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.
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.
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.
About Cardinal Spirits
Business status: No current fundraise
You cannot express interest at this time. Check back soon!
1 Express Interest
Expressing Interest FAQ
Expressing interest covers a few different functions. First, it acts as your indication to the business that you have a potential interest in considering an investment. It is also the means by which you are able to access additional materials from the business. The reason you must express interest to view this information is so that the business can keep track of who has accessed their sometimes confidential information. Lastly, expressing interest allows you to keep in touch and stay updated on the progress of the business as they work through their fundraise.
An expression of interest is non-binding. Providing a dollar amount of interest to the business is exclusively a way for them to get a better understanding of whether there is sufficient aggregate interest from investors to support their fundraise goals. If you do not provide a dollar amount to the business, this is fine, but they may decide to cancel their fundraise if they do not have a clear enough picture as to whether there is enough interest to meet their goals.
Yes. Interest can be cancelled at any time, and after cancelling the business will have no means by which to contact you. If you cancel your interest, you can always express interest again if you change your mind.
Yes. The business will be able to contact you through Localstake Marketplace platform messaging. They will not receive any other personal contact information (i.e. email address, phone number, etc.).
When you express interest in a business, they will receive a notification that you are interested. On their investor management interface, they will see your name, state of residence, occupation, and amount of investment.
2 Commit to Invest
Once you've indicated interest, you can commit to invest or provide feedback to the business about your potential investment.
Committing to Invest FAQ
Committing to invest should constitute a binding commitment on the part of the investor that you are going to follow through on investing the amount you have provided to the business. You should only commit to invest once you are sure that you want to invest in the opportunity.
Note that you are not guaranteed a spot in the fundraise until the business has approved your investment. Once you have committed and the business has finalized their investment terms, you can continue on to complete your investment and submit it to the business for approval.
A commitment shoud be treated as binding. If you do not plan to move forward with an investment, you should not commit to doing so. However, you are not irrevocably committed to investing until 3 days after the business has approved your investment and countersigned your investment documents.
You can commit to invest at any time. Commitments help show traction in the fundraise to other investors, so the earlier you are ready to make your commitment, the better. This will help the business in its efforts to attract additional investors to their fundraise.
The business owners are the only people that will have this information. No other investors will know that you committed to invest, only that someone committed to invest. The aggregate amount of commitments is shared with other interested investors.
No. You will still need to provide an electronic signature on the investment documents and select a method to transfer your funds. You will need to wait to complete these steps until the business has finalized their investment terms.
3 Sign Documents
Once you have committed to invest, you will review and sign the investment documents.
Signing Documents FAQ
When you make an investment in a business, you enter into legally binding contract that outlines your rights as an investor. The specific documents you sign will vary based upon the type of security you are investing in (i.e. debt or equity). Every investment will include an investor questionnaire document that will be pre-populated with information from your investment account that provides proof of your eligibility to invest in the offering. These documents act as your proof of investment and provide all of the details about your investment and your role as an investor. You should read these documents carefully before investing.
Your investment documents will be pre-populated with information from your investment account to help identify you, including your SSN which the business needs in order to produce tax documents for your investment. There will also be information about your personal financial situation on the documents to help provide proof of your eligibility to invest in the offering.
Yes, once the business has accepted your investment and countersigned your investment documents, a copy of your signed agreement will be stored on your Investment Portfolio page on Localstake Marketplace.
We can help you complete an investment for the following investor types: self-directed IRA, joint with spouse, entities, and trusts. Contact us if you would like to make an investment of a type other than as an individual.
4 Transfer Funds
Once you have reviewed and signed investment documents, you will choose how you would like to transfer funds.
Transferring Funds FAQ
The business owner will then receive your proposed investment and accept and countersign it.
For most fundraises, there are three options to choose from when transferring invesment funds.
- 1. Electronic Transfer - transfer your funds by electronic ACH transfer. You will need to connect a personal bank account in order to use this transfer method.
- 2. Wire Transfer - call your bank and give them instructions on where you would like your investment funds to be sent. With a wire transfer, you will receive instructions on where to transfer the funds after the business accepts your investment.
- 3. Check - When selecting to make your investment by check, you will receive instructions on where to mail your check after the business accepts your investment.
If you transfer your funds via electronic transfer, the funds will be transferred from your bank account as soon as the business reaches their fundraise target and accepts your investment. You will receive a notice two business days prior to the electronic transfer occurring. If you transfer funds via check or wire, you will need to complete the fund transfer outside of the Localstake Marketplace platform.
If you would like to change something about your investment, such as the information on your investment documents, or to decrease the amount of your investment, please contact us. If you only wish to increase the amount of your investment, you can make a second investment by clicking the 'Invest Again' button.
You may cancel your investment at any time up to 48 hours after the business has countersigned your documents. To cancel your investment, please contact us.
Businesses send payments to investors over the Localstake Marketplace platform
If the business you invest in reaches their funding goal, they will be making payments to you over the Localstake Marketplace platform. If you use electronic transfer for your investment, these payments will be made back to the bank account you linked for your electronic transfer. If you do not set up an electronic transfer for your initial investment, you may do so on your bank account page.
If the business you invest in does not reach their funding goal, your investment funds do not need to be transferred to the business and will remain in your account.