How do you predict whether a start-up is going to go double-platinum or fade into obscurity? Short of a crystal ball, perhaps the best indicator is to look at the quality of its board members, investors and partners.
By that measure, London-based Lixir Drinks is odds-on to fulfil its potential. Peter Roberts, founder of Pure Gym, is one investor, while its non-exec board boasts a barrel-load of talent. There’s Barry Chevallier Guild, co-founder of Aspall Cyder; Chris Ellis, former commercial director of Pernod Ricard UK; and James Watson and Pete McDonald, founders of Mosaic Pub & Dining. And what about partners? Well, the start-up recently agreed exclusive distribution on the island of Ireland with US multinational Molson Coors, as the exclusive route-to-market partner for the brand.
It augurs well, especially when you consider the brand is just three years old. Indeed, co-founders Matt Mahatme, 27, and Jordan Palmer, 26 – friends since primary school – have worked wonders developing an idea that popped into existence during a series of late-night conversations over cocktails.
The chats took place in 2016 in Newcastle, where Matt and Jordan had stayed on as flatmates after graduating from university. But the pair go back further – their friendship began 15 years earlier at reception class at school in East Anglia. “We’ve got some pretty funny photos of us as six-year-olds at school sports day,” says Matt.
Post university, they both gravitated towards the drinks industry, first as consumers, then as professionals. In their early 20s, Matt got a job with William Grant & Sons and Jordan found a role at Diageo.
Jordan takes up the story: “We both wanted to run our own business. We aspired to the entrepreneurial adage: if you’re passionate about what you do, you never work a day in your life.”
Matt says: “The idea first came after a night out when we realised it was actually quite risky to splash out on a bottle of flavoured spirit if you’d never tried it before. Far better to experiment with high-quality, flavoursome mixers. That way you can switch from, say, a classic G&T to a rhubarb & ginger G&T and back again. You could even chop and change your spirit too for added versatility. So we thought: how about launching a range of brilliant mixers?”
The next morning, the pair began researching their idea and became even more excited. “We saw a gap in the market,” says Jordan. “We couldn’t find a mixer brand that majored on flavour. They were all spirits supporters, not elevators. Also, there were no brands that resonated with 24- to 35-year-olds like us. Most brands felt really traditional and didn’t have a contemporary edge.”
The pair now had a strong idea. But at this point Matt and Jordan did something most young entrepreneurs do not. Rather than wade in all guns blazing, they showed patience and long-term thinking – an approach that would pay dividends later and which offers an essential lesson for fellow founders.
“We took a long time to launch – around 18 months,” says Matt. “That’s because we did everything properly, which in hindsight is a big reason why we were able to attract great investors and board members later on. We carefully thought through our pre-launch decisions. When choosing suppliers, for example, we looked at where we wanted to be in the long term and selected businesses that were perhaps more expensive but could handle growth. We also showed due diligence to the business set-up process. That’s super-important because it demonstrated our intent and that we had a long-term plan. We weren’t just bumbling along.”
The first thing the co-founders did was find an experienced consultant – Paul Martin, former CEO of Harrogate Spring Water. He sense-checked Matt and Jordan’s ideas and pointed them in the direction of good-quality bottlers, labellers and flavour houses.
They didn’t quit their day jobs straight away either but worked on their embryonic business at weekends and in the evenings. This slowed them down but allowed them to build a stable platform before taking the leap.
Jordan says: “After a few months we knew it was time to up the ante. We handed in our notices.” But once again, the pair were patient and canny: they got full-time jobs at a local cocktail bar. “We did evenings and weekends behind the bar,” says Matt, “which meant we could focus on the business 9-5. It was great because we also learnt a lot from a trade and bar perspective.”
Becoming bartenders was a stroke of entrepreneurial genius, letting the co-founders live and breathe their industry while also giving them the time and space to develop their idea. It lends their products more gravitas and authenticity too, resulting in Lixir’s strapline: “Mixed by bartenders”.
The duo developed and honed Lixir’s products throughout part of 2016 and all of 2017. “We were in the position to launch at around Christmas 2017 but decided to wait until the following spring,” says Jordan. “We then launched via a crowdfunding campaign to grow brand awareness and help fund the initial production run. We raised £16k in 30 days from around 250 pledges. That gave us lots of confidence.”
Examples of Lixir mixers to hit the market in spring 2018 after the crowdfunding campaign include rhubarb & ginger tonic, elderflower & lemon tonic, blood orange & cinnamon tonic and classic Indian tonic water. The branding is fresh and contemporary – deliberately different from other well-known mixers. Matt and Jordan felt elated to see their idea come to life but knew much more work lay ahead.
First, they had to keep up the momentum. “After launch, we proactively sought investors,” says Matt. “We’d self-funded so far, minus the crowdfunding, but now needed more cash and economies of scale. So we created our first investment deck on PowerPoint – it was pretty crude! Our first funding round consisted of close family but then a couple of local investors whom Jordan knew came on board. That gave us a cash injection and allowed us to go out and market Lixir full-time.”
Jordan continues: “The next funding round followed a year later. We had proof of concept and knew we could take it further, so we formulated our next investment plan.”
Once again, the pair thought ahead and thought big. Matt explains: “Our desire to form a board inspired our second funding round. We’d grown well in two years but no one was holding Jordan or me accountable. We knew that wasn’t good for the business in the long-term, so we wanted to build an experienced board to take Lixir to the next level and keep us in check.”
And that’s precisely what they did, attracting Peter Roberts from Pure Gym, plus a range of experienced investors and board members.
Fast forward to 2021 and the results of Matt and Jordan’s impressive, meticulous and ambitious groundwork are clear to see. They’ve signed a deal with Molson Coors to take Lixir to Ireland, become the house pour in Selfridges London bar, are distributing to 13 other European markets, and are on their way to becoming a multimillion-pound-turnover business. Moreover, the foundations on which the company is built are rock solid.
The co-founders have achieved this impressive feat by coming up with a strong idea and then, crucially, resisting the initial urge to rush in. Instead, they thought long-term and strategically from the very beginning. In doing so, these self-assured, patient young former bartenders from East Anglia provide an object lesson on launching a start-up. And with a massive global market to shoot for, things could get big very quickly for Lixir. Watch this space. They’re only just starting to stir things up…