- Memorandum of Understanding in place with Vingo, a direct-to consumer wine fulfillment company
- Strategic marketing agreement developed for participating wineries that outlines inventory allocation and price structure
- Management team is made up of seasoned executives that have worked together to develop successful direct-to-consumer wine companies for over 10 years
- As a spin-off of Splash Wines, CellarStash has a marketing agreement in place with Splash to market to its community of 150k+ subscribers
- The direct-to-consumer wine market in the USA exceeded $3 billion in revenue in 2019, growing at an average pace of 11% year-over-year for the past 9 years
- Total Amount Raised: US $430,560
- Total Round Size: US $600,000
- Seed :
- Minimum Investment: US $1,000 per investor
- : Crowd Note
- US $6,000,000 :
- Side by Side Offering
The CellarStash model aims to provide access to $100m of wine, but without the costs associated with inventory ownership.
Direct-to-consumer wine marketing has been hampered by two problems: a) the necessity to own and manage expensive inventory, and b) the fact that wine marketers and wineries often have conflicting goals.
The CellarStash model solves both. First, the wines made available on the CellarStash site remain in the control of the winery until they are sold, which means that CellarStash can quickly develop a broad wine selection without a significant capital requirement. Second, the winery partnership protects winery pricing strategies and product availability concerns. The end result is that CellarStash and winery interests are aligned, and we believe this will help the CellarStash marketplace grow quickly and profitably.
The CellarStash model means that the consumer is the big winner. Because CellarStash is unencumbered by traditional restraints, the selection of wines will be able to quickly expand to include a broad range of wineries -- ranging from household names to those that have never previously been sold outside their own premises. Pricing will be competitive and the enthusiast has the opportunity to take advantage of quantity discounts by building their own case from wines across the marketplace or by ordering one of the CellarStash curated cases.
CellarStash is devoting significant resources to building a large base of wine enthusiasts, forecasting over 500k users by the end of 2020. We believe that the access subscribers will have to a broad selection of wines at competitive prices, with spectacular customer service, will lead our customers to rely on CellarStash and ensure the long term success of the concept.
A Side by Side offering refers to a deal that is raising capital under two offering types. If you plan on investing less than US $20,000.00, you will automatically invest under the Regulation CF offering type. If you invest more than US $20,000.00, you must be an accredited investor and invest under the Regulation D offering type.
US $360,560 (under Reg CF only)
Investors who invest $50,000 or less will have their securities held in trust with a Custodian that will serve as a single shareholder of record. These investors will be subject to the Custodian’s Account Agreement, including the electronic delivery of all required information.
- 5% of amount invested to spend on wine at CellarStash
- 10% of amount invested to spend on wine at CellarStash
- 10% of amount invested to spend on wine at CellarStash +6 bottles Champagne
- 15% of amount invested to spend on wine at CellarStash + 12 bottles Champagne
- 20% of amount invested to spend on wine at CellarStash
- 12 bottles Champagne
- Dinner for two with the CellarStash Team at one of the Napa CellarStash Wineries including transportation/hotel
- 25% of amount invested to spend on wine at CellarStash
- 12 bottles Champagne
- Dinner for two with the CellarStash Team at one of Napa CellarStash Wineries including transportation/hotel
It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.
The USA is one of the largest markets in the world for wine and the direct-to-consumer component has grown from virtually zero at the start of the century to nearly 10% of the entire market at the end of 2019. The primary reasons for growth are: 1) the traditional three-tier system cannot accommodate the proliferation of brands in recent years; 2) wine has generally become more accessible as a result of more consumer-friendly laws; and 3) direct-to-consumer internet purchasing in general has matured and become more mainstream.
With the appetite for direct-to-consumer sales expanding, so too has the number of entities marketing wine. At this stage, there are hundreds of direct-to-consumer wine marketing companies, but notable for its absence is Amazon which departed the scene in 2016 due to legal complications associated with its purchase of Whole Foods. That fact, together with the relative immaturity of the market, has ensured that the segment is very fragmented, with companies ranging from a few shipments a month to several that are in the range of $25-$100m in sales.
While wine sales overall are generally flat, the direct-to-consumer segment is projecting double-digit growth for the foreseeable future.
The development and commercialization of the Company’s products and services are highly competitive. It faces competition with respect to any products and services that it may seek to develop or commercialize in the future. Its competitors include major companies worldwide. The direct-to-consumer wine platform is an emerging industry where new competitors are entering the market frequently. Many of the Company’s competitors have significantly greater financial, technical and human resources and may have superior expertise in research and development and marketing approved services and thus may be better equipped than the Company to develop and commercialize services. These competitors also compete with the Company in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, the Company’s competitors may commercialize products more rapidly or effectively than the Company is able to, which would adversely affect its competitive position, the likelihood that its services will achieve initial market acceptance and its ability to generate meaningful additional revenues from its products and services.
The Company’s expenses will significantly increase as they seek to execute their current business model. Although the Company estimates that it has enough runway until the end of year, they will be ramping up cash burn to promote revenue growth, further develop R&D, and fund other Company operations after the raise. Doing so could require significant effort and expense or may not be feasible.
The Company projects aggressive growth. If these assumptions are wrong and the projections regarding market penetration are too aggressive, then the financial forecast may overstate the Company's overall viability. In addition, the forward-looking statements are only predictions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The Company is pre-revenue and may not be successful in its efforts to grow and monetize its product. It has limited operating capital and for the foreseeable future will be dependent upon its ability to finance operations from the sale of equity or other financing alternatives. There can be no assurance that the Company will be able to successfully raise operating capital. The failure to successfully raise operating capital, and the failure to effectively monetize its products, could result in bankruptcy or other event which would have a material adverse effect on the Company and the value of its shares. The Company has limited assets and financial resources, so such adverse event could put investors’ dollars at significant risk.
The Company may be unable to maintain, promote, and grow its brand through marketing and communications strategies. It may prove difficult for the Company to dramatically increase the number of customers that it serves or to establish itself as a well-known brand in the competitive direct-to-consumer wine space. Additionally, the product may be in a market where customers will not have brand loyalty.
In general, demand for the Company's products and services is highly correlated with general economic conditions. A substantial portion of their revenue is derived from discretionary spending by businesses and individuals, which typically falls during times of economic instability. Declines in economic conditions in the U.S. or in other countries in which they operate may adversely impact their consolidated financial results. Because such declines in demand are difficult to predict, the Company or the industry may have increased excess capacity as a result. An increase in excess capacity may result in declines in prices for their products and services.
Through its operations, the Company collects and stores certain personal information that customers provide to purchase products or services, enroll in promotional programs, register on the web site, or otherwise communicate and interact with the Company. The Company may share information about such persons with vendors that assist with certain aspects of their business. Security could be compromised and confidential customer or business information misappropriated. Loss of customer or business information could disrupt the Company's operations, damage their reputation, and expose them to claims from customers, financial institutions, payment card associations and other persons, any of which could have an adverse effect on their business, financial condition and results of operations. In addition, compliance with tougher privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes.
Failure by the Company's transportation providers to deliver their products on time or at all could result in lost sales. The Company currently relies upon third-party transportation providers for a significant portion of their product shipments. The Company utilization of delivery services for shipments is subject to risks, including increases in fuel prices, which would increase their shipping costs, employee strikes, and inclement weather, which may impact the ability of providers to provide delivery services that adequately meet their shipping needs. The Company may, from time to time, change third-party transportation providers, and the Company could therefore face logistical difficulties that could adversely affect deliveries. The Company may not be able to obtain terms as favorable as those they receive from the third-party transportation providers that they currently use or may incur additional costs, which in turn would increase their costs and thereby adversely affect their operating results.
The Company’s cash position is relatively weak. The Company currently has only $247.47 in cash balances as of March 31, 2020. This equates to less than one month of runway. The Company believes that it is able to continue extracting cash from sales to extend its runway. The Company could be harmed if it is unable to meet its cash demands, and the Company may not be able to continue operations if they are not able to raise additional funds.
The reviewing CPA has included a “going concern” note in the reviewed financials. The Company has incurred losses from inception of $199,593, and has not launched principal operations which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the issuance of debt or the sale of stock, its ability to commence profitable sales of its flagship product, and its ability to generate positive operational cash flow. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.
The Company has conducted related party transactions. On February 19, 2020, Splash Wines, Inc. formed a wholly‐owned subsidiary, CellarStash Wine Marketplace, Inc. Splash Wines desired to spinoff the newly created subsidiary providing them the website that they created in exchange for a 6‐month promissory note in the amount of $221,000 and issuance of Company stock equal to amounts held by shareholders of Splash Wines as of date of the transaction, February 28, 2020. Splash Wines also incurred research and development costs in planning for CellarStash’s business plan, which under ASC 730 requires that both tangible and intangible research and development costs acquired in an asset acquisition with no alternative future use be charged to expense as of the acquisition date. Those amounts are recorded as research and development in the statement of operations. The costs Splash Wines incurred in developing the website CellarStash received from Splash Wines in the asset purchase agreement were capitalized and will begin being amortized when once the website is placed into service. Splash Wines also contributed the cash recorded in the balance sheet which is offset by an accounts payable‐related party balance in the amount of $500. Splash Wines accounted for the transaction as an asset transfer under ASC 505‐60‐25‐2. After the transaction, the Company operates as a standalone business that is no longer a wholly‐owned subsidiary of Splash Wines. The Company has also entered into a Marketing Agreement with Splash Wines, Inc., which outlines the agreement that Splash Wines will promote CellarStash to its community. This agreement is a non-arm’s length agreement.
The Company has issued a promissory note with a related party. As discussed above, the Company issued a $221,000 promissory note to Splash Wines on February 28, 2020 in consideration for receipt of the website under the asset purchase agreement. The note accrues interest at a rate of 5% per annum. The note is payable to Splash Wines in interest‐only payments due on April 1, 2020 and May 1, 2020. $25,000 payments are due on June 1, 2020, July 1, 2020 and August 1, 2020. The remaining principal and accrued interest balance is due if not paid sooner on August 31, 2020. The Company will not incur any penalty for prepaying the loan prior to the maturity date.
The Company has not prepared any audited financial statements. Therefore, you have no audited financial information regarding the Company’s capitalization or assets or liabilities on which to make your investment decision. If you feel the information provided is insufficient, you should not invest in the Company.
The Company does not have an employment contract in place with its employees. Employment agreements typically provide protections to the Company in the event of the employee’s departure, specifically addressing who is entitled to any intellectual property created or developed by those employees in the course of their employment and covering topics such as non-competition and non-solicitation. As a result, if an employee were to leave CellarStash, the Company might not have any ability to prevent their direct competition, or have any legal right to intellectual property created during their employment. There is no guarantee that an employment agreement will be entered into.
The Company does not have formal advisor agreements in place with listed advisors. Advisor agreements typically provide the expectation of the engagement, services, compensation, and other miscellaneous duties and rights of the Company and advisor. These individuals may not be compensated for their expertise and advice. There is no guarantee that advisor agreements will be entered into.
SI Securities, LLC owns Series A Preferred Stock in Splash Wines, Inc. SI Securities, LLC owns 37,149 shares of Series A Preferred Stock in Splash Wines, Inc. an affiliate entity of the Company, and may have interests that conflict with those of investors in the Company. The Series A Preferred Stock was received in connection with a prior offering for which SI Securities, LLC served as placement agent for Splash Wines, Inc.
The Company is subject to many U.S. federal and state laws and regulations, including those related to privacy, rights of publicity, and law enforcement. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended, in a manner that could harm our business. The technology and use of the technology in our product may not be legislated, and it is uncertain whether different states will legislate around this technology, and, if they do, how they will do so. Violating existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition and results of operations.
In 2014, the Colorado Securities Commissioner entered into a cease and desist order against a Denver company and its manager for allegedly violating the securities broker-dealer licensing provisions of the Colorado Securities Act in connection with their offer and sale of securities in Colorado. Black Diamond Financial Group, LLC and Patrick Imeson are named in the order. The Division of Securities, a Department of Regulatory Agencies (DORA) division, alleged that from approximately September 2009 to November 2010 the Respondents offered and sold securities of associated entities. In connection with such offers and sales of securities, the Respondents allegedly received compensation exceeding $330,000 in the form of investment placement or structuring fees without being licensed as a securities broker-dealer. The Respondents entered into a cease and desist order, where the Commissioner acknowledged that the Respondent neither admits nor denies that the allegations or matters set further in the stipulation were true. There were no fines or disgorgement.
Start-up investing is risky. Investing in startups is very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. Before investing, you should carefully consider the specific risks and disclosures related to both this offering type and the company which can be found in this company profile and the documents in the data room below.
Your shares are not easily transferable. You should not plan on being able to readily transfer and/or resell your security. Currently there is no market or liquidity for these shares and the company does not have any plans to list these shares on an exchange or other secondary market. At some point the company may choose to do so, but until then you should plan to hold your investment for a significant period of time before a "liquidation event" occurs. A "liquidation event" is when the company either lists their shares on an exchange, is acquired, or goes bankrupt.
The Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends on your interest in the Company. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on the Site.
Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold.
You may only receive limited disclosure. While the company must disclose certain information, since the company is at an early-stage they may only be able to provide limited information about its business plan and operations because it does not have fully developed operations or a long history. The company may also only obligated to file information periodically regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events — through continuing disclosure that you can use to evaluate the status of your investment.
Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should be aware that a portion of your investment may fund the compensation of the company's employees, including its management. You should carefully review any disclosure regarding the company's use of proceeds.
Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that investments will be immune from fraud.
Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company's board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company may not have the benefit of such professional investors.
Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors") Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors"). SI Advisors is an exempt investment advisor that acts as the General Partner of SI Selections Fund I, L.P. ("SI Selections Fund"). SI Selections Fund is an early stage venture capital fund owned by third-party investors. From time to time, SI Selections Fund may invest in offerings made available on the SeedInvest platform, including this offering. Investments made by SI Selections Fund may be counted towards the total funds raised necessary to reach the minimum funding target as disclosed in the applicable offering materials.
Frequently Asked Questions
A Side by Side offering refers to a deal that is raising capital under two offering types. This Side by Side offering is raising under Regulation CF and Rule 506(c) of Regulation D.
The Form C is a document the company must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.
Before making any investment decision, it is highly recommended that prospective investors review the Form C filed with the SEC (included in the company's profile) before making any investment decision.
Rule 506(c) under Regulation D is a type of offering with no limits on how much a company may raise. The company may generally solicit their offering, but the company must verify each investor’s status as an accredited investor prior to closing and accepting funds. To learn more about Rule 506(c) under Regulation D and other offering types check out our blog and academy.
Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $1 million from all Americans. Prior capital raising options limited private companies to raising money only from accredited investors, historically the wealthiest ~2% of Americans. Like a Kickstarter campaign, Reg CF allows companies to raise funds online from their early adopters and the crowd. However, instead of providing investors a reward such as a t-shirt or a card, investors receive securities, typically equity, in the startups they back. To learn more about Reg CF and other offering types check out our blog and academy.
When you complete your investment on SeedInvest, your money will be transferred to an escrow account where an independent escrow agent will watch over your investment until it is accepted by CellarStash. Once CellarStash accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to CellarStash in exchange for your securities. At that point, you will be a proud owner in CellarStash.
To make an investment, you will need the following information readily available:
- Personal information such as your current address and phone number
- Employment and employer information
- Net worth and income information
- Social Security Number or passport
- ABA bank routing number and checking account number (typically found on a personal check or bank statement)
If you are investing under Rule 506(c) of Regulation D, your status as an Accredited Investor will also need to be verified and you will be asked to provide documentation supporting your income, net worth, revenue, or net assets or a letter from a qualified advisor such as a Registered Investment Advisor, Registered Broker Dealer, Lawyer, or CPA.
An investor is limited in the amount that he or she may invest in a Reg CF offering during any 12-month period:
- If either the annual income or the net worth of the investor is less than $100,000, the investor is limited to the greater of $2,000 or 5% of the lesser of his or her annual income or net worth.
- If the annual income and net worth of the investor are both greater than $100,000, the investor is limited to 10% of the lesser of his or her annual income or net worth, to a maximum of $100,000.
Separately, CellarStash has set a minimum investment amount of US $1,000.
Accredited investors investing $20,000 or over do not have investment limits.
You are a partial owner of the company, you do own securities after all! But more importantly, companies which have raised money via Regulation CF must file information with the SEC and post it on their websites on an annual basis. Receiving regular company updates is important to keep shareholders educated and informed about the progress of the company and their investment. This annual report includes information similar to a company’s initial Reg CF filing and key information that a company will want to share with its investors to foster a dynamic and healthy relationship.
In certain circumstances a company may terminate its ongoing reporting requirement if:
- The company becomes a fully-reporting registrant with the SEC
- The company has filed at least one annual report, but has no more than 300 shareholders of record
- The company has filed at least three annual reports, and has no more than $10 million in assets
- The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
- The company ceases to do business
However, regardless of whether a company has terminated its ongoing reporting requirement per SEC rules, SeedInvest works with all companies on its platform to ensure that investors are provided quarterly updates. These quarterly reports will include information such as: (i) quarterly net sales, (ii) quarterly change in cash and cash on hand, (iii) material updates on the business, (iv) fundraising updates (any plans for next round, current round status, etc.), and (v) any notable press and news.
Currently there is no market or liquidity for these securities. Right now CellarStash does not plan to list these securities on a national exchange or another secondary market. At some point CellarStash may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when CellarStash either lists their securities on an exchange, is acquired, or goes bankrupt.
You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement. If invested under Regulation CF you may also receive periodic updates from the company about their business, in addition to monthly account statements.
This is CellarStash's fundraising profile page, where you can find information that may be helpful for you to make an investment decision in their company. The information on this page includes the company overview, team bios, and the risks and disclosures related to this investment opportunity. If the company runs a side by side offering that includes an offering under Regulation CF, you may also find a copy of the CellarStash's Form C. The Form C includes important details about CellarStash's fundraise that you should review before investing.
For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours before a closing occurs or an earlier date set by the company. You will be sent a reminder notification approximately five days before the closing or set date giving you an opportunity to cancel your investment if you had not already done so. Once a closing occurs, and if you have not canceled your investment, you will receive an email notifying you that your securities have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, you may go to your account's portfolio page by clicking your profile icon in the top right corner.
If you invest under any other offering type, you may cancel your investment at any time, for any reason until a closing occurs. You will receive an email when the closing occurs and your securities have been issued. If you have already funded your investment and your funds are in escrow, your funds will be promptly refunded to you upon cancellation. To cancel your investment, please go to your account's portfolio page by clicking your profile icon in the top right corner.