House launched in 2019 in response to a generation’s craving for a more transparent alcohol brand, raising millions in venture capital from angels such as Casey Neistat, Away co-founder Jen Rubio, and funds such as Homebrew, Haystack Ventures, Coatue, Shrug Capital and Worklife Ventures. Haus has raised $17 million with rolling SAFE notes so far.
Today, CEO and Co-Founder Helena Price Hambrecht used the same ethos of transparency to announce that the startup’s Series A was canceled and the company is in the process of closing. In an interview with londonbusinessblog.com, Hambrecht talked about Haus’s transition from a bustling VC-backed startup to a company currently for sale as is or in parts.
Haus sells a range of citrus, herbal and floral aperitifs with a low alcohol content (alcohol by volume), intended as an alternative to spirits and a little stronger than wines. Made in Sonoma, California, Haus also promised a product made from all-natural ingredients with one key distinguishing feature: Users could order it online and have Haus bottles delivered to their homes. A digitally friendly, healthier alternative that replaces wine memberships has helped the company have a strong social presence.
Hambrecht, a Silicon Valley branding veteran, took over as the company’s sole chief executive in 2021 after her co-founder and former husband Woody split. This year, Haus announced that it has crossed the $10 million revenue threshold and recently announced it would reach national distribution with Winebow, another milestone for the then-only direct-to-consumer business.
But as the pandemic spread around the world, the company faced a series of challenges, including supply chain issues, a lack of personal word of mouth, and iOS changes.
“It was difficult to build the business I wanted to build during the pandemic as we were building a social product,” Hambrecht said. “We didn’t have people getting together, we didn’t have natural word of mouth. We were a purely digital growth brand at the time, great for acquisition, but not good for monitoring behavior over the long term.”
The progress came as Hambrecht struggled to attract venture capital funding, in large part, she says, because venture capitalists are unable to support alcohol companies due to faulty clauses in their LP agreements. “The zeal for an alcohol round is very different from software; with software it is 4-6 weeks, with alcohol it is months. I’ve learned over time that almost every process, from working legally to diligence in fundraising, is 100x harder on alcohol,” Hambrecht told londonbusinessblog.com. Unable to raise money from traditional VC, the company took on debt financing and began looking for private equity and strategic partners.
Enter Constellation Brands, the producer and marketer of beer brands such as Corona Light, Modelo Especial and Pacifico. In 2018, the beverage company’s business unit committed: $100 million investment in women-led startups. Constellation’s dedicated fund stood out to Hambrecht because, in addition to the Winebow deal, it would help expand the brand’s distribution.
Hambrecht says Constellation has committed to leading the startup’s $10 million Series A, even offering to advance the startup money when the runway began to dwindle. Then, at the last minute, Constellation withdrew from the deal for no reason other than “timing,” she says. londonbusinessblog.com reached out to a Constellation spokesperson for more comment, but didn’t hear back immediately.
“Here’s a Haus update that’s not fun to share,” said Hambrecht on Twitter on Monday morning. “Our lead investor recently refused to continue with our Series A that we were finalizing. Without them, we currently do not have the money to continue our activities.” Now Haus only has one month left to sell and ship products. It no longer manufactures new products, but that may resume, it says. “We were just starting to see the collection come back, and I was looking forward to that new chapter.”
The co-founder said “there is no villain” in the shutdown story, but the Constellation outage shows another example of how difficult it is to be a venture-backed, direct-to-consumer company. When Haus announced his $4.5 million seed round, Hambrecht described the company as “Glossier for Alcohol”; fast-forward, and Glossier has had its fair share of battle, too.
Despite the current situation, the co-founder doesn’t think it was a mistake to go the entrepreneurial route. “I’m grateful for the funding we had and what we could do with it. You build the company you want to see in the world and you know it’s going to cost a little more up front.” Instead, she says if she’d focused on becoming a more self-sustainable startup — or run her business on her cash flow – she should have made that decision a year ago.
Due to the fallen Series A deal, Haus is currently for sale through a ABC process, or a transfer in favor of the creditors that is a voluntary alternative to filing a formal bankruptcy claim. At its peak last year, Haus had 30 employees; now only four work alongside Hambrecht, all as contractors for the company.
“It is always dangerous to have little money. We got there, and it’s a shame, but I know there are a lot of companies in this position right now,” says Hambrecht. “I have been sharing my work online for over 20 years. It’s definitely in my DNA. If sharing this process is helpful to another founder who is in a difficult situation and considering their options, then it makes all of this a little more rewarding.”
As for the future for the Silicon Valley veteran entrepreneur, there are no immediate plans to jump into a new startup.
“My goal right now is to be as helpful as possible to make this ABC process have the best possible outcome. Then I’m going to take some time to process the past four years; it was so extraordinary, but also brutal and traumatic; I’m going to rest and process that.”