Santa Barbara Winery looks to the community for investment
Correction: This story has been updated to more accurately reflect the value of the bond and explain how much investors could receive by the end of the term.
A project nearly three years in the making is hoping to be completed by the middle of spring — and it will be done using funds from the public to help make a dream come true.
Dave Potter, owner of Santa Barbara-based Municipal Winemakers, aims to open his third location — and first in Ventura — by April.
But instead of securing the funds in the form of a loan, he is banking on fans of the brand to participate in the fundraising effort and even helping them make a little money along the way.
In January, Municipal Winemakers launched a $124,000 crowdfunding campaign on the site SMBX to fund the buildout of the new Ventura location.
“I actually got the idea talking to a friend of mine. He’s got a bakery up in Northern California, and he’d raise money this way and I think it’s really cool,” Potter told the Business Times Jan. 9.
“It’s a way to sort of fold in our existing audience and get people more invested in that, literally.”
SMBX is a marketplace connecting small businesses and everyday investors. They issue Small Business Bonds businesses can borrow money from investors at competitive rates, raising the funds needed to expand their business while increasing customer loyalty.
Since 2020, over 162 small businesses have raised $14.5 million on the SMBX marketplace, according to the company.
Municipal Winemakers has issued Small Business Bonds on the SMBX marketplace to allow people to invest directly in their business via a bond.
This bond yields a fixed interest at 11% and interest is accrued daily beginning on the offering’s completion date or bond issuance date.
Investors will receive a payment each month after the completion date, which includes the principal amount, or original investment, and the interest. As the principal is paid down, interest will also decrease and will be calculated based on the remaining principal until the principal on an investment is fully paid back to an investor.
This means if someone invested $100, over the next 36 months, receive roughly monthly payments of $3.27 and, in the end, get back $117.86, according to the website.
“It’s an actual opportunity for people to make a little bit of money while also supporting us and then we get to borrow money and hopefully grow the business in the next few years,” Potter said.
So far, over 50 people have invested in the company’s fundraising efforts, totaling over $20,000, Potter said as of Jan. 9.
Potter said the minimum amount needed to be raised for the crowdfunding campaign to be approved was $20,000, and the company has until the end of the month to raise as much of the $124,000 as possible.
“This is our first time attempting to do anything like this so we didn’t want to go too huge with the amount needed, but if this goes well, this is definitely something we would consider doing again,” Potter said.
Municipal Winemakers was founded in 2007 by Potter and is now up to two tasting rooms in Santa Barbara with seven employees across both.
The last few years have not been easy for small business owners, with COVID-19 and the economy struggling, but Potter said Municipal’s efforts in digital marketing helped get them through the pandemic.
“We are settling back into a groove and re-learning how to re-run this business open to the public. There’s a lot of competition and so I am not sure what this year has in store,” he said.
But one thing this year will have in store is the opening of that Ventura location.
Potter said he first purchased the 5,000-square-foot building in 2021 during the height of the pandemic for $1.275 million.
Originally, the plans called for a much bigger restaurant and winery-type deal before the scope was narrowed to a tasting room — one of the only ones that will exist in Ventura County as it is known more for its breweries and bar scene.
“It’s a little intimidating. There’s a lot of unknowns and in some ways, it’s easier to kind of open a spot where there’s already a fish swimming around,” Potter said.
“But we are excited… Muni, I think, will sort of appeal to the beer-adjacent audiences. I’ve had my eye on Ventura for a long time because I think there’s a lot of opportunity there.”
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