declared the ‘World’s Best New Make Whisky Spirit’ in the prestigious 2020 World Whiskies Awards!
This ability to quickly produce exceptional single malts means we can quickly turn a profit on capital we invest in whisky inventory. The earnings from any whisky sales we make can then be reinvested back into more whisky inventory for accelerated growth. Our crowdfunding campaign allows us to jumpstart this cycle and drive toward global expansion much more quickly. The more capital we raise today, the more whisky we will be able to distill, and the greater our revenue will be in 2-4 years time! This will in turn help us reach a liquidity event much more quickly and hopefully build an excellent Return on Investment for our investors.
Have you seen an impact on your campaign as a result of everything else going on in the world right now?
I think it is unavoidable that our fundraising would be impacted by COVID-19. We noticed a decline in new investors in March when investors were most nervous about pandemic. However, the impact of the pandemic on our fundraising has been less than what we anticipated. We definitely didn't see the massive throws of volatility that the public markets endured, and we've surpassed our funding goal in spite of COVID-19. I think this achievement is a testament both to the robustness of our business plan with its multiple independent revenue streams as well as the degree of insulation of the private equity market versus the public exchanges.
Why did you choose FrontFundr?
Frontfundr offered a fantastic way to reach smaller investors who would otherwise be excluded from our equity raises. It is Canada’s most experienced and farthest reaching platform. The onboarding and processing of new investors can be quite labour intensive when done manually, so it never made financial sense to target investors below $10,000 until we launched our crowdfunding campaign. These smaller investors are tremendously valuable because they are every bit as passionate as our larger investors and become big brand advocates for us.
From the investor’s perspective, Frontfundr truly is Canada’s leading platform because the public can invest in our business with minimal effort and time while doing everything online. Private market access with public market convenience.
What do you hope to achieve as a result of this campaign?
We’ve scaled our distillery to eventually become a global player in the single malt whisky category. Our Scottish Forsyth’s potstills are among the largest in North America, however, we still have a lot of room for growth before we reach maximum production capacity. The more money we can invest into the whisky production today, the greater the return for investors will be down the road. Therefore, we want to lay down as much new whisky inventory as possible for future sales!
Investments in our business start at only $500 and come with a series of awesome beer and whisky themed perks including product discounts, free merchandise, and access to our 3-day brewing and distilling academy. Investments are also RRSP/TFSA eligible and BC residents can receive a 30% income tax credit on the value of their investment. If you’re interested in our engaging and rapidly moving brewery and distillery, please check out our crowdfunding page here.