The Crowdfunding Activity Before Crowdfunding Was First Introduced

Naked Wines, an online wine retailer, initiated the first crowdfunding activity before the term “crowdfunding” even existed.

People invested £20 a month into a wine piggy bank to be a wine Angel and Naked Wines used  the sum to invest in the finest self-regulating winemakers. Then the £20 investors would have received that amount to spend on their first-class wines at wholesale prices.

The managing director of the company, Eamon FitzGerald said: “We realised the wine industry was broken. The two most important people, the customer and the winemaker were getting a raw deal.”

FitzGerald noted that the issue was on the wine (per bottle) price markdown. Supermarkets have lowered the price per bottle of wine to £5.50 which resulted to a poor wine quality and made winemakers struggle to make a living.

“Why are they struggling to make a living? Because so much money in the industry is being spent on sales and marketing,” FitzGerald stated.

Naked Wines’ crowdfunding prototype was simple — got customers to finance the wine up front, led to a wine of premium quality and for a fair value; hence, nothing is needed to be expended on sales and marketing.

According to FitzGerald, Angles are consumers with a conscience; normal people who like buying knowing where the products are produced from.

At present, Naked Wines claims that there are more than 300,000 Angels investing each month, there are 130 winemakers who are in full-time production just working for Naked Wines, and acquired £45m of sales in the six months to September last year.

Naked Wines is going beyond by implementing a number of crowdfunding components that have made the most prominent funding platforms so popular.

Crowdfunding that’s risk-free?

There are winemakers who need an urgent assistance. Dominic Maxwell, the man behind the award-winning wines that big wineries produce, decided to make his own wine by himself. He needed an upfront cash to materialise this.

Naked Wines organised a plan instantly – they would put the sum up-front for Maxwell to get started, then finance the wine cases through crowdfunding from their Angels at a 48% discount.

And the most exciting part was when Naked Wines made an assurance that if anything went wrong or even if the final product didn’t meet Angel’s expectations, the financiers would get their money back.

In just two weeks, 4,000 Angels put up the £52.08 required, totally funding Maxwell’s wine and giving him the support to spend the next six months working on the six premium wines he is making.

“For me, this is true crowdfunding. It’s 4,000 people on the other side of the world who are moved and motivated by a strong human story and genuinely get a great product at a much lower price than they would have got in a traditional market.” FitzGerald said.

That’s worth a drink (to celebrate)!