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 an option pool be structured when raising capital—should new shares be created, or should the pool come from founder shares?
When setting up an option pool, **new shares should be created** to dilute the whole company pro-rata, rather than coming from founder shares alone. This is market standard practice. **Key principles:** - New shares dilute everyone proportionally—all shareholders (founders, existing investors, employees) take the dilution, not just founders - This applies unless your Shareholder Agreement or Articles of Association explicitly contain non-dilution clauses, which are rare outside of specific anti-dilution protections in investment rounds - Option pools are typically **excluded from anti-dilution top-ups**, meaning everyone dilutes pro-rata when the pool is created - If your Articles or legal docs specify that one person takes the full hit, that would be non-standard and should be reviewed **Tax-efficient route in the UK:** - Consider setting up an **EMI (Enterprise Management Incentives) share option scheme**, which offers tax efficiency for employees. See: https://www.gov.uk/tax-employee-share-schemes/company-share-option-plan **What members did:** - Several members set up their option pools to dilute everyone proportionally when established - One member noted that an investor/board member pushing for founder-only dilution was incorrect—this runs counter to 10 years of VC market practice **Caveat:** If your SHA or investment docs include specific non-dilution or anti-dilution clauses, review them carefully—but standard practice is pro-rata dilution for option pool creation.
Is Seedlegals suitable for fundraising rounds, and when should you hire a traditional lawyer instead?
Seedlegals is a smart legal document platform rather than a traditional law firm—it gives you access to templated documents to tailor yourself, but does not provide strategic advice, negotiation support, or term sheets guidance from experienced lawyers. Members' experience depends heavily on the complexity of your round. **When Seedlegals works:** - **Seedlegals** — good for straightforward rounds (e.g. bringing on a couple of new investors) or if you've raised before and know what you're doing. The platform is user-friendly. **When to hire a traditional lawyer instead:** - **Legaledge** — recommended by members for more complex fundraising. One founder noted their experienced strategic general counsel was invaluable for pushing back on terms, working to tight deadlines, and ensuring the deal structure was robust. - **Getting a good solicitor through recommendation** — Several members found that hiring a lawyer with investor and SME experience, negotiating a flat fee upfront, was not significantly more expensive than Seedlegals (which takes a commission on revenue raised) and provided much greater protection. Members who went this route were happy to work with the same team across multiple rounds. **Key caveats:** - Seedlegals takes a commission on funds raised, which can add up to more than a flat-fee lawyer would cost. - If anything goes wrong in the future, a document you've self-tailored on Seedlegals may not protect you adequately. Members stressed the importance of having someone who can "push back" on terms and advise what's "normal" vs. "abnormal". - For anything more complex than a simple add-on round, get professional legal advice.
Should pitch decks be created in-house or with external design help?
Most members take a hybrid approach depending on the deck's purpose and how frequently it needs updating. **In-house creation** works well for sales decks that change often, giving you full control and flexibility. **External design support** is worth considering for investment pitches (SEIS/EIS), where visual polish matters to investors. Members recommend: - **Beautiful AI** — praised for making decks look polished - **Canva** — members noted it's a great option for creating professional-looking slides - **Freelance designers** — several members worked with external designers to handle the visual design while keeping core content control **Albatrans** was mentioned as helpful for template work. The consensus: write the core content yourself (you understand the narrative best), but consider bringing in a designer for investor-facing decks where presentation quality directly affects credibility.
Do founders need to disclose personal directors' loans when raising SEIS or EIS funding?
Yes, personal directors' loans must be disclosed when raising SEIS or EIS funding. This is both a legal and practical requirement. **How disclosure happens:** - **SeedLegals** — directors' loans and their conditions appear as part of the formal disclosures letter required during the fundraising process - **Balance sheet** — the loans are shown in your company's financial statements, which investors will review - **Seedrs** — when you drill into the detailed information on Seedrs (a common platform for these rounds), personal investment details are visible **Legal basis:** Directors have a fiducial duty to disclose any loans they have made to the company and the terms attached to them. This is a formal obligation, not optional. **Why this matters:** Members noted that disclosure can highlight disparities between founder skin-in-the-game and investor cash contributions, which investors will factor into their decision-making. One member reflected on the difficulty of equating years of unpaid work against cash investment, but the consensus was that transparency is required regardless.
Should we use non-voting share classes, and how does this affect fundraising and investor relations?
Non-voting share structures are generally not recommended for fundraising. Most sophisticated investors will not accept non-voting (B class) shares, as investors typically expect proportional shareholder voting rights tied to their equity stake. However, in practical terms, this concern is often overstated: since most early-stage investors hold under 1% of the company, their individual voting power is minimal and won't significantly inhibit founder control anyway. The community consensus favours simplicity: - **Single share class structure** — recommended as the cleanest approach. Keeps cap table uncomplicated, gives all investors a voice, and avoids the friction of explaining voting restrictions to prospective investors. Members note this is often easier to manage as you scale. - **Realistic investor impact** — even with full voting rights, small investors (under 1%) have negligible practical influence, so the theoretical concern is often not the bottleneck it first appears. Caveats: There is no single "correct" way; different structures have trade-offs. But if you're seeking outside investment, expect pushback on non-voting shares from institutional or experienced investors, making a single share class the pragmatic choice for fundraising ease.
How should you value a pre-revenue or pre-profit alcohol brand when raising investment?
Pre-revenue brand valuation for fundraising is not an exact science. Members who have successfully closed rounds suggest a pragmatic approach: - **Turnover and fixed assets** — Use actual trading figures (even if modest) combined with tangible assets as valuation anchors - **Brand value assessment** — Factor in brand equity, positioning, and market potential as a separate valuation component alongside financials - **Professional advisors** — Members recommend chatting to **Apholos** or **Signet** for specialist guidance on structuring valuations for investor pitches The key takeaway from closed rounds is that investors understand early-stage alcohol brands won't have profit yet; focus on demonstrating real traction (turnover, assets, brand strength) rather than trying to force traditional profitability multiples.
What crowdfunding platforms are recommended for drinks businesses, and what should founders know before using them?
Members have direct experience with crowdfunding platforms for drinks businesses. **CrowdCube** was used by one member but they felt the platform did not add significant value to the campaign and would not recommend it for future rounds. The member noted they "brought more to the party than they did," suggesting the onus fell heavily on the founder to drive the campaign rather than receiving substantial platform support. Members recommend discussing crowdfunding strategy directly with founders who have completed campaigns, as their insights on platform selection and execution are valuable.
What is the best route for first-time fundraising in the drinks industry: crowdfunding platforms, angel investors, or other structured equity?
For a first fundraise (typically £300k), **angel investors from your network are the strongest option**, particularly if you can offer EIS/SEIS tax relief, which is attractive to high-net-worth individuals given the sector's risk profile. **Key tactics members recommend:** - **Start with low-hanging fruit** — identify super-fans of your product, stockists where your products perform well, and their owners/directors (Companies House is a goldmine for finding directors and shareholders). These warm relationships convert far better than cold outreach. - **Leverage your network for warm introductions** — ask people in your existing network if they can introduce you to potential investors with mutual connections. Never discount anyone; some biggest investors have been unexpected. - **Build momentum with early commitments** — getting your first few backers is psychologically and practically crucial; each commitment builds confidence for the next. - **Crowdfunding platforms (Crowdcube, Seedrs) are premature at this stage** — they work better in later rounds (2nd, 3rd, 4th) when you have significant traction and retailer distribution. Crowdfunding typically tops up a round rather than filling it; members report 80%+ is usually pledged off-platform already. - **Apply the relationship filter** — only take investment from people you'd have a drink with and could maintain a relationship with if things don't work out. Avoid problematic friends or family dynamics. **Expect rejection:** You'll get many no-replies and outright nos, but persistence pays. Ask for introductions even when someone can't invest themselves—they may have valuable connections in their network.
How should early-stage FMCG alcohol brands approach finding angel investors?
For seed-stage FMCG alcohol brands, a direct LinkedIn search strategy is most effective. Start by searching for "Angel Investor" combined with "Alcohol" or "FMCG" on LinkedIn to identify potential investors. Members report this yields suitable candidates and recommend prioritizing those you already have mutual connections with, as those warm introductions tend to be most effective. The key is then systematically reviewing the results and evaluating which investors align best with your brand's vision and needs.
Which designers can create investor pitch decks that are clean, professional and affordable?
Members recommend a small number of trusted designers who specialise in investor decks and offer good value: - **Tim Davies** — praised for designing investor decks across multiple members' projects. Gets the brief, produces clean work, and is noted as affordable. - **Jimmy at We are Noisy** — recommended as another option for pitch deck design. Members emphasise clarifying the scope upfront (investor deck specifically, rather than broader branding or label work) to get accurate quotes and timelines.
What are the best practices for structuring investor communications, ticket sizes, and closing timelines during a fundraising round?
Fundraising requires treating investment like a sales pipeline: confirm ticket size early, set clear minimums, and move fast on documentation. Here's what the community does: **Establish ticket size expectations early** — Ask prospective investors "If you were to invest, what is your normal ticket size?" at the end of your first conversation. This filters out time-consuming small-cheque conversations early and lets you focus energy on serious prospects. **Set a minimum ticket in your deck** — Most members use a £10k+ minimum (e.g., "our minimum ticket is £10k, how does that work for you?"). This closes the funnel quickly, though you may occasionally miss smaller cheques from valuable strategic investors. The trade-off is worth it for focus. **Frame ownership, not just price** — Market the investment as percentage ownership post-money. For example: "£10k = 1% ownership, £25k = 2.5%, £50k = 5%, £100k = 10%." This is a stronger sales frame than absolute numbers. **Execute documents immediately after commitment** — Close the documentation loop as soon as an investor says yes. Members warn that the "investor high" fades fast; chasing signatures weeks later is painful. Money in bank is the only win. **Keep pledged investors warm during the raise** — Raises take longer than expected. Update early commitments regularly so circumstances don't change and investors fall off before close. Treat it as an active sales pipeline, not a done deal. **Don't lose the business in the raise** — Fundraising is consuming and easy to let dominate. Ring-fence time to keep the core business running; growth during a raise shows investors traction and reduces distraction cost.