Your interest paid in fine wine, with Maxime Debure
When you lend someone money, you give up the usage of those funds - temporarily if things go well, permanently if they don't - and so, to make it worth your while, you charge the borrower interest. That's just business. But sometimes business is good to you, and instead of your interest being paid in boring old Euros, you get paid in fine wine!
That's the concept behind WineFunding, the world's first crowdfunding and alternative financing platform specifically for wine companies. With equity and debt-based model, any wine lover can now also become a wine producer, and drink the glorious rewards of that work.
"It’s a passion investment, but it doesn't need to be irrational or risky."
WineFunding's home page is at https://www.winefunding.com/en, with the list of available and funded projects at https://www.winefunding.com/en/projects/explore (I picked this one essentially out of the hat for the episode, https://www.winefunding.com/en/domainebaudon but you're just out of time to participate now)
You can also find videos of those projects on Youtube at https://www.youtube.com/c/Winefunding
WineHub, the co-working and events space dedicated to the wine industry and whose seed funding was raised on the WineFunding platform, can be found here: https://winehub.fr/
If LinkedIn is more your pace, you can find Maxime there (https://www.linkedin.com/in/maximedebure/) as well as pages for WineFunding and WineHub. While you're there, send me a connection request, too.
The wine estates that were bought by the other Pierre's aboard the Berg China were https://cabriere.co.za/ and https://www.la-motte.com/, and are both worth a visit
You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24
If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.
Regards,
Brendan
The full written transcript, with timestamps, is below:
Maxime Debure 0:00
WineFunding is not a crowdfunding platform, WineFunding has a crowdfunding platform.
Four years after the first deal, we invested another E500,000 this time, and recently we bought vinyard for another E500,000 for him. So a company that was not supported by any banks, he had no guarantee from family or anything, thanks to investors passionate about wine, he started his company.
And now... the banks are actually knocking at the door please can we finance you?!
Brendan Le Grange 0:34
When the huegenots were fleeing religious persecution in France, 300 and some years ago, the Berg China was one of the ships that took some of them from Rotterdam to refuge in South Africa.
Aboard that ship were three Pierres of note for today's story, Pierre Jordaan, Pierre Joubert, and Pierre Grange.
Pierre Jordaan bought Haute Cabrière. Pierre Joubert bought La Motte. And even today, these are two of South Africa's most storied wine estates, both with stunning views and award winning produce.
And Pierre Grange?
Well, unfortunately, he did not buy wine estate to leave to me, hs great grandson at least eight times over. That said I may not have missed my chance to be a wind farm owner, because in today's episode, I'm talking wind funding, and how peer to peer credit extensions can now make me a wine farm part owner, or at least a wind project sponsor repaid in the wind that my money helps make possible.
Welcome to How to Lend Money to Strangers with Brendan le Grange.
Maxime Debure, welcome to How to Lend Money to Strangers.
You're a winemaker turned consultant turned entrepreneur, with several wine related businesses up and running - most particularly for us today, you're the CEO of WineFunding.
So I think it's pretty clear what the theme of today is going to be. But before we get into what you're doing now, your background also includes some names that people in the financial services world like me would have heard of plus an MBA at INSEAD. So a bit more of a familiar background than people may at first have thought.
Maxime Debure 2:21
Thank you, Brendan, for having me on the show. I graduated with a Master of Science in agricultural sciences. I specialised in viticulture, and also I have a double degree in enology. I really enjoyed it.
I worked for five years as a winemaker, we can call it a flying winemaker because I started in Australia, and then I went to California, and Chile. And I spent a few years in South Africa - where I met my wife, so it was a good reason to stay a few years!
And when I was in South Africa, I met an entrepreneur who wanted to develop a wine project. And he hired me as a consultant. I was 23 years old. But I really wanted to work on the business and financial aspects. And this is why instead of doing a PhD, which I wanted to do, I thought, okay, I'd rather maybe go for an MBA. And as you mentioned, I went to INSEAD, where I spent a fantastic year.
And after that I followed quite a classic career: I went to strategy consulting. And I think it was great experience. I spent three years there, I learned a lot and I'm still using everyday the skills that I've learned there. But I missed my wine.
I thought that making wine is more fun than making slides.
So I went back to the wine industry. I was lucky enough to find a fantastic experience there to turn around a distressed business based in Bordeaux - it was really the 101 for an MBA with everything I had learned. So I turned around this small business, and the shareholders were quite happy about the work. So they also gave me two other businesses that were not performing.
The first business I turned around was the wine merchant, buying wine from producers, bottling it, and selling it around the world. And the two other businesses were very different, they were wine estates producing grapes, making wine from the grapes, and then selling it.
I spent three years there. I really loved it. I really worked like an entrepreneur. As a wine merchant, I was buying lots of wine, was selling 5 million bottles from producers who I understood had difficulties finding financing for their projects. The banks were not always folending to them, they'd wait many years to pay back the loan before they could take another one. The wine industry around the world, actually, is very often under-capitalised. Many of them need equity.
So as I noted is on the one side of my experience, the wine estates need alternative financing from the bank.
And on the other side, I met lots of people who were passionate about wine. And they always told me are you a winemaker? Can you organise a wine tasting, and I was always doing it with pleasure. And they when we started talking about wine, they were telling me "oh, I've got so much wine in my cellar, I'm buying wine every year, more than I could ever drink in my whole life, so I need to stop buying wine... but I want to invest in the wine industry, in the wine business. I want to come closer to what it is to make wine, do you have any opportunities I can invest a small amount of money in?"
So it was many people telling me that. It's not necessarily people who have E10 million to buy a wine estate, it's wine lovers who would like to take part in the adventure of wine, and they want to invest maybe E5,000 or E10,000 - you can't buy a wine estates for E10,000, or even E100,000 Euro, you can't buy your wine estate, but you can buy shares in a wine estate.
So I thought there was something to do there, to match these wine lovers with money to invest on the other side, and the wine estates who were needing financing, alternative financing from the bank.
This is where the idea of WineFunding came.
Brendan Le Grange 6:20
Yeah, I think it's really interesting, because part of the enjoyment of wine is that idea of wine and wine farming and all the other things that go with it, other than just, you know, the wine in the bottle. And so I can see that appeal of people saying, well, we want to get more involved, we want to be participating in the wine.
Coming from South Africa and growing up near the wine areas, where you'd go for a drive through the wine areas, you do some tastings and see some harvest things in a little farm or little estate, and you suddenly feel a lot more connected to their bottles. Bu
t I think there's probably also a downside there. When we think of wine as the people on the consuming side, we have this very romantic idea of what it means to make wine, and we have a picture in our head of a little old farmer off on the hillside somebody making wine. And you know, looking at your background, of course, I knew it must be happening. But you forget all about that side of the industry.
So when we actually thinking of wine production, how much of it is business knowledge? How much does a good wine estate owner a good wine maker need to know about business these days? Is that a core part of what they doing day to day?
Maxime Debure 7:32
Yeah, I think it depends on the size of the business. We start from small businesses, but of course in big business there's a CEO/ CFO, like normal companies, but even a small wine estate is a business.
I would say it's quite a challenge for a wine estate owner, let's say because he has to have many different skills, you must be a farmer, because he needs to grow vines, all the diseases, the problem of frost, the problems of hail, there are many, many problems when you're trying to grow a grape. And this is just the first step.
When you have the grapes, then you must make sure you're able to turn it into a proper and decent wine. That's the second skill, winemaking. And then, when you have a good wine, it needs to be sold. So you must be also a salesman.
There are not many agricultural businesses where there's such a strong link between the ground where the plant is growing. And the consumer when he has the product in his blade or in his glass in case of wine. If you buy the strawberries, you don't always know where it's coming from. And it can be processed, maybe your growth, but then you lose track. It's not that many products that have always had this link as strong down the value chain.
Brendan Le Grange 8:50
Yeah, and sort of bringing it back to wine finding and the sort of under supply of capital, I think that said, we've got this lovely idea in our heads of what it means to produce wine. And we might have a favourite bottle from a little estate somewhere that we feel like it's our inside secrets are like a family recipe. And we love the idea of a smaller state doing something a little bit different. Going back to some traditional methods or being organic. I've seen some spiral grape planting and all sorts on your projects without sort of pre empting too much but you know, we love that idea as consumers. But then we don't think about what does that mean for all raising the capital.
So you saw this gap and you think okay, well, that's a different lifestyle is just as you need 10 million spare euros to get into the game. But for 10,000 or even for far less as we will discuss, you're presenting me as a wine lover with this opportunity to participate production and in that lifestyle. So what is WineFunding, the first equity crowdfunding platform dedicated to wine?
Maxime Debure 9:52
Exactly, to provide alternative financing to wine estates and connect them with wine lovers who are willing to invest.
This was the initial idea, because they were always relying on bank debt, when the typical wine maker wants to buy or own a wine estate in France, or in Europe at least, when they buy a wine estate, they take a loan for 30 years, and they spent 30 years paying back the loan. And if they have another project, well, it's not always possible because the budget, and the business plan has been designed to pay back the loan and not more.
Sometimes they can develop and they can raise more debt. But if they are entrepreneurs willing to grow a bit faster than only with debt, then it's quite difficult to get additional funding. And this is why I started wine funding with the equity crowdfunding model, you become a shareholder of the wine estate, it has a shareholder agreement, everything is digitalized on the internet, and you can do it very easily on the crowdfunding platform with smaller amounts invested from E1,000 you can become a shareholder. And then we always organise the exit.
It's good for both parties, because the wine estate owner knows that you will buy back the shares from you, at a certain time, most cases five to seven years. And as an investor, you want also to get your money back at some point. And if both parties want to continue to the shareholding scheme, they can.
And then we have the Club Deal model, which is also equity, where each investor will bring a much larger amount, minimum E200,000 up to E1 million per investor - so with three or four investors, we can raise 2 million euros. We form a club to make a deal, an equity deal.
It's very similar to crowdfunding, it's just small crowd, big funding.
But it's exactly the same model. We put together with you we structure the deal, and we make it happen. It's just that if we have to raise 2 million or 5 million, with only small investors at E10,000 each, it will be hundreds of investors. So it can become a problematic.
During COVID, during lockdown, nobody was allowed to drive more than 100 kilometres. So we couldn't go to the wind states, we did a live testing and we we talked about the business, what they want to do, what they want to use the money, what is the impact for the investor, we talk about all these topics about investment. And it's a meeting that can take one hour or one hour and a half. And we interrupt this boring part of the business by tasting the wines produced by the the wine estate.
We've done a club deal for 1 million euro during the first half of hard lock down, and we had to send the wine and we tasted the wine from a distance talked about the investment. It can also work because we are digital where we connect to wine investors, when others with the wine estate. I started to do it actually, when I started WineFunding in 2016. It was too early, I think. Zoom didn't exist, we had five people showing up. So it was a failure and we stopped.
When COVID happened, everybody, even 70 years old people could use Zoom. So we started to do live testing. But we were I think the first in the world to do a live testing. Now everybody does it, but in 2016 I'm not sure many people were doing it.
Then the second model that I developed instead of equity, it's debt. It's a wine bond where you invest, for example, E5000, you get E1000 paid back every year, over five years. So after five years, you've recouped your initial investment of E5,000 and each year you receive interest in wine, your interest is paid in wine. A
nd to my knowledge we are the only want to do it in the world. Because it's not that easy from a legal fiscal and regulatory perspective to structure it but it's a proper financial security, a proper bond. We are registered with the financial regulatory authority in France at this stage and later this year, we will become also certified in Europe trade many of our investors are already coming from outside France.
Brendan Le Grange 14:19
People use some of these terms more as being descriptive and you think okay, why and bond and that's going to repay me in wine. Thank you probably get away with doing that without actually registering and making it official that this is actually a legitimate financial instrument.
This is not just a term that's been used in marketing, you've genuinely bolt a regulated bond, which I think is very impressive and also proper lending product which I think eases the mind of investors when they look at these various projects.
Maxime Debure 14:50
Exactly. And this is very important to reassure investment. Our business is based on trust a lot. So from the beginning, I wanted to make it registered.
It's a significant amount of money, even 1,000 euros. is still 1,000 euros. We do the due diligence on the company, we structure the deal that it's fair for both parties, attractive for the investor but it's not too costly for the wine estate, we tried to find the right balance.
And then there's another model, which is lighter, I call it the wine payback. Instead of investing E5,000, you would just finance for example, E500 and you will receive for three years E200 worth of wine, so you get E600 of wine and you've only paid E500 for it. And every year you receive the new vintage you, you start to create a connection with the wine estate.
And when you share the wine with your friends, it's completely different. Because you have a story to tell, like you've seen some of the project you mentioned with the vineyard planted in its purest form. And there's always lots of fascinating story you can tell the way wine is produced the way wine is enjoyed falling in time.
So it's fascinating and creating a connection between the wine estate and the wine lover is something that both parties want to do.
The wine lovers want to get into the intimacy of creating wine, and the winemakers they're starting to realise that it's important to connect with the consumer. In South Africa as an example, you mentioned, as always been very good at connecting with the consumer, when you see a well they receive you on the wine estates, it's fantastic touristic experience to visit the wine is that much better wine tourism than in France, they connect with consumer.
Brendan Le Grange 16:36
Yeah, it's been a big part of the South African wine industry. But that same sense of community is obviously really important for the idea of crowdfunding.
And you've developed the story, but I see it's even more hands on then that - you had a WineFunders event recentlyin Bordeaux, and I was watching the video from that, people are sitting at the farm sorting grapes, tasting their juices mixing their own blends, you really physically linking them to those projects. And those stories as well. This is a real community, not just a gathering of funds.
Maxime Debure 17:11
When they have invested through WineFunding, we call them Wine Funders. When the Wine Funders share the wine of the wine estate that they've invested in, they are the most sincere and genuine ambassadors you can dream of as a wine estate, because they're part of the the adventure, and they share that with their friends. They can say this is my wine, you know, even if they only own 0.5%, they can say it's my wine. And that's what they like, I think.
You connect with the wine estates. And you remember it, you when you drink a bottle of the wine, it tastes different because you have in your memories, or the good time you spent on the wine estate with your friend with the people receiving you. And this connection is very precious, we go one step further. With wine funding, we create an even stronger bond. And this is what I think both parties find attractive in this model.
Brendan Le Grange 18:03
Yeah, let's stay in that sort of area for a moment. Because obviously, the other side of the lending is the borrowing to say you're funding a range of projects. So starting, I think in France, but now I've seen projects around the world, but also spanning from things like funds to construct new facilities, to people experimenting with new varietals to adopting and so changing their processes to be organic or greener. So something for everyone that includes in terms of the financial spectrum from 'do you have a spare million euros laying around? Or do you have 600 euros that you'd like to lend'.
I'll be coming across to France later this year for the Rugby World Cup and I went to just look on the map to see in the areas that I'm visiting. Are there any projects, I saw domain budong. There's obviously many projects going on. But yeah, 600 euros today, four bottles of wine per year for the next four years, and then a balloon payment at the end, which includes if my translations are right there, but it includes the wine made with the grapes that you you have to plan. So it really does create that full circle that big story.
Now, it's probably for you a little bit like choosing Who's your favourite children. But are there any projects of yours that you really think are great examples of the work that the money has done that was lent or invested by wine funders?
Maxime Debure 19:25
Exactly, but like you said, it's like choosing between your kids which one you prefer. I love them all, drink their wine regularly.
But one that I found quite interesting. It was actually the first project we financed on wine funding with 30 different investors for someone who had worked for 10 years for good wine estates and he wanted to start his own winemaking company had no friends. He didn't come from a wealthy family. He didn't own any vines. It couldn't buy anything. So we helped him to kickstart his business with E100,000 of equity.
So he was very good at selecting the grapes, making the wine. He's very talented. He's learning how to sell it for the third part of the job that I mentioned earlier. So I helped him a bit. I put him in touch with an importer in the US. And he started to sell his wine. He was selling 20,000 bottles per year. Then he started to be too tight in his garage, because he started to make wine in his garage! He said, 'yeah, I need a proper cellar where I can make more wine. And I found this house is a stone house. It's got a beautiful cellar where I can make wine, you know, stone vault cellar where I can put my barrels, but there's a house next to it and they are selling everything or nothing, but I don't need the house. What can I do?'
I said no problem. You know what, we buy whole thing. And in the house, you will make Airbnb to receive wine tourists. I think four years after the first deal we invested another E500,000 this time. And recently we bought vinyard for another E500,000. So a company that was not supported by any banks, they refuse to finance him because he has no fun. He had no guarantee from family or anything. Thanks to investors passionate about wine, he started his company. Now, the banks are actually knocking at the door, please, can we finance you?
There is a great satisfaction to see that we have managed - collectively, it's not only WineFunding, it's also all the investors that have trusted us that trust the winemaker. And to see the company flourishing is a great, great satisfaction, I would say.
There are many other examples we can mention. Over the past six years, we have received 900 applications for financing from mostly wine estates or wine producers, wine merchants, but also producers of, for example, barrels or corks, distributors, startups - we finance the whole value chain of the wine industry.
We've only selected 45. 45 is quite significant, but it's not much. It's 5% of what we've received.
The criteria we've used to select only 5% are the following:
The first one is the wine quality, the wine profile. We want to make sure that our investors happy to taste the wine from the estates that I've invested in. I would not accept if a WineFunder calls me and said they are received the wine and it's not that great. I could not do that.
The second criteria is more classic in the in the investment world. It's the due diligence. We check if the company's financially sound if the project makes sense for the company, if it's creating value, safe for the investor, they are not going to be locked for life. Although not so glamorous things in the world of wine, we have to do that.
It's very important because it's a fun investment, it's a pleasure investment, a passion investment, but it doesn't need to be irrational and dangerous or risky.
And the third criteria is the sustainability approach in the way the company operates, and the way the project is managed. For us, it's very important. It's always been one of my conviction. And I think it's what's also interesting for the, for the investors, many people, probably they're listening your podcast, or investing in ETF in all kinds of financial products. It's always a financial product, it doesn't really taste anything. And with with with wine investment, you can give sense to investment, you invest in something that makes sense, you know which business you're helping.
Brendan Le Grange 23:46
And I'm glad you brought that up. Because obviously we're one we're a lending podcast, and many people in lending have conservative in their risk taking, and want to know the controls. But also because I think if we talk crowdfunding, the first brand that pops up in people's mind is Kickstarter. And Kickstarter has got a lot of projects that are very suspicious, some percentage, some large percentage are never going to get off the ground for whatever reason, they're not going to launch whereas this is not the case. You've been very selective.
Maxime Debure 24:15
Very often I've said that WineFunding is not a crowdfunding platform, WineFunding has a crowdfunding platform. And it's very different.
We are more a corporate finance boutique with different tools, the club deal, it's a different tool, we could do club deal without the crowdfunding platform. The crowdfunding platform is the tip of the iceberg, the one you can see, but the larger amount of money, much larger amount of money, is invested in club deals.
And the third tool that we will develop near future is NFTs because it's another alternative way to finance wine estates.
So I think wine funding is definitely corporate finance boutique dedicated to the wine industry and we have different tools: the crowdfunding platform, club deals and soon to come blockchain.
Our expertise relies not in blockchain or in crowdfunding, our expertise relies on selecting the right project, structuring the right deal for the investors then following for a few years, like a private equity firm does, and we follow them for a few years, and we make sure the exit happens as planned.
What I love to do is to see the company that we've invested in, see them grow. And this is what I'm very excited about.
Brendan Le Grange 25:32
Yeah, I love that. I think it is a very clear and important distinction.
And Maxime obviously, French wine or wine in general, ready travels all the way around the world. One of the things I was impressed with looking at the completed projects on wine funding, is the number of international investors are there. So this is not a a platform for French money. This is a platform for anybody who loves the industry. So you've got people from around the world that are in your WineFunders.
Maxime Debure 26:03
Exactly. Because the web is open, so anyone can come browse the project, you can invest from anywhere in the world, the company, we were mentioning, 30 investors initially, now we have 60 investors, there are 14 nationalities in the 60 investors. And when we did that event that you saw in the video, there were investors from Greece, Spain, Denmark, from Brazil, Belgium from different nationalities, yes, 14 nationalities.
Brendan Le Grange 26:33
Yeah, so that means obviously, that anyone listening today is potentially a wine finder.
So if they are interested in getting involved or learning more and seeing what you've done already, where's the best place for people to go to follow the the WineFunding story?
Maxime Debure 26:50
I think the best is to connect websites where you see the different projects run through them, you can contact us via email, we always try to answer as quickly as possible.
Brendan Le Grange 27:00
That's www.WineFunding.com, the the main page. Yeah, and I think the number of funded projects on there is also really interesting, because obviously, in a crowd type business, it can be hard to get everyone at this same place at the same time. But clearly, it's something you're doing very well,
Maxime Debure 27:15
They can check with our YouTube channel where we have about 100 videos on interviews of wine funded businesses.
Brendan Le Grange 27:22
I mean, I think it really reflects that amount of vetting that you've done. There's really detailed, great descriptions of the projects, even for people just interested.
Maxime Debure 27:30
And please feel free to contact us info@winefunding.com
Some projects are properly translated in English, we haven't had time to translate all of them in English. So sometimes I encourage you to just use the automatic translator from the browser, it works better and better every day. It's not as good as when we've done it ourselves. But if it's not clear, if your transport automatic translator doesn't work, please feel free to contact us to ask more detail.
Brendan Le Grange 27:58
Maxine before I let you go completely I saw in the list of funded projects, one in particular: WineHub, which is one of you otherbusinesses as well.
Maxime Debure 28:09
That's funny and the timing is actually perfect because I just moved recently to the part of the of the building that is finihsed and we will open the WineHub next Wednesday.
WineHub is my little latest baby actually, it's a co working and event space dedicated to the wine industry. I had this idea so I had to present my project WineFunding to get it financed, and then I went to the bank to complement the equity. To my knowledge is the first in the world.
We will have some wine merchants, web agencies specialising in making websites for wine industries, or mostly, communication agencies who are doing social media for wine producers, we will have wine consultants, some wine startups who are going to invent new ways to monitor the vinyards or to taste the wine. Of course, in this co working space, there will be a wine bar. And all the wines that will be available in the wine bar will be funded on WineFunding. And we're looking forward to the opening next week.
Brendan Le Grange 29:14
Yeah, well, I wish you the best of luck with that. And of course with wine funding and all the projects you you're bringing to life there. I will be in Bordeaux in September. So maybe we'll come knock on the door and see if anybody's home.
Maxime Debure 29:28
We will let you taste some of the wines of the producers.
Brendan Le Grange 29:31
Thank you so much, Maxine for your time. It's been really interesting. As I said, I've always enjoyed wine and growing up near a wine area had a vague idea of what's going on but never thought about the financial side and looked at those projects and from Chile to France. Lots of projects that are of interest to me, and I'm sure anyone listening as well. And then to hear about, you know, wine startups and wine businesses growing off the top of that. It's exciting time. So yeah, thank you for educating me.
Maxime Debure 29:58
Thank you very much going on timing me Thank you for the questions, feel free. Any one was listening to contact us for more information, whether you want to invest or whether you have a project that you want to be financed, we have the address info at wind funding.com. You can also contact me via my LinkedIn profile, no problem. And that's great. Thank you, Brendan.
Brendan Le Grange 30:20
And thank you all for listening.
Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn where lending nerds are found in our largest concentration, plus send me a connection request while you're there. This show is written and recorded by myself Brendan Le Grange in Brighton, England. Show music is by Iam_wake and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show
And I'll see you again next Thursday.