Splash Wines, family-run direct-to-consumer wine marketing company, recently announced that first quarter 2018 profits increased by 139% over the same period in 2017. While still small, profits jumped from $19,854 to $47,033 on revenues of $2.1 million. Splash also said it beat its expectations for the quarter as the company ratcheted up another profitable month – something the company has accomplished every month since October 2015.
As part of their strategy to fuel platform growth, Splash recently kicked off a Series A crowdfunding round on SeedInvest. Splash Wines is offering $2 million in preferred equity in the firm at a pre-money valuation of $15 million. The deal is side-by-side (Reg D 506c and Reg CF) funding round thus non-accredited investors may also participate in the offer. Splash previously did two earlier funding rounds. In 2015, Splash raised $200,000 in a convertible note. In 2017, they did the same raising $360,000. To help fund ongoing operations, Splash has tapped a $1.8 million line of credit.
The subscription service currently claims 60,000 individual customers with an average spend of$95 per order. The service offers a curated selection of fewer than 200 rotating wines from around the world. Subscribers can build their own case with wines starting at just $7 per bottle with a markup that is just 15% of cost. To become a member you have to pay a $60 annual fee.
So what will Splash Wines do with the money gained from the crowdfunding round. It’s all about scale and growth. The intent is to expand the number of channels their promote their service and drive that sub number higher. Splash estimates that in 3-5 years the company will be at a “decision point.” Their revenues should be in the range of $25 million -$40 million and it will be time to either do a major funding round to acquire a competitor(s) or sell to a competitor or another company that is interested in the vertical. The US direct to consumer wine business is pegged at $2.5 billion a year.
Robert Imeson, Splash Wines Founder and CEO, commented on the most recent quarter;
“We are pleased by the results. It is a rarity in our industry for a company at this stage of development to break even. We have now been profitable since October 2015 and haven’t looked back. While we have accomplished a lot, we have a lot more in front of us. We are truly just beginning.”
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