To Fund Growth, Lord Hobo Sells Stake to Private Investment Firm

Fast-growing Lord Hobo Brewing – which launched in 2015 and grew more than 400 percent last year — today announced that it has sold a minority stake to Valterra Partners, a boutique private investment firm with offices in New York and Massachusetts.

Specific financial terms were not disclosed, and the transaction is expected to close this month.

Lord Hobo founder Daniel Lanigan, who founded the hop-focused craft brewery using $4.5 million in startup capital from 23 early-stage investors, told Brewbound that rapid growth and the need to reinvest led him to seek out a deal “faster than expected.”

“Our biggest limiting factor has been liquidity, and our major hiccup has been equipment,” he said. “We have ordered thoughtfully and intelligently, but we have blown past all of our projections. Getting tanks into the facility, installing our new canning line — those things have taken longer than expected.”

The deal with Valterra, which typically invests between $2 million and $50 million into asset-based businesses, according to the firm’s managing partner, Drew Reid, had been in the works for more than a year.

It’s the first alcohol beverage investment for Valterra, which presented a letter of intent to Lord Hobo last June, Lanigan said.

“I was looking to raise some more money and I had some equity available that I always expected would no longer be mine,” he told Brewbound. “We were talking to a few other families, but these guys were the best. They were the most experienced, and we had the most alignment philosophically and intellectually.”

100 percent of the capital infusion will be used to fund further expansion and pay down existing debt, Lanigan said. He added that all of the company’s original investors opted to dilute their stakes in the company instead of exiting the business.

“That was important to us,” Reid told Brewbound. “We don’t like deals where our money goes into the business and then comes right back out. The investment will truly be used to help the business grow.”

The investment comes at a critical time for Lord Hobo: The company expects to double production in 2017, to more than 30,000 barrels, while expanding into four additional markets before the end of the year, Lanigan said. It has also grown to about 55 employees, he added.

That kind of rapid growth has presented some challenges, including the ability to develop new products.

“We haven’t been able to put more SKUs out in the market,” he said. “But now, we’ll have more physical capacity than we have actual demand. That will be the first time we’ve encountered that.

“I am looking forward to the day when I have a free tank,” he said.

The investment also underscores just how important access to capital has become in today’s crowded craft beer marketplace, a fact that isn’t lost on Lanigan.

“We have a pretty good finger on the pulse of the market,” he said, noting slowing national trends for craft beer. “We are thinking about years five and seven when we get past 100,000 barrels and need to play defense. There’s a hyper-local movement and a proliferation of breweries. The days of being able to go national in a decade, I don’t know if we’ll see that again.”

Nevertheless, Lord Hobo is eying distribution to at least 20 states before the end of 2018. The company’s products are currently sold in 10 states, and Lanigan is currently discussing opportunities with wholesalers in California, Oregon, North Carolina, Texas, Maryland, Virginia, New York City and Washington D.C., he said. The company will launch in Ohio and Indiana this week, he added.

“Distributors are calling us, looking for a brewery making IPAs from New England with the ability to scale,” he said. “We have the advantage of being from New England and we are making beers that people want on a national level. If we were in Michigan, making New England-style IPAs, and trying to sell them to Oregon, I don’t think we’d have the same level of cache.”

The company is also looking to build satellite breweries in the U.S. and abroad, Lanigan said, and considering investments in smaller craft breweries that “don’t have liquidity,” Lanigan said. He also plans to offer contract space at his 47,000 sq. ft. Woburn, Mass. production facility, which will eventually be capable of churning out about 200,000 barrels of beer annually.

Lord Hobo’s flagship offering, Boomsauce, a New England IPA, currently accounts for 40 percent of production. The company also makes four other core beers: Glorious, a galaxy pale ale; Steal this Can, an IPA; Consolation Prize, a double IPA; and Hobo Life, a session IPA.

A press release with additional information is included below.

Lord Hobo Brewing Plans for Continued Growth

September 5, 2017, WOBURN, MASSACHUSETTS— After experiencing over 400% growth in 2016 with production reaching 15,400 barrels, Lord Hobo Brewing Company (LHBCo) looks to stay on track to achieve another year of substantial growth. A wave of business maneuvers that include, strategic planning, fundraising, and personnel additions aim to bolster LHBCo’s trajectory.

Lord Hobo Brewing continues to rally to keep up with demand for its beers with ongoing fundraising for essential capital. Next week, LHBCo will close a round of fundraising which includes securing a line of credit from a major U.S bank and a minority equity investment from Valterra Partners, a boutique growth capital firm. The new capital will allow the brewery to execute a number of essential capital investment projects. “Fundraising is a necessary evil in any fast-growing brewery, and recent clamor for LHBCo beer has accelerated our capital needs. We are very happy to have found a supportive partner in Valterra,” says Daniel Lanigan, Founder, and CEO of Lord Hobo Brewing Company. “I’m ecstatic by the immense amount of support from our partners and growing fan base… I’m grateful that we don’t have to slow this train due to capital constraints. The LHBCo team is dedicated to sharing our beers with thirsty-consumers and the ability to fulfill demand is incredibly exciting,” Lanigan adds.

By the end of 2017, LHBCo will have added thirty employees to its team, a nearly 80% increase since 2016. Key recent hires include Quality Control Manager, Trevor Bland and Brewhouse Production Manager, Frank Fermino, who join LHBCo from Craft Brew Alliance and will be instrumental in upholding LHBCo’s commitment to producing the highest quality beer. Lord Hobo has also picked up Lindsay Berk as its Vice President of Marketing. Former Chief Branding Officer at Uinta Brewing Company, Berk will develop a robust marketing program at the brewery. Other key positions have been added including several territory sales managers, brewers, cellarman, and other vital brewery talent.

To accommodate demand LHBCo will double its cellar capacity this year — bringing the total capacity to 54,000 BBLs. Additionally, the brewery will augment its QC lab equipment and will commission a state-of-the-art Krones canning line. 2018 will see further cellar additions, as well as an augmentation of the 40bbl brewhouse. Additionally, Lord Hobo’s production expansions will be met by a more imminent renovation of the Woburn, MA Taproom. The new and improved beer hall is scheduled to open early 2018.

On the beer side, the brewery introduced two additional year-round products in early 2017: Glorious, a Galaxy Pale Ale, and Consolation Prize, a beautifully drinkable Double IPA. LHBCo’s portfolio now ranges the full spectrum from a Session IPA to a Double IPA, with everything in between. Boomsauce, LHBCo’s flagship IPA, continues to grow both in volume and in consumer loyalty. The beer currently makes up 40% of the brewery’s production. With the company’s foundation laid, and loyalties earned, new products and package-types will play a key role in Lord Hobo’s evolution, as it strategizes to expand its portfolio in early 2018.

Coupled with greater penetration throughout their New England distribution footprint which includes MA, ME, NH, VT, RI, CT, and upstate NY new market expansion will continue to help fuel LHBCo’s growth. In early August, Lord Hobo beers launched statewide in Florida and will soon commence distribution in four additional markets, Indiana, Ohio, New Jersey, and Pennsylvania.

“As a long time publican, I have a deep appreciation for the distribution and retail tiers in the beer industry,” adds Lanigan. “Our growth has and always will be dependent on continued investment in our brewery, our team, and our brand to enable success at all three tiers. From our birth two years ago, we’ve emphasized the importance of producing high-quality beers that are widely available, I’m more than pumped to see us making that happen.” Lord Hobo is poised to achieve another year of triple-digit growth, the brewery is on track to exceed 30,000 BBLS in 2017.

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