by Moxye Staff
Two years ago rapper and singer Drake launched bourbon whiskey brand Virginia Black along with Brent Hocking, the entrepreneur behind DeLeón Tequila.
Now Drake wants to take the brand public, but in a somewhat unconventional way: through crowdfunding. The brand plans to offer shares of the company through a Regulation A+ offering, crowdsourced fundraising enabled during the Obama era, the Financial Times reports.
Investors will be able to help “redefine whiskey” by buying stocks to raise money to aid in the domestic and international expansion of the whiskey brand. Drake and Hocking plan to raise $30 million. The IPO will begin at the end of the first quarter of the year.
Virginia Black is also betting on Drake’s star power to grow the brand. The rapper and singer, who had the fourth-highest-selling album worldwide last year with “More Life”, has been promoting the whiskey brand on talk shows and in advertisements. While accepting an award at the Billboard Music awards in 2016, he brought bottles of the Virginia Black whiskey on stage and drank shots with his entourage.
“Virginia Black is the perfect combination of exceptionally good juice in exquisite packaging at an accessible price,” Hocking said in a statement. “From inception, we wanted everyone to enjoy Virginia Black, and are pleased to extend the opportunity to millions of Americans and other investors around the world to become part of the Virginia Black family.”
Mr. Hocking met Drake through mutual friends years ago, and the two launched Virginia Black. Since then the company says it has sold 60,000 cases of the whiskey. In comparison, Casamigos Tequila, the brand backed by actor George Clooney that Diageo bought in June for $1bn, sold 170,000 cases in 2017.
Virginia Black, whose slogan is “one sip, and wooh!”, declined to give details on revenues. The aged Bourbon whiskey, distributed by Proximo Spirits, is priced at about $40 for a 750ml bottle.
Mr. Hocking founded DeLeón Tequila, which he later sold to Diageo, the world’s largest drinks producer, and Sean “Diddy” Combs in 2014 for an undisclosed amount. He said that after the tequila sale, he saw a “hole in the market” for whiskey.
Sales of American whiskey, including bourbon, Tennessee and rye, grew 7.7 per cent in 2016 to $3.1bn, according to the Distilled Spirits Council of the US, the trade group. This outpaced the 7.5 per cent growth in tequila and 4.1 per cent for vodka.
The traditional IPO is “somewhat limited and old-fashioned”, said Mark Elenowitz, partner of TriPoint Global Equities, which is underwriting the offering. “Drake tweets. People read things on the internet . . . which the SEC and Wall Street never really thought about before,” he says, pointing to the ability to promote during the Regulation A+ process.
Last year, part of rapper Eminem’s song catalogue was offered up to the public through a Regulation A+ listing.
The Securities and Exchange Commission revamped guidelines for Regulation A+ filings in 2015 as a way to help small businesses raise capital without the support of big institutional investors. Instead, ordinary people can buy equity. It is viewed as a precursor to listing on an exchange.