If you’re headed north on I-680, Del Cielo Brewing Co. is one of the last breweries you’ll hit before reaching Napa Valley. This transitional region, where the vines and rolling hills of wine country adjoin the motherland of the American beer industry, can be thought of as a modern-day Mesopotamia—and it’s home to some of the country’s leading beverage businesses and innovators.
51 years ago, just across San Pablo Bay, Anchor Brewing Co. helped birth the United States’ craft brewing craze, and Northern California has since grown into one of the densest beer scenes in the country. The Golden State’s $9.66 billion beer market is intensely competitive, and there are over 300 breweries in Northern California alone, headlined by world-beaters like Russian River Brewing Company and Almanac Beer Co. It’s a cutthroat ecosystem for anyone starting a 15-barrel brewery like Del Cielo, but in 2018, that’s exactly what co-founder Luis Castro did.
That same year, Castro met Oscar Delgado, Jr. at a local beer fest. The two started chatting, and Delgado, Jr. told Castro about something that could give his brewery a competitive advantage: his new company, CA Draft Tech.
[Editor’s note: This story was published as part of Good Beer Hunting’s Compound Interest series, underwritten by SMBX, which highlights different ways small businesses can get the funding they need; all of the businesses profiled in this series have worked with SMBX to achieve part or even all of their funding. And on that note, we have our own bond offering on the platform for anyone interested in investing in Good Beer Hunting’s future.]
Delgado, Jr. had just started CA Draft Tech that same year, providing brewers in the bustling scene with tapline cleaning services, educational training, and sterile jockey box rentals. The business was predicated on preserving the quality of breweries’ beers, and ensuring they were poured clean, free of any mold or microbes, and consistently—“from grain to glass,” as his sales pitch goes. Castro signed on enthusiastically, and CA Draft Tech now cleans and maintains lines at the Del Cielo taproom, as well as all its permanent restaurant/bar accounts.
“At bars and taprooms, the employees come, and they just pour the beer,” Castro says. “We don’t have the staff to do it, so it’s definitely a benefit for us.”
When Delgado, Jr. leaves his job as a certified sterile processing technician at Kaiser Permanente Redwood City, he’s ready to have fun.
His extroversion is what led him to start CA Beer Society, a loose-knit club for beer fans who wanted in on NorCal’s brewery boom, in 2008. Together, the group started touring local breweries and beer bars, and organizing fundraisers and cornhole tournaments like the annual Battlestar Classic, which takes place aboard the USS Hornet aircraft carrier in Alameda and benefits the USS Hornet Sea, Air and Space Museum.
“It was all about raising money for food banks and getting together and bringing friends together,” says Delgado, Jr., who served as president of the CA Beer Society until it went inactive. “It was never about ‘what’s the best beer,’ or whatever.”
“At bars and taprooms, the employees come, and they just pour the beer. We don’t have the staff to do it, so it’s definitely a benefit for us.”
Delgado, Jr.’s post-work social life gave him the opportunity to meet local brewers and learn more about commercial beer production—folks like Matt Fox from Alameda Island Brewing Company and Adam Lamoreaux from Old Kan Beer & Co. While Delgado, Jr. is adamant that brewing beer was “just never an interest” for him, he began to empathize with their problems. Chief among their gripes: dirty lines.
“You go to certain restaurants, and they’ll tell you exactly where they source their ingredients, and they take good care of their wines, but beer always feels like an afterthought,” Lamoreaux explains. “In the Bay Area, you have a discerning customer. If your product isn’t pouring as well as it should be, they’re not going to assume the restaurant did something wrong. They’re just gonna assume that the brewery didn’t really make a great beer.”
Delgado, Jr. thinks of it this way: What if a Michelin-starred chef spent their days sourcing fine ingredients, crafting impeccable recipes, only to serve their food on a dirty plate?
“What I clean here at the hospital are instruments that we use that go inside your body,” Delgado, Jr. says. “Well, you consume beer, it’s ingested. So why wouldn’t the instruments we use to deliver beer be clean?”
Lamoreaux began to push Delgado, Jr. to bring his day job into the beer world. In 2018, those two paths finally converged. Delgado, Jr. gathered CA Beer Society members Rob Martin, Ryan Fenderson, and Mike “Squirrel” Rustay, and each party put in $2,000 to get CA Draft Tech off the ground. That humble sum bought them enough runway for a few years’ worth of chemicals and Alameda Island’s delivery vehicle, a boxy Ford Expedition that Fox sold to the startup for $700. Their first customer was Old Kan.
In nearly four years, that $8,000 initial investment has turned into more than 45 accounts, including the Oakland Coliseum. The payroll is growing too; Delgado, Jr. just hired his third employee. But more importantly, a gauntlet has been thrown down for breweries that operate in CA Draft Tech’s territory.
“It puts the pressure on other breweries to be as serious about the level of quality they’re trying to put out there,” Lamoreaux says. “Because it’s the right thing to do.”
Though Delgado, Jr. takes draft quality very seriously, he didn’t found CA Draft Tech to be a viable business. He just wanted to help the people he’d met in the scene. His growth plan was organic, relying on word-of-mouth and little else. But even that approach pushed the business to its limits.
Delgado, Jr. still works his full-time job at Kaiser Permanente, and he runs operations out of his garage. The first year, CA Draft Tech took $6,000 in losses. The following year, it was up $20,000. But that upward trend didn’t convince Bank of America or Fremont Bank to float the company a business loan.
Banks didn’t quite get what CA Draft Tech was for—no one outside of the beer world did. When Delgado, Jr. first applied for a business license from the City of Oakland, they tried to make him rezone his house as a chemical company. He considered doing a Kickstarter, but unlike a brewery, he had no perks to offer—who wants a T-shirt for a cleaning company?
That’s when SMBX started headhunting CA Draft Tech. SMBX, a service that helps businesses raise capital by selling small bonds directly to the public, had just helped Oakland’s Degrees Plato Taproom & Bottle Shop raise $250,000 in the form of 25,000 $100 Series A bonds. CA Draft Tech also happened to be working with Degrees Plato, and SMBX’s head of sales and business development, Benjamin Stein, liked what Delgado, Jr. was doing. Having been burned by big banks, Delgado, Jr. was hesitant. But Stein persisted, selling Delgado, Jr. on the thought of using their marketplace to bypass the banks and raise enough money to take CA Draft Tech to the next level—and maybe even replace that janky Expedition with a proper branded van.
“In the craft world, we all work together, we all do things together, it’s a small world,” Delgado, Jr. says. “When it came to banking, I wanted the same thing. I wanted community. When [SMBX] explained the whole bond thing to me, I went, ‘I can deal with that, because now I’m beheld to the people that buy my bonds.’”
“In the Bay Area, you have a discerning customer. If your product isn’t pouring as well as it should be, they’re not going to assume the restaurant did something wrong. They’re just gonna assume that the brewery didn’t really make a great beer.”
On February 21, 2021, CA Draft Tech released 3,500 $10 bonds on SMBX. 44 people invested, some giving as much as $5,000, with the hope that CA Draft Tech’s expansion would return them their investment with 10% interest in the bond’s 36-month term.
Delgado, Jr. used that $35,000 to buy new pumps and enough equipment and cleaner to last him another couple years. The company expanded into providing blended gasses. And he took Stein’s advice and invested in a proper Ford Transit van with CA Draft Tech branding painted on the broadside.
Delgado, Jr. prefers to think of the next phase in terms of the problems left to solve.
He’s got the forward-thinking bar owners and clients that stand up with those titans of the Bay Area, like Santa Rosa’s HenHouse Brewing Company and San Leandro’s Drake's Brewing Co. He envisions a brick-and-mortar location that can act as a draft tech institute, showcasing CA Draft Tech’s services; educating bar owners and staff; and pouring glorious, clean beer. Maybe then he’ll be able to staff up to the point where he can respond to those Friday and Saturday night emergency calls he gets from bars who didn’t think ahead.
“In the craft world, we all work together, we all do things together, it’s a small world. When it came to banking, I wanted the same thing. I wanted community.”
“I can’t be there,” Delgado, Jr. says. “You’re two weeks out, brother. Some people wait for you, and some people don’t, but with a brick-and-mortar, if I had more people, I might be able to help more.”
The SMBX raise has taught Delgado, Jr. to think differently about where his business is at. He never anticipated doing more than helping his drinking buddies do better, but with one successful cash infusion, CA Draft Tech has crossed a precipice. Delgado, Jr. can’t help but look to the next plateau. Maybe with some more funding, he could achieve that dream of becoming an education enterprise. Maybe in a few years, those banks will say yes.
Whatever it is, he has a whole stable of people who’ve pushed him to succeed. Now, he holds himself to their standard.
“It may sound dumb, maybe romantic, but I want to show them something tangible,” he says. “I want them to be proud of what they invested in.”
Words by Jerard FagerbergIllustrations by Colette Holston
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