Curious Wines: Customers and crowdfunding get business off ground
Published 09/07/2014 | 11:52
When brothers Mike and Matt Kane decided to open a new wine warehouse near Naas for their six-year-old company Curious Wines, they submitted a business plan to their bank.
The lender was willing to fund the expansion by topping up existing loans, but it wasn’t enough to pay for stocking the new outlet.
Undeterred, the Kanes turned loyal customers into lenders, by encouraging them to back their fundraising campaign on LinkedFinance.com, a crowdfunding website for small businesses.
As an incentive, customers who pledged to lend at least €500 apiece at a rate of 6.5pc or lower were promised discounts on wines for the loan’s three-year duration.
“Despite the fact that I went to the bank with a detailed 30-day business plan and that we had four successive years of profitable accounts, the bank still had a ceiling on how much money they’d lend,” said managing director Mike Kane, who co-owns Curious Wines with his wife. “Even with the growth we’ve had over the years, the banks’ attitude to risk and exposure hasn’t changed.”
Last month, the Cork-based retailer and wholesaler set out to raise €30,000 on Linked Finance within two weeks.
The company spread the word about the campaign on Twitter and emailed customers on its newsletter list.
After Linked Finance’s online auction chose bids from the customers and lenders offering the cheapest interest rates, Curious Wines had a loan with a rate of 6.2pc, the lowest rate ever achieved on the crowdfunding website.
The wine company, which makes 18pc of its sales from online sales, was able to quickly reach out to customers for finance because it had been cultivating a following on Twitter since 2008.
“I’ve a fair idea of what our peers are doing in online sales and we do significantly more,” Kane said. “I put that down to being early adopters of social media, and having a fresh, loud brand that sat well with customers. For me, the lovely thing about social media is that it allows you to build up your brand personality.”
Kane, 40, knows what he’s talking about; after securing qualifications in psychology and marketing, he worked his way up the managerial ranks in Texaco and GE Money. When his 29-year-brother Matt returned from a backpacking trip around the world that took in visits to vineyards in Australia, New Zealand and California, the pair took a punt on setting up their own wine company.
By last year, Curious Wines had generated sales of €1.1m, a figure the company expects will rise by 50pc in 2014. If its foray into Naas is successful, and wins the company a foothold into the greater south Dublin area, Curious Wines intends to use another crowdfunding campaign to finance a nationwide chain of out-of-town wine warehouses.