Erica Duecy’s Post

Billboards, digital ads, giveaways -- maybe even a free trip to Cabo for the distributor team. Early on, drinks brands can try almost anything to figure out what drives sales. Investor Jason Sherman, co-founder and managing partner of Top Shelf Ventures, says there’s room for that kind of experimentation when a company is below $1M in revenue. At that stage, investors are mostly looking for strong velocity and evidence that consumers come back and buy again. But as the company grows, the bar gets much higher. At $3M to $7M, investors want to see existing accounts buy more and reorder faster. They also want to see that the company knows how to support retailers and distributors efficiently. And the bar keeps rising as the brand scales. “If you do try to do a $10M round, they have to know exactly what you’re going to do with that capital,” Jason says. That means having nailed down a sales playbook, i.e. the plan the company will replicate in every new market and with every new distributor. Here, investors want specifics: How many accounts will the money open? How often should those accounts reorder? What will happen inside the stores and bars? How many salespeople will the company hire? “And it can’t just be a guess,” Jason says. The company needs evidence from prior markets that those tactics work. That’s a big change from the early days, when a founder might try five things without knowing which one will take off. By the time the company is raising $10M or more, experimentation is no longer the strategy. Jason gets into more of what investors need to see at each stage on the latest Business of Drinks. Listen to the clip 👇 cc: Scott Rosenbaum Noah Sanborn Friedman