Pando

Not content to be the "Uber for alcohol," Drizly announces $13M in funding and a new partnership

By Dennis Keohane , written on May 18, 2015

From The News Desk

Many a startup wants to be "Uber for 'X'," meaning a fast-paced growth company that relies on elegant software solutions to facilitate often-inelegant huamn transactions. (Strangely, being the Uber for 'X' has yet to have an association with the car service's questionable moral approach to business.)

One such company is Boston-based alcohol delivery statup Drizly. Much like Uber, Drizly is operating in a space in which there are many regulations but minimal innovation — when I first met Drizly co-founder Justin Robinson three years ago, he told me the story of the liquor store owner who kept track of all his beer, wine, and liquor inventory in his head.

But unlike Uber, Drizly has navigated regulations by not just complying with laws, but by taking a proactive approach to following the myriad rules on alcohol sales, which vary from state to state, and doing a better job at it than companies like Amazon. And additionally, VERY unlike Uber, Drizly is being embraced by the alcohol industry, and not just the at the retail level.

Last week, the Wall Street Journal reported on the company's new partnership with the Wine & Spirits Wholesalers of America, a 72-year old trade association that represents 350 alcohol distributors across the country.

As part of the deal, Wine & Spirits Wholesalers invested an undisclosed amount in the company and gets a board of directors seat for Drizly. The funding is part of a $13 million Series A round of funding that the company announced this morning. The investment round, which brings Drizly's total funding to date to $17.4 million, was led by Polaris Partners, and included First Beverage Group and prior investors like Suffolk Equity Partners.

While the funding will help Drizly expand its sales and marketing operations as well as its technical team, the influx of capital is going to ideally help the company grow its operation to 30 cities — up from 12 — by the end of the year according to CEO and co-founder Nick Rellas.

"This is allowing us to be a lot more than just the Uber for alcohol, which is kind of how we've thought of ourselves to this point," said Rellas.

The funding is key to the company's growth at this stage, but more important may be the alliance with the Wine & Spirits Wholesaler and the backing of Los Angeles-based First Beverage Group. The involvement of both is a signal of acceptance by the powers that be to the three-tiered alcohol industry as a whole — made up of producers, distributors, and retailers — and to Drizly's competitors in the space. The differentiators are the app's ease of use for its customers, the simplicity with which it can be on-boarded by new delivery partners, and its focus on regulatory compliance through its own proprietary ID verification application, something even a company like Amazon has had trouble with, including its home state of Washington.

One of the greatest benefits of the partnership with the Wine & Spirits Wholesalers is that the organization will be promoting the use of the Drizly app to its retail members, which will greatly help as it expands to new markets. As far as the company sees it, they have an almost limitless opportunity to continue to grow into major and minor cities across the country.

It's quite amazing -- and very unlike Uber -- that Drizly has received the blessing, both financially and through influence, from some of the most powerful forces in the alcohol industry. Just imagine if Travis Kalanick had the backing of the National Taxi Drivers' Alliance as Uber was expanding.

"We seriously think that if you are a consumer of alcohol and you have ever paid a company like Dominos $5 for delivery, that you can be a Drizly customer whether you are in SoHo or Wichita, Kansas," Rellas said. "That's not something that every delivery company and tech company in on-demand can say."

I asked whether or not Drizly was more the Dominos of alcohol delivery rather than the Uber of the space. "An Uber for alcohol is the sexy, easy consumer side," Rellas said, "but what we are doing in terms of information in the alcohol industry and being a very, very old industry into the 21st century, that is compelling."

"This is an affirmation from both the alcohol industry and the VCs. It's the stamp that the last three years of work has been worth it, and now its really time to go out and build the business that we've always wanted to build," Rellas said. "We are building an alcohol industry business that can stand on its own in a lot of different ways, and delivery is just the start."

[photo by Jeremy Noble]