Ask the Collective
The questions independent drinks founders ask most — answered. Distilled from years of community knowledge so the good stuff never disappears in the feed again.
How should I value a drinks business ahead of a first funding round, particularly for SEIS investment?
Valuing an early-stage drinks business is described by members as "a black art" with many possible approaches. There is no single formula, and valuations vary widely in rigour—members have seen some that read like "outstanding work of fiction." Here's what the community recommends: **Approach:** - Valuation is ultimately determined by what an investor will pay, not by formulae alone. Use comparable brand valuations as a benchmark, but don't over-index on them. - **Pitch high initially**: Members advise erring on the side of over-valuation in your first round, because equity dilution at this stage is greatest. You'll likely negotiate down anyway ("you'll end up taking a hair cut on your valuation anyway, so over egg it"), so starting high protects your stake. - Several members reported having direct experience with raising at ~£300k SEIS rounds and offered calls to discuss specific numbers and methodologies in detail. **Caveats:** - Macroeconomic climate affects investor appetite and valuation expectations. Conservative valuations are increasingly common. - Get advice from experienced founders in the space before finalizing your figure—this is sufficiently subjective that peer input is valuable.
What product liability and recall insurance should early-stage drinks brands get, and what are reasonable excess levels?
Early-stage brands without physical premises should prioritise product liability insurance through specialist brokers who understand the drinks industry. Several members have found good value through brokers and trade associations rather than direct insurers. **Recommended providers:** - **Towergate** — contact Ian.Hughes@towergate.co.uk; members recommend them for product liability - **Superscript** — noted as nice and cheap for all the basics needed by early-stage brands - **Sutton Winson** — described as very good, insured multiple members for years - **National Farmers Union** — recommended by members - **Federation of Small Businesses** — has a dedicated insurance service with good prices **Recall insurance specifics:** Members warn that recall-only policies with very high excesses can be poor value. One member was offered £7k annual recall cover with a £100k excess, which they considered a waste of money. Others have secured recall insurance with more reasonable £30k excesses at around £9k per year. **Key takeaway:** For early-stage brands, focus on comprehensive product liability rather than standalone recall policies with punitive excess levels. Use a broker familiar with drinks brands to negotiate better terms.
What compensation structure should early-stage drinks businesses offer to non-executive board directors—cash, equity, or a mix?
Early-stage drinks founders should structure non-executive director (NED) compensation based on business stage and the specific value you need them to provide. **Stage-dependent approach:** - **Early stage**: Equity-only compensation is the standard expectation. NEDs should be willing to take stock options rather than cash, ensuring they are vested in the business's success and aligned with founders. - **Later stage**: As the business matures and generates revenue, cash compensation becomes appropriate alongside or instead of equity. **Key principles members recommend:** - **Define the role first**: Be clear about what you actually need from the NED (strategic advice, sector connections, operational expertise, etc.) and recruit accordingly. Compensation should reflect that scope. - **Consider investment**: One member suggested asking prospective NEDs to invest their own capital in the business, which strengthens alignment and commitment. **Finding NEDs:** - Members recommend specialist recruiter **Nurole** as one option for identifying non-executive candidates in the UK, though other recruiters exist in this space. - The broader Kindred Collective membership itself may contain potential NED candidates with relevant experience. **Caveat**: The exact split between equity and cash, vesting schedules, and role scope should be worked out case-by-case. Members recommend discussing specifics one-to-one if you need deeper guidance.
How should a founder split their time between direct selling and business operations when starting out?
Founders typically win more business than hired salespeople because they know the brand better and buyers value direct founder relationships. The optimal time allocation depends on your stage and strategy. **Early-stage approach:** Focus heavily on direct selling in a small geographic area, building relationships in trade venues and maintaining regular contact. You don't need an expensive salesperson yet—prioritise someone passionate and charismatic who can convince bar owners to stock your products. **Operational support:** Hire in other areas like ops and finance so you can spend more time selling—the activity that matters most. This keeps your payroll small while freeing you to do what only you can do effectively. **National/commercial accounts:** Once pursuing bigger accounts, expect longer sales cycles, higher listing fees, and heavy rebates. This is when hiring more experienced (and expensive) sales talent becomes necessary. **Hybrid distributor model:** Consider using a good distributor with niche, high-quality brands and strong on-trade networks. Let them do the heavy lifting while you focus on making your brand their top performer. Keep your own team small and build profits until you either attract larger distributors or have capital to expand your own sales effort. **Exit strategy matters:** Members noted that your time allocation should align with your long-term exit strategy—whether you're building for acquisition, sustainable profits, or rapid growth. Members emphasised that founders often accomplish more in a day than typical salespeople do in a week, making direct selling the highest-leverage use of founder time.