What is the biggest challenge your clients face when creating a craft beer startup?
Minneapolis Minnesota brewery and distillery attorney Jeff O’Brien explains how raising money in a craft beer startup is the biggest challenge.
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I don’t know if there’s any one challenge. Obviously, raising money is a big challenge, especially here in this community. The venture capitalists, they aren’t really interested in looking to invest in a brewery where there is no exit strategy. These folks that are starting a brewery are starting a brewery to do it for maybe 20, 30 years or more. And so that doesn’t always jive with what angel investors and venture capitalists are looking for. So finding money is a tricky issue, especially when you have all the restrictions. Like a wholesaler can’t own an interest in the brewery and a retailer can’t own interest in a brewery. So if you have – let’s say that you have a friend who owns a restaurant that has a liquor license and you want – and they want to give you $20,000.00 for your brewery. The law says you can’t do that. So that’s a tricky issue.
The trademark issues, the name issues. We have clients that may have picked their second or third choice for a name because of the – there’s some other name out there. And the trademark office lumps every liquor mark together. So if there’s – you might have – there may not be another brewery I’m the country that has a trademark on your name, but there may be a winery out there that has a wine that is something similar, and that’s enough to make the trademark office say, “Nope. Can’t have that mark.” So name issues. Those are always hard issues. It’s a regulated industry. It’s tough navigating these waters, especially if you try to do it without counsel or without counsel that doesn’t have experience in dealing with these issues.