• Mon. Oct 3rd, 2022

Haus, a VC-backed apertif startup, is up for sale after Series A falls through

ByASNF

Aug 9, 2022

Haus launched in 2019 as an answer to a generation’s craving for a more transparent alcohol brand, raising millions in venture funding from angels such as Casey Neistat, Away co-founder Jen Rubio and funds including Homebrew, Haystack Ventures, Coatue, Shrug Capital and Worklife Ventures. Haus has raised $17 million on rolling SAFE notes to date.

Today, CEO and co-founder Helena Price Hambrecht tapped into the same ethos of transparency to announce that the startup’s Series A fell through and the company is in the process of closing down. In an interview with TechCrunch, Hambrecht spoke about Haus’s transition from buzzy VC-backed startup to a business currently up for sale, as-is or in parts.

Haus sells a series of citrus, spice and flowery low ABV (alcohol by volume) apertifs, meant to be an alternative to hard liquors and a little stronger than wines. Made in Sonoma, California, Haus also promised a product made of all-natural ingredients with a key differentiator: users could order it online and get Haus bottles delivered to their doorstep. A digital-friendly, healthier alternative that replaces wine memberships set up the company to have a strong social presence.

Hambrecht, a Silicon Valley branding veteran, took over as sole chief executive of the company in 2021 after her co-founder and former husband Woody parted ways. This year, Haus shared it has crossed the $10 million in revenue threshold and recently announced that it would be hitting national distribution with Winebow, another milestone for the then solely direct-to-consumer business.

Yet, as the pandemic spread throughout the world, the company went through a series of challenges, including supply chain issues, lack of in-person word of mouth growth and iOS changes.

“It was difficult to build the business that I wanted to build during the pandemic considering we were building a social product,” Hambrecht said. “We didn’t have people gathering, we didn’t have natural word of mouth. We were a purely digital growth brand during that time, great for acquisition but not good for monitoring long-term behavior.”

The progress came as Hambrecht struggled to raise venture capital funding, largely, she says, because venture investors are unable to back alcohol companies due to vice clauses in their LP agreements. “Diligence for an alcohol round is very different from software; with software it is 4-6 weeks, with alcohol it is months. I’ve learned over time that almost every process, from operating legally to fundraising diligence, is 100x harder for alcohol,” Hambrecht told TechCrunch. Because the company was unable to fundraise from traditional VC, it took on debt financing and began looking for private equity and strategic partners.

Enter Constellation Brands, the producer and marketer of beer brands such as Corona Light, Modelo Especial and Pacifico. In 2018, the beverage company’s venture arm committed $100 million investment in women-led startups. Constellation’s dedicated fund stood out to Hambrecht because it, alongside the Winebow deal, would help expand the brand’s distribution.

Hambrecht says that Constellation committed to leading the startup’s $10 million Series A, and even offered to advance the startup money as runway began to dwindle. Then, last minute, Constellation backed out of the deal without any specific reasoning other than “timing,” she says. TechCrunch reached out to a Constellation spokesperson for further comment but did not immediately hear back.

“Here’s a Haus update that’s not fun to share,” Hambrecht said on Twitter on Monday morning. “Our lead investor recently declined to move forward with our Series A that we were in the process of closing. Without them, we do not have the cash to support continued operations at this time.” Now, Haus only has one month to sell and ship products. It is no longer manufacturing new products, but that may resume, it says. “We were just beginning to see gathering come back, and I was looking forward to that new chapter.”

The co-founder said “there’s no villain” in the shutdown story, yet Constellation’s dropout shows another example of how difficult it is to be a venture-backed, direct-to-consumer company. When Haus announced its $4.5 million seed round, Hambrecht described the company as “Glossier for Alcohol”; fast-forward, and Glossier, too, has had its fair share of struggles.

Despite the current situation, the co-founder doesn’t think that going the venture route was a mistake. “I’m grateful for the funding we did have, and what we were able to do with it. You build the company you want to see in the world and you know it is going to cost a little more upfront.” Instead, she says that if she were going to focus on becoming a more self-sufficient startup — or run operations off of its cash flow — she would have had to make that decision a year ago.

As a result of the fallen Series A deal, Haus is currently for sale via an ABC process, or an assignment for the benefit of creditors process that is a voluntary alternative to filing a formal bankruptcy claim. At its peak last year, Haus had 30 employees; now only four work alongside Hambrecht, all as contractors for the firm.

“It’s always dangerous to be low on cash. We got there, and it’s unfortunate, but I know there are many companies in this position right now,” Hambrecht says. “I have been sharing my work online for over 20 years now. It’s definitely something in my DNA. If me sharing this process is helpful for another founder in a tough spot and considering their options, then it makes all of this a little more worth it.”

As for what’s next for the entrepreneur, a Silicon Valley branding veteran, there’s no immediate plans to jump into a new startup.

“My goal, right now, is to be as helpful as I can to make this ABC process have the best outcome possible. After that, I’m going to take some time to process the last four years; it’s been so extraordinary, as well as brutal and traumatic; I’m going to rest and process that.”

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