Wilmington, North Carolina-based Ironclad Brewery has established a venture capital business unit in order to invest its profits into other startups.
Speaking to Brewbound, CEO Ted Coughlin said Ironclad’s revenue grew 33 percent year-over-year due to a robust events business as well as direct-to-consumer taproom sales. In order to make venture capital investments, Coughlin said he has tapped two employees as minority partners, while retaining more than 90 percent of the company.
Coughlin, who also serves as the CEO of Coughlin Capital Corporation in Northern Virginia, said Ironclad will consider investments in the beer space as well as other sectors with significant growth potential. He added that Ironclad will invest its profits — which he estimates will average about $200,000 annually — in about eight startup companies a year. The individual investments will range between $25,000 and $50,000, with some of those going to companies located in the Wilmington area, Coughlin said.
“We think the best return is to make venture investments from the company,” he said. “I truly believe five years from now, we’re going to be spending more time on the venture side than we are the brewery side.”
Last week, Ironclad made its first investment of $50,000 in a tech company called Petrics, which provides pet owners with customized nutritional information for their animals.
“Petrics — they’ve got the experience, they’ve got the desire, they’ve got the knowledge of the market,” Coughlin said. “It really comes down to the people. We’re making investments in companies, but it’s really the leadership of those companies.”
Coughlin told Brewbound that he didn’t want to open another taproom or events space in search of growth due to increased competition among beer companies. However, he wouldn’t rule out the prospect of investing in other breweries.
“If they think they’ve got some concept that’s going to have significant growth, we’re definitely going to listen,” he said.
As for Ironclad, the company has built a thriving events business and hosts more than 150 weddings, corporate functions and entrepreneurial networking events in its 500-seat taproom, annually.
According to Coughlin, the 4-year-old beer company sold about 320 barrels of beer, brewed on a 10-barrel brewhouse, last year. Coughlin said he hopes to leverage successful investments on the venture capital side to eventually build a production brewery in the $8 million range.
“If we make good investments on that [venture capital] side, it will allow us at some point to get into production without the risk of taking on significant debt,” he said.
A press release with additional details is included below.
Ironclad Brewery Expands into Venture Capital Business
Wilmington, NC — Since its inception in 2014, Ironclad Brewery has operated in two business segments: brewery/tap room and the event venue business. With 33% year-over-year revenue growth and projections for continued growth going forward, an expansion to build out more breweries, tap rooms and event venues would be the norm. Instead, Ironclad has decided to expand into a new business segment: Venture Capital.
“I would not recommend this approach to others,” said Ted Coughlin, CEO of Ironclad Brewery, who is uniquely qualified to lead Ironclad into venture capital as he is also the CEO of a Northern Virginia based VC firm. “I have created wealth for many by following a simple recipe: brainstorming, discovery, researching and roadmap development, followed by detailed execution. This expertise led his VC firm to success. Several of the investments were in high risk, pre-revenue start-ups and not one has failed.
Mr. Coughlin noted the expansion into VC should help on two fronts: building wealth for Ironclad employees and investors; and contributing to the growth and achievements of Wilmington’s start up community. Some of our employees have invested in Ironclad, but creating wealth for people working in the service sector is a challenge,” said Coughlin. “With Ironclad, I have seen first-hand the long hours people put in. Wilmington struggles with underemployment of those with advanced degrees. Many have the qualification to work elsewhere but want to stay in Wilmington. Without enough sizable businesses, their opportunities to build wealth are limited.”
Today Ironclad shares are worth roughly $500 each; Coughlin’s goal is to have each share valued over $5000 by the end of 2023. He noted that some investments will be made in Ironclad’s hometown as supporting local start-up companies is “the right thing to do.”
Ironclad has promoted start-ups and entrepreneurs by hosting launch parties for companies. It is also the regular host of events for the Network for Entrepreneurs in Wilmington (NEW) and Wilmington Angels for Local Entrepreneurs (WALE) meetings. Ironclad will continue to host those events, but also use WALE to vet investment opportunities. A company seeking investment or an angel looking to invest should contact the WALE Coordinator, Jim Roberts.
Coughlin ended by saying, “I work in a company that makes craft beer, hosts parties and makes investments. Life is good. The only thing better will be an exit party at Ironclad for a company we invested in. That is nirvana.”
About Ironclad Brewery
Ironclad Brewery, founded in 2014, is located at 115 North 2nd St. in downtown Wilmington, NC. The brewery hosts over 150 events annually. Wedding ceremonies and receptions make up over half of the events followed by corporate parties, rehearsal dinners, fundraisers and special occasion events.
Wilmington Angels for Local Entrepreneurs, or WALE, launched in 2015 and has since invested in eight regional startups, two of which were accepted into the highly competitive startup accelerator Techstar Austin. The group meets regularly with other angel investor networks in Raleigh, Durham and Chapel Hill, sharing information and resources to support the broader regional entrepreneurial ecosystem. WALE is managed by Jim Roberts who also ran BRAIN, the Blue Ridge Angel Investor Network. For more information, contact Jim at firstname.lastname@example.org.