Why beverage brand Brēz is raising money through an SPV

Brēz launched in 2023, and by 2024 had reached $50 million in sales. Brēz Founder and CEO Aaron Nosbisch said that in August, the company officially surpassed $60 million in profitable revenue. In light of the milestone — and to fuel Brēz’s next phase of retail growth — Nosbisch opened a $25 million raise to accredited investors at a minimum of $25,000. Nosbisch said that while “a lot of people look for the traditional routes of investment,” he decided to go the SPV route to “get a scope of the people interested in being part of the company’s future.” 

According to the company, the raise is open for accredited investors only. The round’s potential participants are currently a mix of bigger VC firms and individual investors. As of this writing, Brēz has taken in $2.1 million so far and is on track to close an additional $8 million by October 15, according to a spokesperson. Brēz still expects to surpass its $25 million goal.

To kickstart the process, Nosbisch set up the startup’s SPV as an alternative fundraising structure, allowing multiple investors to pool their capital as a single investment. “This is not an offer to sell securities,” per the company’s statement. “Any investment will be made solely through official offering documents. Investing in startups involves risk, including possible loss of capital. Offered under SEC Rule 506(c).”

While SPVs share many of the same characteristics as a traditional VC fund, SPVs are typically formed to make a single investment in one specific startup. They have other advantages: They are historically faster to set up than a traditional VC fund, which requires buy-in from a number of limited partners. And, they also typically have lower capital requirements. 

But, if a brand is looking to raise money through an SPV, the onus is on them to set it up, and to vet potential investors.

“I haven’t raised money before, actually, and so I just kind of went into the deep end right away,” Nosbisch said. Previously, Nosbisch started the brand by investing his own money. 

“But we got to a point where we’re not really able to continue [growing] unless we do raise,” Nosbisch said. He cited the high cost of beverage distribution as the brand transitions from selling primarily DTC to retail. “My intention is to raise enough money to not have to raise again.”

Brēz has expanded its line to 10 products over the last six months. This year, the company is also on a retail expansion streak, especially after launching products that are free of THC, enabling it to scale through traditional retail doors more quickly. Some of its retail partners include Sprouts, Wegmans and Total Wine, plus it has partnerships with Gopuff and DoorDash. The new cash injection will go toward growing Brēz’s current footprint of over 2,000 doors. 

Nosbisch expects to run the company for the foreseeable future, he said, meaning there is no planned quick exit. But, the hope is that, eventually, investors can receive a return on their investment through liquidation or secondary transactions. 

“We have a bit of a following online, where we’ve been building [the brand] in the public,” Nosbisch said. “We share all of our data, our numbers and the challenges with everyone.”

So far, over 600 individuals have reached out. “We’re getting a lot of executives and owners of brands to reach out and offer to invest,” Nosbisch said. Of that, there are about 30 who have closed. 

The approach does take legwork, as there are many people to call and follow up with on a daily basis. At first, sending blast emails helped get things moving along. “But everyone wants to have a real conversation,” Nosbisch said. “If you’re going to write a check for $25,000, you probably want to talk to someone.” Nosbisch himself has been promoting the raise on social media.

Logistically, raising through an SPV can be more time-consuming for founders. The onus is on them to set it up, and to vet potential investors. But it can potentially close more quickly than a traditional VC funding round, in which founders might spend months pitching firms just to receive a yes from one venture capitalist.

For Brēz, Nosbisch decided to set a month-long window for participation during September with hopes of receiving the cash in October. Currently, Nosbisch said, the raise is being organized by check size and the priority of speed at which people can invest.

Eric Weiner is a partner at national law firm Lowenstein Sandler, which handles venture capital and growth equity deals in the CPG space. Weiner said an SPV can make sense for self-funded startups like Brēz, which don’t have existing complicated cap tables. Raising money through an SPV “doesn’t sound negative to me,” he said, but it can be tricky to practically execute on a larger scale. 

Weiner said it’s likely that investors of all check sizes will want one-on-one updates from the brand. “It’s people giving you $100,000, which is a lot of money, but not in the context of fundraising,” he said. Weiner advises setting boundaries and limitations on how to communicate with potential investors, as to avoid spending all of one’s time on it instead of running the business.  

But Nosbisch said that while an SPV requires a different approach to the fundraising process, it can also offer more control over ownership of the company in the long term.

He said that, as the company scales, he expects secondaries to come into play as a way to transform the cap table. “My intention is to create a secondary liquidity pool within the company,” Nosbisch said. “Because if we’re only raising once and we continue on this growth trajectory, there’s going to be this limitless list of people who want to be involved and can’t be.”