Over the last 18 month Distill Ventures has extended its investment programme to support new start-up drinks brands, by starting a Pre Accelerator programme aimed at identifying and then backing new brand launches from entrepreneurs from marginalised communities. To date it has been able to invest $5 million in a wide range of brands and is now starting its investment programme for 2023. Here we talk to Ara Carvallo, portfolio and I&D Director at Distill Ventures about how it works.
Diageo’s standalone start-up investment arm, Distill Ventures, has for years been able to bring new brands to the market. It now wants to make sure it is also supporting entrepreneurs from as wide a range of backgrounds as it can.
How does the Pre-Accelerator program work?
The goal of the Pre-Accelerator is to promote greater diversity of brand ownership through access to early-stage funding and business support for founders from historically marginalised communities.
We want the program to appeal to as many founders as possible, so it starts with a simple application process online. Successful entrepreneurs then receive an initial investment of up to £350,000, as well as the tools and support needed to test, learn and develop a scale plan to unlock more substantial equity investment. Typically, this program will last six to 12 months – enough time and space for a company to establish a relationship with their consumer, begin to build their commercial foundation, test their product, and fine tune messaging.
At the end of their Pre-Acceleration journey, founders will be able to seek further investment from Distill Ventures (DV) and Diageo, or from other capital sources or strategic partners without restriction, having concrete proof points and a solid pitch that we’ll have helped them create.
How does it differ from the usual support that Distill provides?
Brands that work with Distill Ventures typically pitch directly to the Investment Board as a first step, but the Pre-Accelerator is a more structured program designed to support smaller brands in getting to that stage.
As with brands in our main portfolio, Pre-Accelerator founders benefit from continued, dedicated acceleration support and hands-on mentorship, whilst we work to remove barriers and roadblocks to unlock growth. One key difference is that the Pre-Accelerator provides a simplified deal structure that gets investment flowing much more quickly, and at an earlier stage. We know that access to capital is a crucial requirement for early-stage companies and underrepresented founders. Providing this access remains a fundamental goal of our Pre-Accelerator.
How do you apply and what sort of projects are you looking for?
Distill Ventures was born out of a passion to connect visionary drinks entrepreneurs to funding and resources in order to help them bring their brands to life and scale in the marketplace. That ethos remains at the heart of our Pre-Accelerator – we want to work with and help awesome founders with amazing visions, liquids with great potential, and the foundations for creating a strong brand.
Ultimately we are looking for is innovation and the importance of this shouldn’t be underestimated. We want to work with pioneering brands that are pushing the boundaries of the drinks space.
Having operated the program for 18 months now, we’ve learnt an enormous amount, but we’re constantly seeking ways to improve how the Pre-Accelerator operates. As a result we’ve recently shifted to a cohort structure, with applications open to entrepreneurs in specific windows of the year.
US applications are currently up to December 15 with the next round of applications opening on February 15 2023. The rest of the world has just closed and we are opening up again on March 6.
Founders apply through a simple form on the dedicated Pre-Accelerator section on our website. The forms takes applicants through a few questions that provide a chance to tell us a little bit more about themselves, their brand, their liquid, their audience and their vision.
What advice would you give on what you look out for in applications?
The goal of the program is to diversify ownership within the industry, so applicants must identify with a community that has been historically marginalised, whether that’s black, latinx, LGBTQIA+ or any other. Beyond that, there are three main things we’re looking for:
- A product that is either in-market, or at least is ready to be commercialised.
- Founders, or a founding team, that are starting to understand who their customers are and what might make their brand a good fit for them.
- Founders with a plan for the next six to 12 months, and where they’d like the future to take them – whether it’s listings in more stores/bars, partnerships, improved liquid quality, or a new bottle design. We want to see that they’re thinking about the future and how bright it is.
But over and above those three things, we want to see passion – passion for drinks, their product, innovation and building a next generation brand. We only invest in brands and founders that we believe in, so we need to see the dedication and commitment required to develop a world beating brand.
What criteria do you use to assess the applications you get?
The application questions are designed to give us insight into a founder’s thinking while sparing an exhaustive interview process. This is important to us, because we want to be attracting as many visionary founders to apply as possible, without turning people off with a complex application process. That being said, we are aware that different types of bias occur throughout the decision-making process and are working on ways to reduce this through awareness and standardisation.
We’re not worried about how successful a brand is already. We’re most interested in learning about the founder’s vision, ambition and passion.
Can you give specifics on the support, advice and impact you can have on a brand in the Pre Accelerator initiative?
Last year we invested $5m through the Pre-Accelerator, working with 19 founders and their 10 wildly different drinks brands; from London-based spiced Caribbean rum brand, Kromanti, to Los Angeles-based Vervet – a brand of Californian sparkling cocktails, and Colorado-based Atōst – an American aperitif. A lot of these brands are innovating in ways that industry hasn’t seen, sometimes pushing into pioneering new drinks sub-categories. The result of that is that we don’t have a playbook for how we support each one. If we did, everyone would be doing it.
Support is designed to suit very specific needs and requirements, whether it’s help with R&D, consultancy on brand creation, liquid development, marketing and distribution or analysis to help founders understand their brand’s target audience. We spend a lot of time upfront to understand where support is needed most, and where it can have the biggest impact.
We also help Pre-Accelerator brands tap into the network of experts we have gradually built through our work over the past nine years. Whether it’s with agencies, founders, experts, different investors, or Diageo, access to these key people can make a real difference to a new brand.
As for that impact, two of the brands from last year’s Pre-Accelerator have now entered our regular program – joining the likes of Denmark’s Stauning Whisky, Australia’s Starward Whisky and Oregon’s Westward American Single Malt Whiskey in our portfolio of outstanding drinks brands.
Any good case studies of successful brands that have gone through the process?
We are incredibly proud that in its first year, not only did we attract over 300 applications from a broad range of backgrounds, but we were also able to invest $5 million in seed funding directly to entrepreneurs.
Here in the UK, one of the brands we’re most excited about is Kromanti. The brand was developed by a father and daughter duo who descended from a group of enslaved Africans known as Kromantis. Cashain and Danielle Davis have created an outstanding signature rum infused with the sweet and sour notes of the tamarind fruit, along with cinnamon and nutmeg.
In addition to a great liquid, they’ve developed a brand with an enthralling story – one that honours the legacy of the Kromanti people who had a unique insight into local botanicals used in what is now Ghana. The liquid draws on the magic of storytelling and the passing down of amazing recipes through the generations. We’re incredibly excited to be supporting Cashain and Danielle, who epitomise what we look for in founders and brands seeking to join our Pre-Accelerator.
- If you would like to find out more about the Pre-Accelerator programme at Distill Ventures here.