Scotch Raises $20M Series A to Modernize Independent Liquor Retail
The POS system behind most independent liquor store counters was built before the iPhone.
Before Amazon was founded, and in some cases, before the store owners themselves were even born. The $250 billion beverage-alcohol retail industry runs on software that is 30 to 40 years old, mostly on-prem, mostly unchanged. That is the market Scotch is changing.
The Raise
Today we are announcing a $20 million Series A round of funding led by VMG Partners, with participation from First Round Capital, Lerer Hippeau, Toba Capital, and Watchfire Ventures.
Carle Stenmark, GP at VMG, sees a category that has been left out of the technology revolution for too long, stifled by the complexity of scaling an efficient operation in the three-tier system, the regulatory structure that requires every bottle to pass through a licensed distributor before it reaches a store shelf.
That conviction is why VMG led this round, and it is why we said yes. The investors around the table share a thesis we have lived inside for years; the category is large, the customers are underserved, and the moment is now.
This capital lets us keep building faster and more intentionally, deepening our investment in both the product these retailers deserve and the team standing behind it.
Read the story on Crunchbase or the full release.
$1 Billion
Scotch just crossed $1 billion in annualized gross payment volume in the 10 months since launching.
While that number is a proof point, it is far from a finish line. It tells us the problem we picked is real, that operators are willing to rip out systems they have used for twenty years when something better shows up, and that the market we have always believed in is finally ready to move. The teams running these stores have been waiting longer than anyone outside the industry realizes.
Why This Market, Why Now
There are 47,000 liquor stores in the United States. Roughly 37,000 of them are independent. Almost all of them are running legacy software.
The operational complexity of running one of those stores is not widely understood outside the industry. Here is how I have described it:
“Enterprise retailers face massive operational complexity, with many carrying anywhere from 10,000 to 25,000 SKUs sourced from more than 30 distributors. COVID-era demand exposed the limits of manual, legacy systems, and as growth normalized, retailers were left with tighter margins, macro-driven pricing volatility and flat category growth. Retailers can no longer afford manual ordering, mispriced SKUs or hidden inventory; they need intelligent automation.”
Unlike a coffee shop or restaurant, every liquor store operates inside that regulated three-tier system, creating layers of invoicing, pricing, and inventory complexity that generic point of sale (POS) software was never built to handle. They cannot handle distributor deal sheets, case-break inventory, or FIFO cost tracking for spirits. They were built for different problems.
This team has been here before. Kevin Hodges and I built Skupos in convenience retail. Our CTO, Dan Chen, spent more than a decade in liquor, including as CTO of Drizly before its acquisition by Uber for more than $1 billion. We did not stumble into this market. We picked it deliberately, and we built the team for it.
What Scotch Does
Our mission at Scotch is to give liquor stores the technology to operate faster, simpler, and more profitably. Most liquor store owners didn’t get into the business to manage sprawling IT systems, or to manually count products and manage spreadsheets. We are taking the toil out of running a store and bringing joy back into the work.
A flagship example is invoice scanning. Before Scotch, a liquor store GM reconciles distributor invoices by hand, line by line, checking cost changes, catching errors, updating inventory. It takes hours. For some stores, it takes a week.
Scotch’s optical character recognition (OCR) invoice ingestion handles that work instantly and automatically. Stores using it report saving 15 to 20 hours per week on invoice entry alone. That is not a feature; that is a workweek returned to someone who needed it.
What that looks like in practice is a Monday morning that does not start with a stack of paper. It is a GM who can spend the first hour of the week looking at margins and reorder points instead of typing line items into a database designed in 1994. The legacy incumbents are not bad companies. They just have not evolved. A store running on software from that era is not getting the tools to run a modern business. That is the gap we set out to close.
Straight From the Floor
We sat down with customers across the country and asked them one question: what did running your store look like before Scotch, and what changed after?
Keegan Jenks, owner of Bacchus Wine & Spirits in Highlands Ranch, Colorado, knew that staying competitive meant having better visibility into his business: “With the competitive nature in the liquor industry, if you’re not doing something different to look at the analytics of your business, you’re a sitting duck. I think most importantly, it’s allowed me to look at expanding my business.”
Joey McDonald, General Manager of Sinkers Beverages, one of the largest stores in Tennessee by revenue and a staple of East Nashville, put it in terms of the bigger picture: “Scotch has allowed us to unify all of our revenue streams in one place. It’s boosted our productivity and, importantly, taken away the day-to-day headaches around managing our business.”
Sara and Debbie at Cheers Fine Wine & Spirits in Carrollton, Georgia had a different story to tell. Before Scotch, Sara spent the majority of her day chained to her computer, entering invoices line by line.
When the same story comes back from stores of every size, in every market, you stop hearing it as a testimonial and start hearing it as the category telling you something. That is what we built Scotch to answer, and it is why Keegan, Sara, and Debbie are at the center of what we are announcing next.
Demolition Day
Three Scotch customers were so done with their old systems that destroying them felt like the only fitting goodbye. We just made sure to capture it on camera.
If you run a liquor store and you have wanted to do the same thing to your old system, we are making it possible. A full year of Scotch, free. Software, hardware, on-site installation. We have never made an offer like that before.
We are calling it Demolition Day. It is live now.
Where We Go From Here
Our current and future customers will see meaningful product expansion. Scotch already saves stores 15 to 20 hours a week; what comes next gives operators more time, more margin, and fewer headaches.
Independent liquor retail is a $250 billion category that has gone ignored by the technology industry for 30 years. There are 37,000 independent stores in this country. Most of them deserve better software than they have.
That is what we are building.
