Jim Rutledge Cancels Crowdfunding

Last week, I criticized Jim Rutledge's effort to raise funds for his new distillery through a crowdfunding website. On Friday, Rutledge pulled the campaign which, in its first week, had only raised about $10,000 of the $1.9 million it had sought.

In a message citing the campaign's "lackluster performance," Rutledge acknowledged that "mistakes were made by the management team" and that "the perks program could have been handled a lot better as well." Those who contributed will be refunded 100% of their contributions (something Rutledge did not have to do under the terms of the contribution).

Cancelling this campaign was the right move by Rutledge, and he did it in an honorable way. Everyone makes mistakes, but not everyone comes back from them with humility and grace, so kudos to Rutledge.

His announcement also noted that he has heard from a number of additional private investors, so hopefully he will get funding for his distillery and we will all be able to enjoy J.W. Rutledge bourbon and rye in the future.

Jim Rutledge Lays an Egg

For the past decade, Jim Rutledge has enjoyed a privileged status among bourbon lovers. Serving as Master Distiller of Four Roses at a time when it was reintroduced to the US after a long absence, Rutledge is respected for the uncompromising quality of his product and his disdain for flavored whiskeys. Four Roses has been one of the highlights of the bourbon revival and much of the credit for that has gone to Mr. Rutledge (though the Kirin Corporation, which purchased Four Roses in 2001 and saw it through the revival, certainly should share in the credit). In 2015, Rutledge announced his retirement from Four Roses.

Last week, Rutledge unveiled a new project, the J.W. Rutledge Distillery. Rutledge announced plans to build a "world-class," mid-sized Kentucky distillery where he will make bourbon and rye. Rutledge has formed a limited liability corporation with two business partners.

So far, it all sounds great, but here's where it gets a little weird. Rather than do what most businesses do and seek out investors, Rutledge is planning to raise the initial $1.9 million through the Indiegogo crowdfunding site. This initial amount will cover start up costs such as legal fees, consultants and property costs.

Now, I've contributed to crowdfunding campaigns before. They can be a great way to support an artist or craftsperson who needs some initial cash to realize a project they could not otherwise fund, but this is very different. This is an industry veteran with many contacts who wants to build a large and presumably profitable factory, and rather than rely on investors who will be rewarded with equity in the project, he wants us to give him these initial funds for free.

Well, not exactly for free. The benefit of contributing to crowdfunding campaigns is you get rewards, but Rutledge's rewards are downright crappy. For a $50 contribution, you get a t-shirt; $100 gets you a commemorative coin which gives you "first access to special releases through the gift shop" (i.e. you can use it to pay them more money!); $175 gets you two commemorative coins plus 15% off of non-alcohol merchandise from the distillery gift shop (most crowdfunding sites do not allow you to offer alcohol as an incentive); $400 gets your name on a brick at the distillery; all the way up to $1,250 which gets you an invitation to the grand opening.

On top of those lackluster prizes, Rutledge is using "flexible funding," which means that they get to keep your money even if they don't reach their goal.

I love the idea of a Jim Rutledge distillery and I hope it is a success, but this campaign is seriously uncool. Jim Rutledge has earned himself a great reputation, and now he is using that reputation to take advantage of whiskey lovers...some of whom will get their name on a brick.

But hey, if you are the type of person who is into giving money to a for-profit venture and getting little in return, please consider the Sku Store.