Amanda O’Brien co-founded rhubarb wine innovator Eighteen Twenty with a mix of savings, personal debt and friends and family debt. They quickly sold out of their first season’s production. Now, they need to fund a much bigger season two production while sustaining their tasting room in Portland, Maine. Will Kickstarter make sense? Slow Money Maine? Equity? A new source of debt? And what does their cash flow forecast tell them about how much is needed?
- Amanda O’Brien grew up on Peak’s Island near Portland, Maine. She met her current business partner Pete when they were both working in marketing for radio. Pete was making wine from rhubarb, and Amanda was very pleasantly surprised with how good it was. They ended up starting the company and bringing Eighteen Twenty rhubarb wine to market in July 2017.
- The company has been funded by a combination of a personal loan, family and friends, small savings including retirement savings (an IRA), and ongoing out of pocket from the two founders. They both have families and other jobs.
- In their first season they sold out of their wine quickly, in 3 or 4 months, so they’d like to triple the production in year two. That means buying 10,000 pounds of rhubarb at $2/pound.
- They could also use some automation to reduce their personal labor cutting, cleaning and freezing the rhubarb, and maybe reduce their transportation costs of hauling 10,000 pounds of rhubarb. Perhaps hiring some help during rhubarb processing, and helping with the tasting room especially during production would also help.
- This interview is shortened on the public (iTunes+) version in order to protect the company’s ability to raise funding, if needed, in a 506(b) offering. The full version is available to our Entrepreneurs Only members.
Links and Resources
In this episode I interview Amanda O’Brien, who cofounded dry rhubarb winemaker Eighteen Twenty. I started coaching Amanda way before the company got launched. But at this point the company’s made it through their initial small run, sold out too soon, which is kind of a good problem. They battled to get their tasting room opened. Now they have to figure out how to fund the second season a dry rhubarb wine.
Because of the nature of their funding challenges, I’m sorry, but I have to make some of the interview available just on our Entrepreneurs Only membership podcast. That’s to protect Amanda in case she needs to raise equity soon, although she isn’t raising money right now. In either case I hope you enjoy the interview.
Don: Amanda O’Brien of Eighteen Twenty, welcome to The Funding Coach!
Amanda: Thank you. Thanks for having me.
Don: Well now you and I have known each other for some time but can you give a little background on yourself and then how Eighteen Twenty got started?
Amanda: Of course. I grew up on Peaks Island off the coast of Portland, So I’m a Maine girl. I left there, and then returned home. And I have been heavy into marketing, specifically digital marketing, and putting together events and programming for around the past ten years or so. In that journey, I became friends with my now business partner Pete. We both worked in radio and had a lot of the same interests, and we’re both pretty curious people. And he was making wine from rhubarb, and he was pretty excited about it. And anytime anyone hears wine from rhubarb, you have the same reaction of like, “oh yeah, that’s… neat. But I don’t want to try that.” [laughs] And I ended up trying it at a party that we were both at, and it’s great. It was already a really well balanced wine. And there was some grape involved. And so we just kind of were talking more about that, and it’s like, if you could get this to just rhubarb I think that the market and Portland and Maine would love this as as an offering. So yeah. We drank some more wine and made some bad decisions and brought Eighteen Twenty wines to market officially this past July. This is all still super new.
Don: Well that’s very exciting to go from the glass of wine, literally, to actually delivering it to the market. Generally speaking, how have you been funding the business so far. Has it been mostly your own and Pete’s resources?
Amanda: Yeah. I mean, that was a part of the conversation too. So, what do you have to put into this? I mean as businesses go we have less cost to start up than many many others. But there are still significant costs. We both have families and jobs and lives and things so we both kind of talked about what we could put in personally. There was a personal loan taken out, some family and friends pitched in, and then you have small savings and the retirement IRA cash out. And the rest is just been through our pocket – Pete’s and my pocket.
Don: Which is a classic way – you know, a little bit from here a little bit from there. So you’ve gotten through the first season and as I recall you made wines and people loved it so much you actually ran out, right?
Amanda: Yes. Which we are told is a good problem to have but still feels a bit uncomfortable when you work so hard to make something and now that the market wants it you are asking for it and you have to say we’re out of that right now. So yeah.
Don: So I’m thinking that for season two of Eighteen Twenty which is what you’re looking at now, that you’re going to want to buy a lot more rhubarb at the beginning of the season and then be able to keep on making it. Have you started to try to size up how much more rhubarb you want to be buying.
Amanda: So last year we bought over 3,000 pounds of rhubarb. And this year we want to do at least three times as much. And really it feels like the game is: as much rhubarb as we can get, we can we can make things with. But right now we’re shooting for at least nine-ten thousand pounds of rhubarb.
Don: Wow, that’s a lot of rhubarb! I’m trying to imagine what that would look like all in one place. What time of year is the rhubarb crop that they’re harvesting and then they’re selling to you?
Amanda: So one of my favorite parts about this process is that rhubarb is a spring crop. So it comes out before anything else. And it loves growing in Maine: it loves cold winters, it pops right up. So we get to buy from the farmers in the spring, which is you know traditionally when they need money the most in their calendar because they’re investing in the summer. You know, getting the land ready getting the soil, getting their seeds again. But then there may be out from the fall harvest. So it’s a great time of year. There is a second pick option which we’ve been working on which is later in July / early August, but the rhubarb is physically very different from first pick in spring, the second pick in the summer. So that’s something we’re kind of learning too. It’s a lot more work for not as much of the juice, which is what we’re ultimately looking for.
Don: And so when you’re buying 10,000 pounds of rhubarb what’s the price per pound that you have to pay?
Amanda: Somewhere in the two dollars [range]. It’s an expensive crop. Sure. Yeah. It’s a weed. I mean it’s not hard for them to manage.
Don: So then if you want to buy 10,000 pounds that’s twenty thousand dollars ish. What are the other funding needs you might have in the upcoming year. Any upgrades to equipment? And I know you have a tasting room now – anything additional you need to be doing there?
Amanda: Yeah. So we have a tasting room which is in the same space as are our production, which has pros and cons. To buy 10,000 pounds of rhubarb… Right now we like to say, adoringly, that we’re doing everything the hardest way possible. So 10,000 pounds of rhubarb at this point means Pete and I will be washing, cutting, and processing them by hand. So anything we can do to upgrade equipment – some type of machine for cutting or washing… We’ve then have to take the rhubarb and part of our process it it so we send it to Americ old for the palletized freezer space. So any help in not renting a U-Haul to get that done… And then all the way back to pressing it. Then we could bring it back and we press it. So it’s a difficult process. Right now it’s just him and I and we both have full time jobs so we’re trying to cram this in overnights on weekends.
Amanda: So yeah upgrades and equipment, upgrades for the space, and maybe getting some help especially during the production part. It’s pretty fast, so getting more bodies in there, other than just our family and friends who are probably pretty sick of us asking for help cutting rhubarb at this point.
Don: Yeah, maybe the first 3,000 pounds it was OK, but this next batch… Yeah, so you’re going to have to hire some people.
Amanda: Yeah and then with the tasting room… We never had the business operating at the same time. So how could one of us work the tasting room while cutting rhubarb? So I think something I’m thinking of was also someone to help in the tasting room. And then we also self distribute which means we drive every time someone orders a case of wine for a store we drive. So like when Golden Harvest in Kittery wants to order a case of wine: Yay! That’s great! It’s also two hours to drive down and back.
Don: And, not only do you have a full time job, you have a kid as a single mom and an old house on an island. And a mortgage etc.. So there are a lot of financial constraints I know that you’re facing. So what are the financing, the funding options that you’ve been looking at? ‘Cause I’m guessing that first year revenue hasn’t generated enough cash to fund everything you’re going to need for year two. Is that right?