When Lauri and Matthew Spitz determined they were ready to launch a microbrewery, they turned to an unlikely source for financing: perfect strangers.
The married couple has been brewing small batches of beer out of Matthew's parents' Islip Terrace home since 2005. After hearing enough good feedback about their beer, they've decided to turn their hobby into a business. But to get a liquor license, they need a lease, and to get a lease, they need money. So they've turned to the Internet to find it.
On April 23, Moustache Brewing Co. launched a campaign on Kickstarter.com, a crowdfunding website where people with "creative projects" can ask for donations to fund their ideas.
As of Sunday afternoon, 234 backers had pledged a total of $16,276. More than 1,200 people "like" the project on Facebook. The Spitzes -- Lauri, 28, is a health information manager at a doctor's office; Matthew, 29, is a warehouse manager -- have until May 23 to reach their goal of raising $25,000.
"People we talked to said, 'We wish we could invest in you, but we don't have that kind of money,' " Lauri Spitz says. "We thought it would be so cool [to use Kickstarter] to get some money to get us off the ground."
Websites collect fees
To receive the pledged funds, a project must meet its goal amount; if it doesn't, no money is exchanged. Kickstarter collects a 5 percent fee from fully funded projects, and Amazon, the website's payment processor, generally takes a 3 percent to 5 percent credit card fee.
Moustache Brewing is offering modest rewards to donors: branded gear, a name on the brewery's donor wall, or, for people who donate $10,000 or more, "swimming in the fermenter, twirling Matt's moustache, the possibilities are endless!" (No donor has pledged that much yet.)
"Kickstarter allows them to attract funders with similar passions who are happy to provide funds in exchange for . . . company swag or the chance to collaborate on a brew -- not to mention the opportunity to help bring a project they like to reality," he says.
Torrens says he doesn't see many downsides to a Kickstarter campaign, except the possible negative perception that could come if a project doesn't reach its goal, which "could leave potential customers or future supporters with less confidence," he says.
Moustache is likely to meet its $25,000 goal, says David Marlett, executive director of the National Crowdfunding Association. "Once you get about 40 to 42 percent [of your goal], your odds of finishing out your offering are extremely high."
The craft beer business is booming, state officials say; Long Island already has about a dozen microbreweries. State and federal legislation is pending that would give small brewers tax breaks and create a "made in New York" beer designation to boost the industry.
Pursuing a license
The Spitzes' need for funding, Lauri Spitz says, stems from a cash-flow issue: To apply for the federal license to operate a brewery, they need to provide a copy of their lease agreement. Once they have the lease, the Spitzes, who live in Central Islip, expect it could take six months or more for the proper state and federal licenses to come through. That means they'll have to pay at least six months of rent before they would be able to sell their product. Some of the money will go toward equipment. Even if they meet their Kickstarter goal, they will still seek backing from more traditional sources.
The Spitzes are trying to find a location for their 15-barrel brewery. They're looking for about 2,000 square feet; right now they're focused on Farmingdale.
Perhaps the most startling part of Moustache's quest for funding is the number of donors who have never met the Spitzes or tasted their beer. According to Lauri Spitz, about 25 percent are strangers. Although many are on Long Island, some live as far away as the United Kingdom and Australia.
Mark Colacioppo, of Old Brookville, heard about Moustache through a friend's Facebook post. After researching the company, he found their Kickstarter campaign -- which includes a quirky silent film starring the Spitzes -- and pledged $250.
"I liked the pitch they made," Colacioppo says. "I have not tried their beer yet . . . but have heard only great things through the grapevine. As a longtime craft beer lover who supports entrepreneurs, helping out a Long Island-based brewery was a no-brainer."