Craft distillery producing artisan spirits: gin, vodka, and whiskey.
Cardinal Spirits is not currently fundraising.
Preferred equity investing explained
How it works: Investors receive a share of the ownership of the business by investing directly or through a pooled entity.
Use this simple calculator to determine how much ownership of the company you receive.
How much equity will I receive?
Two key terms to understand in preferred equity offerings
Equity represents ownership in a business. Since investors are providing capital to the business in order for the business to operate, they receive preferential treatment as it relates to certain activities of the business. There are two key terms to focus on when considering a preferred equity offering:
Valuation: Valuation represents the agreed upon price at which the business is being valued in the fundraise. There is not set method for determining what the valuation of a business is, especially for early stage companies. It is simply a number to be negotiated between the business and potential investors. Investors will want a lower valuation, so that they receive a greater percentage ownership in the business. Businesses will want a higher valuation, so that they give up less ownership. Typically with early stage businesses, you can expected to give up anywhere between 20% and 50% of your company in a preferred equity fundraise. Typical valuations for early stage businesses range from in the hundreds of thousands to $5 million.
Liquidation preference: A liquidation preference represents the order in which proceeds of the business are distributed in the event that the business is sold. Often, preferred equity will come with a 1x liquidation preference, meaning investors receive 1 times their investment back before any other funds are distributed to any other owners of the business (i.e. the common equity holders). In this scenario, investors would receive their money back, and then any additional proceeds would be distributed ratably (based on the percentage of the business each investor owns).
So if the company is sold for $10 million, and preferred equity investors previously invested $1 million, which represented 25% ownership of the company, preferred equity investors would receive the first $1 million + 25% of the remaining $9 million, or a total of $3.25 million in the sale. So while they owned just 25% of the company, they received a total of 32.5% of the proceeds from the sale of the company.
Cardinal Spirits plans to operate a craft distillery in Bloomington where it will produce premium and ultra-premium gin, vodka, whiskey, liqueurs and other distilled spirits. Like the recent craft/micro-brewery movement, there is significant consumer interest in craft distillers - people are thirsty for thoughtful, high-quality spirits. Cardinal will emulate the concept of a winery or brewery that reflects the tastes of the region but with distilled spirits.
A highlight of the Cardinal Spirits strategy is its plans for a tasting room and high-end retail space called the Birdhouse - a place to learn about the craft, meet the distillers and sample spirits in a meaningful way. Located in the heart of downtown Bloomington, the Birdhouse will offer guests guided distillery tours and tastings plus small food plates that are locally sourced whenever possible. Spirits will be sold by drink, bottle or case from the Birdhouse an opportunity facilitated by recent changes in state legislation. In many ways, the Birdhouse can be compared to the experience visitors have at a brewery or winery.
In addition to selling at the Birdhouse, Cardinal plans to distribute its spirits to restaurants, bars, liquor stores and other end purchasers through a liquor distributor. Crafting delicious and unique spirits is the Cardinal mission, but its team is equally focused on smart and powerful sales and marketing strategy. The founders have significant experience in operating early-stage businesses and in branding and marketing. Cardinal intends to be a pillar of the Bloomington community by providing a great craft distillery experience not only to residents but also Indiana University alumni, students and visiting parents.
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Business status: No current fundraise
You can express interest to notify the business of your interest in a future fundraise.