House launched in 2019 Responding to a generation’s need for a transparent alcohol product by raising millions in funding from angels like Casey Neistat, Away co-founder Jane Rubio, and funds from Homebrew, Haystack Ventures, Coatwe, Shrug Capital and WorkLife Ventures. Haus has raised $17 million in SAFE notes to date.
Today, CEO and co-founder Helena Price Hambrecht The startup also went through a similar transparency ceremony to announce that its Series A has fallen and the company is in the process of shutting down. In an interview with TechCrunch, Hambrecht talked about Haus’ transition from a buzzy VC-backed startup to a business that’s currently for sale, either as is or in part.
House sells a series of citrus, spice and floral low ABV (alcohol by volume) options for strong drinks and intended to be slightly stronger than wines. Made in Sonoma, California, House also promises a product made from natural ingredients with a key tagline: consumers can order online and have bottles of House delivered to their homes. A digital-friendly, healthy alternative to Vine membership established the company to have a strong social presence.
Hambrecht, a Silicon Valley branding veteran, took over as the company’s sole CEO in 2021 after co-founder and ex-husband Woody split. This year, House announced it passed the $10 million revenue threshold and will soon hit national distribution with Winbow, another milestone for its only direct-to-consumer business.
However, as the pandemic spread around the world, the company faced a series of challenges, including supply chain issues, lack of word-of-mouth growth and IS changes.
“It was hard to build the business I wanted to build during the pandemic. We’re building a social product,” Hamrecht said. “We didn’t have people gathering, we didn’t have natural word of mouth. At the time we were a purely digital growth brand, great for acquisitions but not great for tracking long-term behaviour.
The development came as Hambrecht struggled to raise venture capital funds, she says, mainly because venture capitalists couldn’t back alcohol companies because of antitrust clauses in their LP agreements. “Diligence for an alcohol round is very different from software; with software it’s 4-6 weeks, with alcohol it’s months. I’ve learned over time that almost everything from moving legally to fundraising is 100x harder for alcohol,” Hambrecht told TechCrunch. Unable to raise VC funds, he took debt financing and began looking for private equity and strategic partners.
Enter Star Brands, the developer and marketer of beer brands such as Corona Light, Modelo Special and Pacific. In the year In 2018, the beverage company’s venture arm made a $100 million investment in women-led startups. Constellation’s special fund stands out for Hambrecht because it will help expand the brand’s distribution alongside the Winbow deal.
Hambrecht said Constellation is committed to leading the startup’s $10 million Series A, and has offered to step up the startup’s funding as the runway dwindles. Then, at the last minute, Constellation pulled out of the deal for no particular reason other than “time.” TechCrunch reached out to a Constellation spokesperson for further comment, but did not immediately hear back.
“Here’s an exciting House update to share,” Hambrecht said. Monday morning on Twitter. “Our lead investor declined to move forward with our Series A, which was in the process of closing recently. Without them, we currently have no funds to support continued operations. Now, Haus only has one month to sell and ship products. It is no longer manufacturing new products, but That could resume, he said.
The co-founder says there’s “no evil” in the story of the shutdown, but Astrology’s exit represents another example of how difficult it can be to become a venture-backed, direct-to-consumer company. When House announced the $4.5 million seed round, Hambrecht described the company as a “glossary for alcohol.” Fast forward, and Glossier, too, has had his fair share of struggles.
As it stands now, the co-founder doesn’t think going the venture route is wrong. “I’m grateful for the funding we’ve had and what we’ve been able to do with it. You build the company you want to see in the world and you know it will cost a little more. Instead, she said she should have made that decision a year ago to become a more self-sufficient startup — or run operations outside of her cash flow.
As a result of the failed Series A deal, Haus is currently being sold through an ABC process, or an assignment in favor of creditors as a voluntary alternative to filing a formal bankruptcy petition. At its peak last year, Haus had 30 employees; Now only four work with Hambrecht, all of them contractors for the company.
“Being short on cash is always dangerous. We’re getting there, and it’s sad, but I know there are a lot of companies in this space right now,” says Hamrecht. “I’ve been sharing my work online for over 20 years. It’s definitely something in the DNA. If sharing this process is helpful to another founder in a tough spot and considering their options, it will make it all a little more worthwhile.
As for what’s next for the Silicon Valley brand veteran for the entrepreneur, there are no immediate plans to jump into a new startup.
“My goal, right now, is to be as helpful as I can to make this ABC process the best it can be. After that I will take some time to process the last four years; It was very unusual, as well as cruel and horrible; I’m going to rest and do it.”