PicoBrew, the Seattle-based maker of high-tech beer, spirits and coffee brewing appliances, is up for sale the Spoon has learned.

According to company CEO Bill Mitchell, PicoBrew had until mid-December to close a new funding round as part of terms agreed to with a bridge lending group comprised of current and new PicoBrew investors. PicoBrew had decided to take on bridge financing last year as it looked to lock down its second institutional funding round.

Mitchell said conversations went fairly deep and they entered due diligence conversations with a few potential strategic investors, which led the lending group to extend the original due date on the loan from June to mid-December of last year. However, PicoBrew ultimately wasn’t able to close the funding round, and the bridge lender decided to call in the loan and force PicoBrew into selling the company through a somewhat complicated process called receivership.

Mitchell indicated the bridge lending group has plans to continue funding the company through the Washington State receivership process and hopes to essentially take full ownership of the company with a winning bid, but runs the risk that another bidder will swoop in with a higher bid.

Mitchell told me the receivership motion was filed yesterday.

So how exactly did PicoBrew get itself into this position in first place?

According to Mitchell, it’s a complicated story in part because the company’s product portfolio has become increasingly complicated. After first making products tailored towards home and prosumer craft brewing enthusiasts with the Zymatic and later the Pico, the company ventured further into equipment for both small craft breweries and cold brew coffee makers. From there, the company made a small distilling add-on for its home and pro brewing appliances, teased a new coffee machine, and, most recently, has expanded further into professional distilling with a new spirits-aging product line called CaskForge (more on that later).

While all of these products are essentially high-tech beverage appliances, they serve different markets and, as a result, each were of varying interest to different suitors. According to Mitchell, the company had “investment interest in PicoBrew and spent hundreds of hours with some of the biggest names in the industry.”

Ultimately, though, things got hung up due to the diversity of the portfolio and, said Mitchell, their cap table.

“It’s important to understand that we operate a diverse and complex business,” said Mitchell. “PicoBrew is comprised of 3 completely different yet complementary businesses and as you might expect from a 10 year old startup, we have a diverse and complex cap table as well, both of which have hindered our fund-raising efforts.”

In other words, beer might be interesting to one strategic investor, coffee products to another. However, finding an investor who wants the entirety of the product portfolio, which the company has sometimes described as “brewing computers”, has been a tough task, at least up until this point.

I also think, generally, hardware startups have been a tough sell over the past couple years in the world of venture capital. And while PicoBrew does offer suitors a hardware+ continuous revenue model with their food supply business with PicoPaks, the company’s yet to turn that business into a huge revenue driver.

So what now?

Wait and see who bids says Mitchell. He indicated that he expects other potential buyers to come out of the woodwork, but wouldn’t name any names.

I can see a big beer or CPG company being interested in the IP portfolio the company’s amassed has built around beer and spirits. I also think we’re slowly moving towards a post plastic coffee pod world, so I wouldn’t be surprised to see the company’s new coffee machine business being of interest as well to appliance company suitors looking to take on Keurig.

Being a backer of the company’s first Pico through a Kickstarter campaign back in 2015, I personally hope someone buys the company, in part because I’d like to see my countertop beer brewer continue to have the support of a growing company.

On another level, the company’s also been fascinating to watch ever since I first wrote about the Zymatic back in 2014, in part because it was the first time I’d seen a company attempting to bring the same precision and automation to beer I’d seen in the food within the Modernist Cuisine movement. Founded by a couple Microsoft founders (Mitchell essentially ran a skunkworks division for Bill Gates, leading the software giant’s first smartphone and smartwatch efforts), the company has essentially been doing continuous invention in the drink space since their founding a decade ago.

They may not have hit on a home run yet, but the company’s been fun to watch for a food tech nerd like myself, so let’s hope someone with deep pockets purchases the company and continues to fund their crazy ideas.

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