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Bespoken Spirits raises $2.6M in seed funding to combine machine learning and accelerated whiskey aging

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Bespoken Spirits, a Silicon Valley spirits company that has developed a new data-driven process to accelerate the aging of whiskey and create specific flavors, today announced that it has raised a $2.6 million seed funding round. Investors include Clos de la Tech owner T.J. Rodgers and baseball’s Derek Jeter.

The company was co-founded by former Bloom Energy, Blue Jeans and Mixpanel exec Stu Aaron and another Bloom Energy alumn, Martin Janousek, whose name can be found on a fair number of Bloom Energy patents.

Bespoken isn’t the first startup to venture in accelerated aging, a process that tries to minimize the time it takes to age these spirits, which is typically done in wooden barrels. The company argues that it’s the first to combine that with a machine learning-based approach though what it calls its ACTivation technology.

“Rather than putting the spirit in a barrel and passively waiting for nature to take its course, and just rolling the dice and seeing what happens, we instead use our proprietary ACTivation technology — with the A, C and T standing for aroma, color and taste — to instill the barrel into the spirit, and actively control the process and the chemical reactions in order to deliver premium quality tailored spirits — and to be able to do that in just days rather than decades.”

Image Credits: Bespoken Spirits

And while there is surely a lot of skepticism around this technology, especially in a business that typically prides itself on its artisanal approach, the company has won prizes at a number of competitions. The team argues that traditional barrel aging is a wasteful process, where you lose 20 percent of the product through evaporation, and one that is hard to replicate. And because of how long it takes, it also creates financial challenges for upstarts in this business — and it makes it hard to innovate

As the co-founders told me, there are three pillars to its business: selling its own brand of spirits, maturation-as-a-service for rectifiers and distillers and producing custom private label spirits for retailers, bars and restaurants. At first, the team mostly focused on the latter two — and especially its maturation-as-a-service business. Right now, Aaron noted, a lot of craft distilleries are facing financial strains and need to unlock their inventory and get their product to market sooner — and maybe at a better quality and hence higher price point — than they previously could.

There’s also the existing market of rectifiers, who, at least in the U.S., take existing products and blend them. These, too, are looking for ways to improve their processes and make it more replicable.

Interestingly, a lot of breweries, too, are now sitting on excess or expired beer because of the pandemic. “They’re realizing that rather than paying somebody to dispose of that beer and taking it back, they can actually recycle — or upcycle maybe is a better word — the beer, by distilling it into whiskey,” Aaron said. “But unfortunately, when a brewery distills beer into whiskey, it’s typically not very good whiskey. And that’s where we come in. We can take that beer bin, as a lot of people call initial distillation, and we can convert it into a premium quality whiskey.”

Image Credits: Bespoken Spirits

Bespoken is also working with a few grocery chains, for example, to create bespoke whiskeys for their house brands that match the look and flavor of existing brands or that offer completely new experiences.

The way the team does this is by collecting a lot of data throughout its process and then having a tasting panel describe the product for them. Using that data and feeding it into its systems, the company can then replicate the results — or tweak them as necessary — without having to wait for years for a barrel to mature.

“We’re collecting all this data — and some of the data that we’re collecting today, we don’t even know yet what we’re going to use it for,” Janousek said. Using its proprietary techniques, Bespoken will often create dozens of samples for a new customer and then help them whittle those down.

“I often like to describe our company as a cross between 23andme, Nespresso and Impossible Foods,” Aaron said. “We’re like 23andme, because again, we’re trying to map the customer to preference to the recipe to results. There is this big data, genome mapping kind of a thing. And we’re like Nespresso because our machine takes spirit and supply pods and produces results, although obviously we’re industrial scale and they’re not. And it’s like Impossible Foods, because it’s totally redefining an age-old antiquated model to be completely different.”

The company plans to use the new funding to accelerate its market momentum and build out its technology. Its house brand is currently available for sale in California, Wisconsin and New York.

“The company’s ability to deliver both quality and variety is what really caught my attention and made me want to invest,” said T.J. Rogers. “In a short period of time, they’ve already produced an incredible range of top-notch spirits from whiskeys to rum, brandy and tequila–all independently validated time and again in blind tastings and prestigious competitions.”

Full disclaimer: the company sent me a few samples. I’m not enough of a whiskey aficionado to review those, but I did enjoy them (responsibly).

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Political strategist turned tech investor Bradley Tusk on SPACs as a tool for VCs

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Bradley Tusk has become known in recent years for being involved in what’s about to get hot, from his early days advising Uber, to writing one of the first checks to the insurance startup Lemonade, to pushing forward the idea that we should be using the smart devices in our pockets to vote.

Indeed, because he’s often at the vanguard, it wasn’t hugely surprising when Tusk, like a growing number of other investors, formed a $300 million SPAC or special acquisition company, one that he and a partner plan to use to target businesses in the leisure, gaming, and hospitality industries.

Because Tusk — a former political operative who ran the successful third mayoral campaign for Michael Bloomberg —  seems adept at seeing around corners, we called him up late last week to ask whether SPACs are here to stay, how a Biden administration might impact the startup investing landscape, and how worried (or not) big tech should be about this election. You can hear the full conversation here. Owing to length, we are featuring solely the part of our conversation that centered on SPACs.

TC: Lemonade went public this summer and its shares, priced at $29, now trade at $70. 

BT: They are down today last I checked. When you only check once in a blue moon, you’re like, ‘Hey, look at how great this is,’ whereas if, like me, you check me every day, you’re like, ‘It lost 4%. Where’s my money?’

We got really lucky; Lemonade was our second deal that we did out of our first fund, and the fact that it IPO’d within four years of the company’s founding is pretty amazing.

TC: Is it amazing? I wonder what it says about the common complaint that the traditional IPO process is bad — is it just an excuse that founders and investors use to keep a company private longer?

BT: [CEO] Daniel Schrieber was very clear that he and [cofounder] Shai Wininger had a strategy from day one to go public as quickly as they possibly could, because in his view, an IPO is supposed to represent kind of the the beginning. It’s the ‘Okay, we’ve proven that there’s product market fit, we’ve proven that there’s customer demand; now let’s see what we can really do with this thing.’ And it’s supposed to be about hope and promise and future and excitement. And if you’ve been a private company for 10 years, and you’re worth tens of billions of dollars and your growth is already starting to flatten out a little bit, it’s just much less exciting for public investors.

The question now for everyone in our business is what happens with Airbnb in a few weeks or whenever they are [staging an IPO]. Will that pixie dust be there, or will they have been around so long that the market is kind of indifferent?

TC: Is that why we’re seeing so many SPACs? Some of that pixie dust is gone. No one knows when the IPO window might shut. Let’s get some of these companies out into the public market while we still can?

BT: No, I don’t I don’t think so. I think SPACs have become a way to raise a lot of money very quickly. It took me two years to raise $37 million for my first venture fund, and three months was the entire process for me to raise $300 million for my SPAC. So it’s a mechanism that is highly efficient and right now is so popular with public market investors that there is just a lot of opportunity, and people are grabbing it. In fact, now you’re hearing about people who are planning SPACs having to pull [them] back because there’s a ton of competition right now.

At the end of the day, the fundamentals still rule. If you take a really bad company public through a SPAC, maybe the excitement of the SPAC gets you an early pop. But if the company has neither good unit economics nor high growth, there’s no real reason to believe it will be successful. And especially for the people in the SPAC, where they have to hold on to it for a little while, by the time the lockup ends, the world has probably figured out that this is not the greatest IPO of all time. You can’t put lipstick on a pig.

TC: You say you raised the SPAC very quickly. How is the investor profile different than that of a typical venture fund investor?

BT:  The investors for this SPAC — at least when I did the roadshow, and I think I did 28 meetings over a couple of days — is mainly hedge funds and people who don’t really invest in venture at all, so there was no overlap between my [venture fund] LP base and the people who invested in our SPAC that I’m aware of. These are public market investors who are used to moving very quickly. There’s a lot more liquidity in a SPAC. We have two years to acquire something, but ultimately, it’s a public property, so investors can come in and out as they see fit.

TC: So it’s mostly hedge funds that are getting paid management fees to deploy their capital in this comparatively safe way and that are getting interest on the money invested, too, while it’s sitting around in a trust while [the SPAC managers] look for a target company.

BT: Why it kind of does make sense for [them to back] VCs is they are basically making the bet to say: does this person running the SPAC have enough deal flow, enough of a public profile, enough going on that they are going to come across the right target? And venture investors in many ways fit that profile because we just look at so many companies before deploying capital.

TC: Do you have to demonstrate some kind of public markets expertise in order to convince some of these investors that you know what it takes to take a company public and grow it in the public markets?

BT: I guess. We raised the money, so I guess I passed the test. But I did spend a little under two years on Wall Street; I created the lottery privatization group of Lehman Brothers. And my partner [in the SPAC], Christian Goode, has a lot of experience with big gaming companies. But overall, I think that if you are a venture investor with a ton of deal flow and a good track record but very little or no public market experience, I don’t know that that would disqualify you from being able to rate a SPAC.

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Google sued by DOJ over antitrust practices: What you need to know

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The US Department of Justice has filed a lawsuit against Google today, claiming the company has an illegal monopoly of search traffic. It’s a major challenge to the dominance of the Big Tech companies — the first from the DOJ. But it’s been coming on for a long time.

The DOJ’s complaint is 57 pages long, but to sum it up, it contends that Google uses a series of business deals and shady practices to kneecap any potential competition, calling it “a monopoly gatekeeper for the internet.” The deals it’s made with Apple and other hardware manufacturers to make its search engine the default on so many machines gives it a whopping 80% of the market share. One line of the complaint contends that Google’s dominance is so absolute that “Google” has become a verb that means “to search for something on the internet.”

Google’s response is that its dominance is because of consumer choice, not because of anything illegal it’s done. In a statement issued this morning, Google’s VP of Public Affairs Kent Walker refuted specific allegations that its agreements with other tech companies are the result of anything but competence on the company’s part. “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”

If the lawsuit succeeds, what would it mean for consumers? Google contends that it would “artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.” While the DOJ‘s complaint doesn’t specifically address how it would change things for us, the users, it does say that, at the moment, “American consumers are forced to accept Google‘s policies, privacy practices, and use of personal data.”

The DOJ first opened its investigation into Google last year, and had previously investigated the company in 2013 but opted not to sue it. U.S. Attorney General William Barr allegedly opted to go against advice of the DOJ‘s lawyers in bringing the case this month — initially they’d wanted more time to build their case. State attorney generals in Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas have signed on to support the lawsuit, and it’s possible that other states could bring their own actions against Google.

It’s worth noting that Google isn’t the only company that’s facing criticism from the American government. Earlier this year, the heads of Apple, Google, Amazon, and Facebook — a veritable Four Horsemen of Big Tech — sat in a hearing in July specifically over this issue. While the hearing was not the most productive — as my colleague Tristan Greene pointed out, the congresspeople present seemed to want to talk about everything except antitrust regulation — at least one or two congresspeople said that the companies in general, and Google in particular, have “too much power.” Both Democrats and Republicans seem to agree on that point, though I’m not entirely sure they’d agree on what breaking up that monopoly would look like.

It’s not the first time Google has faced antitrust allegations, but it’s the biggest of any of the lawsuits so far. It could presage antitrust laws being modified or expanded to account for Big Tech, but that would require the complaint to have some measure of success. In any case, it might have to take a backseat to the US Presidential Election taking place next month.

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Watch GM unveil the $80,000 GMC Hummer EV right here

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GM just took the wraps off the Hummer EV and it looks great. The vehicle is coming to dealers in 2022, with pre-orders starting in 2021. You can watch the unveiling here.

The vehicle is detailed here. With 1,000 HP, 350 mile range, and autonomous drive modes, it’s an impressive vehicle though still significantly more than Tesla said the Cybertruck will cost.

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