Naked Wines’ angel investment scheme: Why there is such a thing as too popular

By on June 11, 2014

Fine wines can’t be magicked out of thin air, so the company may need to close the door to new angel investors.

Most companies would desperately love new customers. Very few have the opposite problem. Step forward Naked Wines, effectively an Indiegogo for fine wines, which has said it may have to close its angel investment scheme to new members, because fine wine won’t mature overnight.

The company, based in Norwich and founded in 2008, takes on ‘angels’ who pay R350 or more a month to invest in independent winemakers and then get to buy their wines at wholesale prices.

However, it seems there may not be enough boutique wineries to take all the cash that wine-lovers want to throw at them. As managing director Eamon FitzGerald says, “If the current rate of growth keeps up, we will have to shut our doors temporarily to stem demand.”

“We are absolutely not prepared to compromise on the quality of our wines or of our service to existing angels, so closing the door on new business sounds crazy, but actually feels like the most sensible thing to do.”

Naked Wines currently has around 220 000 angels, up from 150 000 in April last year, and is adding around 500 a day from the UK, US, and Australia. Those investors have put money into more than 100 independent winemakers since it was founded by Rowan Gormley, who previously set up Virgin Wines.

FitzGerald’s comments come as a bit of a surprise given Naked Wine’s spate of well-publicised fundraising last year. WIV Wein International, a German direct wine retailer, put in R108 million last August, having invested R162 million in two previous funding round.

The company also raised R90 million through a ‘fine wine bond’ issued in the autumn, R36 million more than it targeted. It then said it had earmarked R900 million to invest in winemakers at the end of January, after reporting sales soared 67 percent to more than R1 billion in 2013.

It sounds like Naked Wines may now have more money than it knows what to do with. As long as it can put the brakes on without veering off the road, it’s not a bad problem to have.

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