Callum Woodcock: Founder and CEO at WineFi

0:00Hello, welcome back to Scaling Europe show. I've got Callum here, the CEO of WineFi. I've been following your journey for a long time, Callum. You're a great builder in public. So for somebody like me who lives on LinkedIn, it's like an amazing and easy business to follow. But for those of you who don't know, can you just give like the quick pitch, quick intro? Who are you? What is WineFi?

0:19Callum Woodcock:Well, thank you very much for the very kind introduction. But yeah, I'm Callum Wilcoff. I'm the CEO and founder of Wineify. Wineify is a multi-award winning platform for investing in fine wine. we've taken a very interesting kind of emergent asset class in fine wine and made it more accessible than ever before to access from an investment standpoint by lowering the barrier to entry reducing the cost of entry for a unique syndicate structure to just£3 ,000 and also really levering up on the data side so people work with Wineify in order to maximise their chances of outperforming the wider wine markets by leveraging our quantitative analysis.

1:02Callum Woodcock:Quite a wordy intro there, but hopefully that gives your audience an idea of what we do. Yeah, yeah, got it. So you enable people to access the asset class itself, which can sometimes be quite challenging, but not just access it, but also perform better than other kind of asset managers in this space. Absolutely. That's the aim. What we really want to do, I think democratise is a very overused term, but the ambition is to make it so seamless and cost effective to invest in fine wine that it can feasibly form a part of every portfolio for the very first time so people can take advantage of fine wine's characteristics as an asset class in their portfolios in a way that they've never been able to before because of the various different barriers to entry.

1:41Callum Woodcock:Historically the only people investing in fine wine would be either specialists so people that perhaps work in the wine trade or have some degree of insider knowledge or the very wealthy who are already really into wine as a consumable and so are very happy to kind of double down and build out their own cellar. But this is really investment focused. So people work with us because they're expecting a return on their investment. They're expecting us to make them money, as obvious as that sounds. And that means that we attract people who are both into wine or other collectibles, but also those that are just into alternative assets more generally.

2:13Callum Woodcock:Perhaps they want diversification within a portfolio. Perhaps they want to take advantage of wine's status in the UK as a capital gains tax exempt asset. And perhaps they're just looking for returns as well. So we are bringing a wider demographic, a newer demographic to fine wine than perhaps previously existed in the space. And what demographic are you seeing? Sure. So it's really a relatively wide age range. So we've recently run an exercise where we looked into this at detail. Interestingly, about 50 % of our revenue comes from 30 to 49 year olds, and overwhelmingly the highest volume in terms of the largest number of investors are between 30 to 39 so very sort of millennial centric and i think our brand speaks to that so it's not it's not wholly unexpected but interestingly the other 50 of our revenue comes from a comparatively smaller number of 50 to 59 year olds so people that are at you know the peak of their earnings the peak of their careers have more money to invest perhaps have existing wine portfolios themselves or are certainly more sophisticated on the investment side and as a result are willing to allocate more capital and that actually took us by surprise a little bit because our initial thesis was that we were going to bring an audience in that perhaps wasn't as familiar with wine whereas what we found with this older demographic is it's people who um you know they might have their own wine cellars because they've got an interest in drinking wine they might have seen certain wines appreciate in value and really they're attracted to our proposition because they're going okay well these guys have made an entire business out of trying to predict which wines are most likely to outperform the wider wine markets therefore you know we're going to lean in slightly harder to this to this business and invest more than than we perhaps would in our sellers that we're planning on drinking interesting and you know i think one of the issues with wine investing or wine more generally is that it is a difficult uh asset to invest in in the sense that it's hard to know which is good wine which is bad wine it's hard to get access to certain bottles it's hard to even like store it and keep it and then sell it and track all the value and all this kind of stuff how are you actually solving some of those problems in a very pragmatic way yeah sure so it's a it's a great it's a great question so the thing that i noticed i initially started as a a wine investor prior to founding wineify so just to cut a long story short my own background is in asset management so i started my career at fidelity and then jp morgan and at the same time my in-laws were deeply involved in the wine trade they were wine collectors so it didn't take me too long to take that kind of interest in investing and apply it to what is a very interesting and unique asset class but as you say you know there are lots of facets to this and the thing that i noticed first and foremost when i went to build out a wine portfolio you know i did what many people do which was to approach a wine merchant and the issue with that is one they are set up to facilitate collecting wine and drinking wine so for pleasure as opposed to investing which is obviously for anticipated financial gain but beyond that they make their money by um you know buying wines from a producer or wholesaler marking them to market and then selling those wines on which means they are always going to be incentivized to sell the wines that they have in stock and actually when you're investing in wine you don't want to be buying what someone necessarily just has in stock you want to be looking at the market holistically and saying okay well this portfolio makes the most sense i'm going to deploy this much capital in order to build that portfolio so wineify holds no stock ourselves so our interests are entirely aligned with those of our customers it also has the added benefit that we don't have that upfront cost you know we don't need to buy the stock in in order to resell it and in that way we really do kind of distinguish ourselves from the traditional merchant model you know our our only objective then is to buy wines that are most likely to outperform the market by buying those wines mainly from the secretary market we do buy some stuff from producers as well but typically it will be from the secondary market because that's where we see um the best value opportunities appearing for our clients amazing and you're super data driven right so you're not just you're not just like you're not just investing in wine but it also feels like you're becoming thought leaders in in the industry in the market as a whole and you know you produce like i always see data and insights coming out about like you know different vintages or types of wine or regions what's the rationale there yeah well it's mainly just to take any of the enjoyment and passion side of wine as we're often accused of doing but no so the thing that really attracted me to wine and as as a collectible was one but it's a very inefficient market you know the bid offer spreads are enormous and as any investor knows that is where opportunity lives and there are also these vast informational asymmetries you know you have some market participants that are very educated around you know what a wine is worth and what it could be sold for and then you know you ultimately have some drinkers that are not at all price sensitive they just want to buy a particular wine because they might have had a bottle of it the year that their daughter was born and now she's turning 21 they want to open another bottle of it right so you've got this um kind of passion led audience and then a uh a commercially led or an investment led audience um and really where data makes fine wine stand out beyond other collectibles and when i talk about collectibles i specifically mean you know whiskey classic cars watches um that kind of bracket of alternative assets is that wine has real-time trading data going back 25 plus years you know hundreds of years in terms of auction data but 25 plus years in terms of real-time trading data because there are platforms like the livex and several others that set up to facilitate the trading of wine so you can actually see what wine has sold for during different market cycles.

7:54Callum Woodcock:Wine's a risk asset, goes through market cycles. You know, sometimes the LiveX 1000, which is the broadest measure of investment grade wines, the wine index will be up. Sometimes it will be down. So it is a risk asset. But what that allows you to do is once you get your hands on all of that data, you can introduce different variables over the past 25 years and test which ones actually influence the price performance of a wine. So you can see like, OK, well, how much does a critic rescore from this specific critic influence a particular wine or a particular wine region when it comes to, you know, trying to forecast the price movement of that particular wine?

8:32Callum Woodcock:Now, it's never going to be 100 % accurate. And all we're trying to be is directionally correct moving forward. So we want to be able to say, OK, this portfolio historically, across thousands of back tests, would have delivered, you know, 12.5 % compound annual growth rate over five years. And what is so fascinating to us is that that has never been done before. So we are compiling, in fact, you know, we think we already have the largest historic data set for fine wine ever compiled. We are constantly adding to it. We've tested 70 plus variables. Of those 70, we found that 35 of them do impact the price performance of a wine.

9:13Callum Woodcock:And if a variable does impact the performance of a wine, it's then added to our model. So the model is becoming more and more refined over time. I will quickly say that I can't take much credit for designing that particular model. That's our wonderful data team. So Aaron Daniel, our head of data, and Dr. Raphael Vanden Bosch, to my knowledge, the only PhD in nuclear physics working within fine wine investing, but you never know, have been fully responsible for putting that model together. and really that allows us not just to conduct investment analysis and real kind of quantitative driven analysis but it also allows us to produce you know market commentary that I think has made Wineify stand out and actually has helped really win the trust of not just our clients but also the wider wine trade you know we have for the first time over the last six to twelve months had the wine trade coming to us and saying oh you know could we pay to get some of your insights earlier perhaps than the the broader market and that for us is a very surreal feeling yeah you're right it's like it's like you're building the money but it's like money ball right it's like money ball for wine it's money ball it's money ball for wine i'm desperate i really want a michael lewis book written about this yeah i think we need to achieve a lot more first yeah no it definitely sounds really interesting you know you're like uncovering the data that hasn't been uncovered and it's the data but it's the trends and the um yeah super interesting uh yeah but like let's talk about you know how long we've been building this a couple of years now two yeah so so yeah it's uh we went to market in october 2023 so yeah pretty much bang on two years and tell me a bit about what's happened since then because i think i saw a post recently that said that you were initially into like uh fractional investing right that that was it initially so let's just talk about a bit a bit about the journey what's changed let's talk about some traction that you've seen um and some of the raises that you've done as well?

11:03Callum Woodcock:Yeah, sure. So we raised probably the worst possible time to raise any money in the last decade, which was the summer of 2023. So not only were all investors on holiday, but the VC bubble that we'd seen during COVID had burst, valuations were suppressed. And I think we got very lucky in that a lot of wealthy angel investors in particular, so when you're raising a pre-seed, obviously you get the bulk of that pre-seed investment from angel investors are very into wine and i think there was no doubt that we were the interesting bit in many of their portfolios so we raised um half a million really to build out the um the the proposition more generally improve product market fit so as you say you know version one of winify the initial concept was around fraction investment so i love the idea that you know you could put 50 quid into fine wine in the same way you might allocate 50 quid into an S &P 500 fund via your ISA.

12:00Callum Woodcock:You know, I wanted it to be that seamless. The downside with that is, one, from a regulatory perspective in the UK, it's very difficult. There's not really the equivalent of, you know, the Reg A in the US, which is the structure that they use to fractionalise assets or the equivalent structure in Europe. So it looked like it would be a bit of a headache from a regulatory perspective to do that. But more importantly, you would be taxed on the capital gain of that portfolio that you're invested in whereas through the bear trust nominee structure that we eventually ended up implementing um the our clients are regarded as holding the wines directly themselves so the capital gains tax exemption is inherent to fine wine then carry through to the end investor so we still have massively reduced barriers to entry you know you can invest in a diversified portfolio worth quarter half a million um from as little as three grand but it's not quite that fractional level but when we went to market really our number one priority was understanding what people wanted so we took to linkedin very quickly just because that's where we had or i had a bit of an existing audience we posted about what we were doing and we had this very surreal kind of 48 hours where we were getting an inquiry via the wix website that i'd set up um and you know i'm sure you can find out the way back machine but i am certainly no designer uh but we're getting an inquiry every four minutes so we ended up with this um you know this vast list of people that were interested in what we were doing the issue was we didn't really having products to offer them at that point.

13:31Callum Woodcock:So we were building out our investment models. We had an investment committee in place. We were wine experts. So it took us another, you know, six, seven, eight months to actually introduce our syndicate structure. Until then, we were building private portfolios for those investors that wanted to own the wine outright themselves. But it took off very, very quickly. And we ended up doing seven figures in revenue within our first 12 months. We've doubled the size of the business in our second year, despite the wine markets having really declined over the past couple of years. They're now looking like they are starting to recover, which is good timing.

14:07Callum Woodcock:And we're now at the stage where we are starting to ramp and scale. So we've been really laser focused on keeping spend very low, experimenting with different commercial channels. And we're finally getting to the stage now where we are ready to start putting the pedals of the metal so to speak um and scaling even faster than we have so far that's amazing yeah it's great traction and it's amazing to kind of i guess to be at almost that inflection point where you're ready to like go full throttle you talked about some of those like commercial avenues different ways you are seeing growth what's been the most successful and what are you going to doubling down on yeah it's a great question so um the most successful for us has been partnerships so working with businesses that have their own audience of high net worths for high earners that could be interested in a product like this.

14:55Callum Woodcock:So maybe they're interested in wine, maybe they're interested in collectibles investing more generally, maybe it's just alternative assets, maybe it's capital gains, tax exemptions. But what we found is that there's a really interesting cross-section of businesses that are keen to work with us. And that could range from Hatch, so the SEIS fund, whose primary interest in wineify was that their own audience is interested in tax-efficient alternatives, given wine CGT free. you know could there be an angle there and it turns out their audience was very receptive all the way through to a company like Lane Wheeler whose audience is older wine collectors wine drinkers who were predominantly interested in what we do because of that wine angle so there's quite a it's quite an interesting group of companies that we can work with and we're constantly now we've hired a head of partnerships Jorge Sierra who's an exited founder himself now we have a head of partnerships in role what's been amazing is the people that have reached out to us asking to have a conversation it's completely changed our view on actually how big the potential partnership market is for us you know just just before uh this interview uh we had a conversation with an esports company that were interested in offering something like this to their client base and i would never have thought about that avenue i know i never would have thought about that that avenue for us and then equally like i think we made the mistake um when we were looking to work out the commercial channels that that were appropriate for wineify by trying to follow what market incumbents were doing um we spent a lot of money on paid advertising on meta because we thought that's what the competition was doing therefore it should be what we're doing when we already had a channel that was working and you know what we found the hard way was people aren't willing to invest in uh something very esoteric like wine or really even invest in general based on the back of a cold ad that they've seen while scrolling Instagram.

16:47Callum Woodcock:Like, it's just not the way that people make investment decisions. And I know that sounds obvious, but we had seen all of our competition doing it and assumed that as a result, it must be working. And very stupidly, at the beginning of this year, we almost mothballed partnerships because at the time it was just me doing them. I was like, oh, this is really time consuming. You know, I'm spending a lot of time closing partners. And it was only really when we realized how significant a percentage of our revenue these partnerships were contributing that we went why are we messing around with all this performance marketing stuff let's just double down on this and actually bring someone in to replace me and luckily Jorge's doing a far better job than I ever was so very excited optimistic about that channel and it's also something that because of the syndicate structure where multiple investors can co-invest in wine our competition can't do it because almost uniformly they're all offering one-to-one wine investment whereas you know where you as Seb would own an entire portfolio outright whereas we allow multiple investors to directly own a portfolio together.

17:46Really interesting. Yeah, I mean, yeah, it's one of those things that always seems to make sense after you've done it and tried it. I mean, yeah.

17:52Callum Woodcock:It was just one of those, like, the most stupid moments as well. I remember us having a meeting where we were just like, why aren't we just doing this? It almost seemed like too easy. I know that sounds really strange, but I think we were expecting a degree of friction. Yeah, and also I actually worked with Jorge for probably about a year. We overlapped one of the first startups I worked at. He was great. really that is absolutely mad i had no idea yeah yeah he was a collector benefits before it became onsy i was with the first time i was at he was great you know i think i joined as like employee 35 he was very early but um yeah yeah he's a great guy people loved him yeah he's a machine he's a machine yeah yeah super good story yeah the best the best feeling is hiring someone and then realizing how bad the setup that you'd put in place was in comparison to what they can do um so i've definitely had that experience with all that yeah he's great yeah i guess it's um is this always an interesting transition it's a lot of things that i speak to founders about is that move away from sort of founder-led sales which is more traditional like b2b but i guess in this world it's sort of similar where our partnerships has become your primary like go-to-market channel yeah has this like how have you found handing that over have you was there any like like do you want to keep it at all or were you happy to let it go so i was happy to let it go i mean where it has been difficult is because the partnerships universe for us is so vast there's a huge amount of discovery that's needed you know you can sell to certain financial advisors but not others why is that you know okay these investment platforms want to list our products others don't why is that you know there's a degree to which we're still going through that like product market fit to a degree you know we know that when our syndicates are put in front of the right audience that audience invests but how we get to that audience and the incentives that our partners have in order to offer our products to their audience really vary and that's what we're working out at the moment so it's almost like commercial engine fit um interesting so i mean i was very ready to to hand that over i think you know it's a time-consuming job and i'm from a b2b sales background and partnerships to me and i'm sure i'm going to offend all the heads of partnerships that are watching this but it felt like an easier version of b2b sales because you're not looking for them to essentially pay for a service right you're looking to structure a deal in a way that both of you benefit.

20:06Callum Woodcock:So both parties benefit and their audience benefits because they gain access to a new and very interesting product. And that meant that the, I think people come to conversations more collaboratively. You know, you almost know that if they're willing to take the call, there is a degree to which they want to do a deal. Whereas with B2B sales, you get a lot of people going, oh, is this a solution to a problem that I have? Whereas with partnerships, it's like, well, how can this benefit both of us? And I think that's almost a nicer way of doing business uh and ultimately you know the thing that we've noticed more than anything else partners look for in us is can we trust these guys you know what's their track record who backs them how are they you know like what does their trust pilot score say you know because we're an unregulated investment product because wine is not regulated um we almost need to lean even harder into that than a a regulated investment business would because we can't just say oh you know we're we're fca authorized you know we have to basically say okay this is our approach this is how we um custody the wines this is why clients are protected this is our past performance here are the third party audits that prove that you know it's a much more yeah it's a much more like trust driven sell yeah interesting um well look we're running out of time i want to ask one more question which is sure what is it that you want to achieve next year sure so i think where i would love to get the business to um i i would like to get to profitability um i think that is less of a dirty word than it was for venture-backed businesses and we recently ran a sensitivity analysis that shows we only have to grow by you know five percent month or month um in order to you know to get to to profitability whilst also increasing spend you know in order to continue to drive revenue so that's very exciting so if all goes to plan we should be profitable by july next year um which which would be a good milestone just because it gives us that flexibility but i think more than anything else you know our unit economics are now the core focus you know we really need to get to the stage where we know if we put one pound in we get x number of pounds back we want that number to constantly go up um you know we are a relatively low margin business not as low as a traditional asset manager but certainly not sas and so our focus really does need to be on that.

22:20Callum Woodcock:And then, you know, the exciting thing for us, I think, is global expansion. And that's not a phrase that I toss around lightly. I'm a sales guy. I know how easy it is to start in your home market and how hard it is to expand. But really, because of this partnership strategy, you know, if we were to sell to a partner in the US who has their own audience, as long as our website looks US native and can facilitate transactions in dollars, et cetera, et cetera, et cetera, then there is no reason why we can't expand geographically. And, you know, I nearly had a a heart attack the other day i looked at the addresses that our clients have entered and we actually have clients in more than 18 countries now 80 from the uk don't get me wrong but you know i was looking at them like and we only accept pounds so i was like looking at all these countries in europe and you know argentina canada the us australia and thinking wow this is incredible that we've you know we've we've developed this already without really trying and i think that speaks to you know the fact that around the world luxury wine has this status as a luxury asset is interesting people talk and actually you know we've used that to inform where we're planning on expanding to over the next 18 to 24 months and you know the as of as of next week the platform will facilitate investment in us dollars pounds obviously as it currently does euros and then singapore dollars and hong kong dollars because those are the two hubs where we've seen you know more investors than than average come in so um it's it's really interesting it's the first time I've been involved with a business where we've seen the market almost dictate where we're going to next.

23:50Callum Woodcock:And that's, to me, really, really cool. Yeah, I've spoken to another founder who did something similar where it was, yeah, when it's consumer led and that demand is there, it's such a great validation. It's like, I know that we can go into that market because without doing any work, we have customers there already. We've got no marketing, no partnerships, which is amazing validation of what you built. Well, look, Callum, thank you so much for joining. like you know you know i love watching you on linkedin i love people to build in public it's like you know yeah like i said i spend my life on linkedin so seeing people do interesting content talk about entrepreneurship i love um so look thank you for coming on i'll be following your journey whenever you've got milestones things you want to talk about just let me know i would and let me just say as well seb i'm very jealous that you've hit 50 000 followers before i did i was gutted to see that but congratulations again it's testament to the the fantastic work that you're doing on linkedin so very much enjoy following your stuff as well and um yeah look forward to having a glass of wine with you in person one of these days let's do it man all right thank you very much see you later bye