How Venture First Partnered
Leading Special Credit Fund
Venture First and its partners created the first credit fund focused on the American craft whiskey industry. Because barreled whiskey needs time to age, a major working capital problem exists. Concurrently, a robust secondary market exists for the filled barrels exhibiting rapid value appreciation over time. By lending primarily to brands and laying down some barrels as well, Whiskey Capital Secured Financing Fund I has thus far generated an impressive return for its investors, making it one of the leading special situation credit funds. Since beginning lending in 2018, Whiskey Capital Finance Company has launched two funds, Whiskey Capital Secured Financing Fund I and Whiskey Capital Secured Financing Fund II, and operated numerous special purpose vehicles in the industry.
Recognizing Market Dislocation
As the CFO of a craft bourbon brand, Venture First assisted with the capital planning and provided support as the entrepreneur raised a Series B. During that process, VF got to know the whiskey space and observed first-hand its inefficient capital structure; younger brands were raising too much equity, as opposed to debt, unreasonably increasing their blended costs of capital. As CFO, VF approached several banks to source a lending facility for its client. The group-think answer was consistent: “That makes sense, but we wouldn’t lend against barreled whiskey.” Our response was simple: “If you don’t, we will.” Weeks later, we began making loans from special purpose vehicles and then created a fund.
