The food and beverage industry is experiencing a kind of Renaissance as bold startups are trying out new things and new ways of doing things that have been done before. Often in this industry, you are hardly trailblazing as a startup. How do you differentiate yourself sufficiently so that you can attract the right customers and, equally importantly, the right investors? Witness another pitch sprint as four food and beverage startups pitch in front of investors, Nick McCoy of Whipstitch Capital and Sabrina MerageNaim, Ben Levy, and Stephen Daubert of Echo Capital Group. With host, Elliot Begoun, they scrutinize each of the pitches and home in on some crucial learning points on the food and beverage industry and venture capital.

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Listen to the podcast here

Founder Pitch Sprint: Food And Beverage With Nick McCoy Of Whipstitch Capital And Sabrina Merage Naim, Ben Levy And Stephen Daubert Of Echo Capital

We’re doing another Pitch Sprint, which is super fun. The purpose of it is to give some founders the opportunity to pitch in front of a panel of investors and learn what is said about their pitches when they leave the room. The goal of this is to not only provide them with actionable, meaningful feedback and input but also for all of you who are also in the throes of fundraising to give you some insight, tips, and things that may be constructive as you shape your investor narrative and conversation. The way this is going to work is each founder will have five minutes to pitch and then there’ll be a Q&A. There are four companies pitching. At the end of the four pitches, we’ll have a little discussion about what we heard, what we liked, and what we felt the founders may be missed in their presentations. Also, some tips and things that may make future pitches for all of the readers more effective. I’ll start with Nick McCoy with Whipstitch Capital and then I’ll introduce the team from Echo Capital.

I’m Nick, the Cofounder of Whipstitch Capital. We work with companies when they’re a little bit further along helping them raise money and helping sell when it’s time for them to do that. We also work with larger companies in their quest for buying smaller companies. We spend a tremendous amount of time going through data to try to figure out what is going to add value to brands from a strategic decision standpoint and also what in third party data exists to validate the brand’s value. Since a lot of our work is trying to get the highest evaluation of the best terms for the brands we work with. My questions are going to be around margins, sell-through data and category dynamics.

The team from Echo Capital, Sabrina, Stephen and Ben. I’ll start with Sabrina and a little bit of introduction and background of Echo Capital.

Thanks for having us. Team Echo is happy to represent in full force. My name is Sabrina Merage Naim. I founded Echo in 2004. The idea was to create a venture capital fund that was looking to invest in early-stage consumer product companies, not just as a capital provider. Also, as a strategic partner with a background and understanding of food, operations, and the consumer in a way that we thought was lacking in the investment arena at that time. Particularly, now that the food and beverage are having a Renaissance. We are able to utilize our many years of experience in that way, and to leverage that to young entrepreneurs has been particularly valuable. Being a young team ourselves and understanding consumer needs and the value that brands can bring to the consumer marketplace has also been a great value-add for brands. We are excited to share some of our thoughts and knowledge. I will pass it along to Ben, who is my VP, Cofounder and trusted ally through this process.

I’m Ben Levy and I’m excited to be a part of this. Thanks for having us.

I’m Stephen Daubert, the newest member of Echo. I am an associate there and I am happy to be a part of this. I’m excited to ask some questions.

Perhaps newest but certainly not new. You’ve been with us for a number of years.

Our first founder is Renee Dunn with Amazi.

I’m Renee Dunn, the Founder of Amazi Foods. Snacking is generally a pretty mindless activity. We pick it up, scarf it down, unsatisfied and disconnected. Now, more than ever before, people crave connection in what we consume daily. There’s a call for purpose and transparency that will shift the status quo. What if snacks could be that change agent? Taking you from mindless to mindful? Enter Amazi Foods, on a mission to help you snack on purpose through our made in Uganda plant-based tropical snacks. Every bite you take directly supports our mission to support sustainable, more equitable supply chains, and closes the gap between source and consumer. Together, we help consumers eat good, feel good, and do good too.

How exactly? I studied abroad and did my thesis research in Uganda. While living there, I was blown away by the organic tropical fruits that were bursting with flavors that I didn’t get at home. Stand after stand, people were trading fruits raw or looked for cheap ways of processing or exporting. I had heard stories about cocoa farmers never seeing a chocolate bar but realized that this anecdote sums up a lot about our supply chains as a whole. Those at the resource are completely separate from the opportunity and the innovation that exists in those global market. They’re resulting in very high unemployment and food waste.

Meanwhile, back at home, consumers are actively looking for products that serve a higher purpose. There’s a huge opportunity missed, not only for local industry and job creation but also to satisfy a growing need for the US consumer. There’s a huge rise in plant-based and it makes that demand for more unique fruits and flavors. As snackification grows as part of the US diet, we’re looking for more clean and healthy options. Above that, brands with purpose are driving traction more than their competitors as 67% of consumers say they search for brands with a purpose. Our solution was to connect to the ingenuity, drive, and bounty of Uganda with the American consumers who crave both good food and story.

We sourced directly from farmers and then keep the production in-country by partnering with small businesses, building skills, educating on market preferences, and in turn, offer purpose-driven snacks to America’s growing conscious consumer market. That’s how the Amazi brand came to be. A 100% made in Uganda snacks, vegan, paleo, minimally processed. Each product has made it with three simple ingredients, but the flavors are anything. It’s a much-needed twist to the boring dried fruit category. Our two main product lines are plantain chips and jackfruit chews. Our plantain chips are dried and roasted, never fried. They have a hardy crunch and none of that greasy residue that you typically get. They also have a subtly sweet flavor to them, which makes them very versatile. Our jackfruit chews are like grownup fruit rollups. They’re sticky, chewy, and sweet, but they’re made with fruit and spices, nothing else, and are high in fiber. We compete on flavor, health, story, and price.

In late 2019, we rolled out to Sprouts Market and prior to COVID-19, we had big plans to continue expanding in retail. We’ve since leaned into and also relaunched our Amazon listings with improved pricing. We’re continuing to be curated in our rollout to brick-and-mortar retail in the years to come, but you don’t have to take our word for the traction. We’ve been humbled by favorable features from retailers, publications, and consumers alike. Above all else, as we aim to convert snacking from mindless to mindful, our ultimate hope is to have a social impact.

In the next few years, we’ve projected an additional $1.6 million in income for our farmers and over 150 jobs created for youth, which builds skills and market connections for the next generation. All in the hopes of ultimately achieving a true shift in the power dynamic in our value chains. To achieve this, we’re looking for support. We’re asking for $500,000 to help build brand awareness, drive discovery, build our team and continue supporting our transparency by helping us get certifications and improve reporting. Will you join us in the shift from mindless to mindful? We hope you’ll choose to snack on purpose today. Thank you.

Let’s start with the Q&A with team Echo. I’m going to Ben first with the first question.

I appreciate the fact that you’ve found a way to manufacture and produce a product in Uganda. My questions are around quality control and real stewardship of the supply chain and ensuring that you’re espousing ethical practices there that you would want to see not only in the state. How are you controlling that process?

That’s been the utmost thing to figure out. I’ve been working on this for many years. When I first started developing the products and developing the relationships, I did find a third-party manufacturer that is making dried fruit. Over time, I found that with that relationship, we weren’t able to have as direct a line of impact and/or transparency and quality control. Over the past years, we partnered with our Ugandan partners and they own the facility, but it’s an Amazi-dedicated facility. They’re under inspection for ISO 22000 Certification.

The quality of the product is the best it’s ever been. We have a very close relationship with them. The team there has an extensive background in food science. They’re eager. We also directly get reports on how much more the farmers are being paid relative to the market price, how much our employees are being paid, and making sure that all aligned within our pricing model. When I personally go meet with our farmers, we have a very open conversation about the entire pricing along the supply chain and work together to find a price that will allow them to always get above market but will allow us to continue to thrive through the whole chain.

I’m going to toss it to Nick.

I like that you have your brand as it’s not tied to a specific ingredient because if I think about the side of the snack aisle that you’re on, there’s a fairly low bar in conventional grocery for the sell-through if you compare it to Doritos. There tends to be a pretty big availability for multiple SKUs. The idea that you could have multiple fruits or whatever you might put in there and flavors if you look at things like Bear and Rhythm and companies like that, that’s what they do. It’s like baby food, lots of products and lower sales for each. If you’re tied to Uganda, what’s the scope of fruits that are grown there that you could sell? I know you could do 3 or 4 flavors each. How many do you think you could sell that would appeal to the US? I’m thinking about how big can the brand get and still stay with Uganda as a tie-down?

Part of what inspired me to start is how many fruits they had. I had a hard time deciding which chews to start with, had way too many, to begin with, and paired it back. They have papaya and a lot of byproducts that I can make with the jackfruit. They have a number of different kinds of banana. They have pineapple, mango, a lot of cassava, tubers, and such that you see being innovated with as well. There’s a lot to work with.

We’ve got time for one more question. I’ll go to Sabrina.

I like to talk a little bit about differentiation. Nick mentioned Bare and Rhythm. There’s an argument to be made for companies that are going into plantain chips like banana and others. Your slogan being snack on purpose translates to a snack that has a larger purpose. Although that’s something that consumers have been looking for in the last many years, that’s no longer enough of a differentiator. The social or environmental give back started to lose favor with consumers, given that many new startup brands were trying to capitalize on a more marketing gimmicky view of impact. I’d like to ask, how are you differentiating through that and your product profiles with some established brands out there?

With regard to product differentiation, we make our chips very different than typical plantain chips. We merchandise it closer with superfood or dried fruit products. They’re sweet and crunchy. They don’t taste anything like other plantain chips on the market. Similarly, our jackfruit chews are one of the only snacks that is highlighting jackfruit as that sweet tropical fruit and one of the only ones breaking into the snack category with jackfruit as not a savory option.

Thanks, Renee, for joining. We’re going to bring Jeffrey Burbank in from Fluid Cold Brew. Jeff, the floor is going to be yours.

My name is Jeffrey Burbank, the Cofounder, and CEO of Fluid Beverages. I’m excited to share with you the Fluid Cold Brew which is a refreshing take on the cold brew coffee category. Before I get into the deck, a little bit about me. I spent time in consulting. Many years ago, my journey to Fluid began as a consultant and working out in Las Vegas, where typically people only spend a few days a year out there, but I would go there four days a week, every week for two years. I joke with people that drink more cold-brewed coffee than anyone in America during that period of time and I’ve tried them all. I had all experiences of crashes of energy, drinking unhealthy drinks, and struggles with hydration, which all brought me to create Fluid.

What we all know and appreciate is that coffee is an amazing beverage. It’s the ritual of choice for Americans to start their day and to energize themselves but there’s one drawback in that it’s perceived as being dehydrating and it is in fact, a rehydrating stable beverage. A study found it to be a thirteenth place, last place out of thirteen stable beverages. You might ask, “Do that really matter? If I’m dehydrated, I’ll drink water. If I’m thirsty and it’s okay.” Estimates have 3 out of 4 Americans being chronically dehydrated and that’s because people struggle to drink eight-plus cups of water a day. Life gets in the way, you’re busy and it’s tough to keep up with. It has a real impact too. It can drive to fatigue, low energy, and lack of focus.

These are all things that I dealt with every single day during my time out West. It’s something that a lot of other consumers and people deal with regularly. It’s also what brings me to coffee. I often drink it when I have low energy. That’s what was the exciting opportunity that brought up to create Fluid Cold Brew. We’re on a mission to hydrate your coffee. The coffee you love, hydration you need, and it gives you the energy that you feel. We have premium ingredients throughout each of the cans. We have a 100% organic Colombian coffee in each can as well as three delicious from our oat milk, to our smooth and refreshing black coffees, as well as our cacao mocha, which uses organic Peruvian cacao. They all taste rich, smooth, and refreshing.

They all have a blend of electrolytes that helps you retain fluids in your body and to improve hydration. Lastly, we’re most proud of is the healthy benefits of Fluid or having healthy ingredients in sticking with your sugar and low calories. All three are less than 40 calories. Our overall beverage category is across two dimensions. Hydration has been around for a long time in sports drinks, coconut waters and a lot of energy drinks but there isn’t anything that combines the two, hydration and energy. That’s the unique opportunity and space that Fluid occupies in the overall beverage area. The Cold Brew itself is a very crowded category. We see interesting white space there and on the bottom row, you’re accustomed to a lot of different cold brews and indulgent, frappuccino, lattes on the shelf.

All the growth is in the functional coffees. Consumers are looking for function and return on what they’re buying on the shelf, but they all have a lot of calories and they have a lot of sugar as well. Fluid is a real opportunity to be in that low-calorie, low-sugar option that you can feel good about it when you’re drinking. It’s not just about theory. We worked to design and develop the product. We took it to New York City to run a pilot and testing throughout the summer. We sampled with them for 3,000 coffee drinkers, partnered with leading health and wellness companies where we had a partnership with like Flywheel. We’d be opening up yoga studios helping them to give out products to customers. We are getting great feedback that we can take in and use to improve and optimize our product with Fluid Cold Brew.

During that time, we found a great fit with three segments of fitness enthusiasts, blending office workers, and wellness women, who were looking for a clean healthy option. We have a go-to-market that is poised for success with COVID-19. We’re shelf-stable launching on Amazon. We have a very hyperlocal targeted strategy in Brooklyn and Queens, the residential areas in New York City to grow from a strong base. We are raising $500,000 with mostly going to marketing, building brand awareness, as well as hires and working capital. It’s on a convertible note. Lastly, we have an excellent team who’ve been working together for a long time. We’ve been together for over a year and it’s a great team that points to success and sees the opportunity going forward. I want to say thank you, stay hydrated and I look forward to your questions.

This time we’re going to start with Stephen in the Q&A.

My question is around taste. Does adding electrolytes alter the tastes in any way, and are you adding enough electrolytes to claim some benefits as a hydrating beverage?

Taste is crucial. We spend time in 2019, calibrating the taste so that you don’t taste the electrolytes, it’s all coffee. The electrolytes are less than the threshold of you actually tasting it. What’s special about it is it changes the texture of the coffee. There’s a more refreshing texture to it through the electrolytes that gives you more of the iced coffee feel from coffee shops as opposed to a stick cold brew coffee in a can. It’s a nice addition to the taste and flavor. We use robust ingredients to taste rich especially with our oat milk and cacao mocha as well.

I liked that your shelf is stable because that in itself is a differentiating factor in cold brew. It also opens the door more easily to convenience because most of the supply chain there is shelf-stable and not refrigerated at least the easy to access supply chain. One thing with beverage is cost, calories, and caffeine can be limiting factors for how much you can drink. Thinking that this does have a lot of caffeine, which cold brew does which is good and that you have a hydration focus.

Have you thought about doing a larger can size, which would have maybe the same caffeine, but have whatever it might be that would dilute it so we have more liquid to hydrate? One of the other reasons I asked that is back to one of the things that made so successful when they rolled out and got rid of the old bottle, they designed the bottle literally so it popped on the shelf. There’s a white label, the label is very high in the bottle and it was tall. It would stand out on the convenient shelf.

The good points about the hydration and caffeine content there, we do have an eleven down product to have more liquid for hydration. Our own innovation pipeline does include a lot of options for also feeling back the caffeine to be more approachable and palatable for more consumers as well. For us, it’s the bar of taste to make sure that we can get to the right level of that taste and balance. Right now, we are pure Colombian coffee that’s in there and it’s a good balance that we found. We’re working on that. We are experimenting with can sizes and with the labeling and packaging. We are always optimizing and rearranging that as well.

Sabrina, do you have a question for Jeff?

This is a category we know pretty well given that Super Coffee is a portfolio company of ours. In your competitive landscape, you identified that the coffees that have 80 calories or more as high caloric. I’m wondering, if you have any data that shows that consumers are viewing 80 calories as being a lot in a bottle of coffee or an X amount of coffee and 40 is less than 80, I’m wondering if that is differentiator or if you’re going to have to educate the consumer about something different than what’s out there already?

The 80 was a natural number that helps us to create a quad on the slide, but what we found, is consumers are looking for nothing. Some people want low-calorie, as close to zero as they possibly can go. That’s the type of people that we are looking to service with Fluid. To your point, there are many consumers that have been perfectly comfortable to 80 plus calories especially how well Super Coffee has done at around that level. We’re looking to work with the consumers that want the bare minimum simple, low-calorie ingredients.

Next, we are going to bring up Brian and Jeff from Real Coco.

I’m Jeffrey Kung and this is my business partner, Brian. Thank you for this opportunity. In 2012, we noticed that coconuts were taking off, being that both Brian and I lived in Asia, we’re very familiar with the delicious taste and health benefits of the coconut. However, everything on the market didn’t taste like the real thing. We were determined to do better and be true to the raw ingredient. We call it coconut 2.0. That’s why we started Real Coco. We’re humbled to report that we’ve sold over 15 million bottles of Real Coco. Why were you disappointed with everything on the market? We did a little research and discovered a few things that Brian will share with you, our resident coconut guru.

Our process shouldn’t be revolutionary, but compared to the landscape, it is. All other coconut milk-based beverages are using dry and/or desiccated coconut powder, sourced from multiple countries, and reconstituted in the US versus our process which is bottled fresh at the source from single-source organic farms, in this case, Vietnam. That means a rich, authentic coconut experience without the need for blends additives or concentrates.

What did we do? We went to many sources. In fact, Brazil, Philippines, Mexico, Sri Lanka, Thailand, and Vietnam, where we found the best coconuts that we’ve ever had. As founders, we go three times a year to those places, meet with local farmers, help them meet their farming goals while respecting their farming practices. We do this all in a very sustainable way. We decided a few things were very important to us, low carbon footprint, minimal plastic use, and competitive pricing. That’s why all of our products are shelf-stable require no refrigeration. We practice regenerative farming and are competitively priced. One of our Thai factories, going to be net-zero carbon emissions by 2021. As a bit of history, we began our business in China but quickly pivot to the USA. We had our first major opportunity in Costco.

We were fortunate to establish that long strong partnership with Costco. This partnership provided many benefits. Number one, leveraging the supply chain, utilizing good costs of goods, building a defensive motor on our supply chain, validating the brand through effective demos and trials. Thus, scaling out the business in a very capital efficient manner. We’ve been a top-performing coconut brand in the regions that we sell, outperforming the incumbent or even private label brands, and have enjoyed a five year plus relationship, which we can only see continuing into the future. With quick updates on financials, we’ve had a consistent organic year on year growth around 24% finishing in 2019, $8.4 million in sales. We’ve been profitable since 2018 and are on track to exceed our $10 million revenue target by about 25%, despite COVID-19.

We’re proud of what got us here but more excited to share with where we’re going. As everyone knows, plant-based is a movement. Plant-based coffee creamers in 2019 saw a 30% increase in sales, and this is our offering. This just entered the market. It’s super creamy. Also, the only plant-based coconut creamer that’s completely bottled at the source and completely organic. Previously, the only way to get this quality of coconut water was called a press-refrigerated bottled option. Through innovation, we can offer the same quality in a tetra pack.

This year we announced these two product offerings and have already begun to see traction in Amazon, as well as brick-and-mortar. Being mindful of where our customer is. we plan on expanding distribution into the all-natural channel, as well as a traditional grocer in the ensuing few months. Beyond that, we’re looking to open specialty channels as COVID-19 subsides, as well as heavily investing in eCommerce. Despite these recent challenges, we’ve already begun to execute our plan. We are extremely excited to launch the Creamers and Pink in Harmons, Erewhon, as well as Foodland in 2020. We’re proud to report that during Q1 of 2020, we saw $2.3 million in revenue with zero hiccups in our supply chain. In Q2, we closed out with $2.5 million in revenue.

This year, for obvious reasons, we’ve also focused on Amazon. We’re proud to say that we are the number one new release on Amazon, for our Pink and our coconut milk, as well as Amazon’s Choice for Coconut Milk. Our creamers we’ll be launching this month and we expect equally strong numbers. To execute this plan, Real Coco is seeking growth capital to expand our product lineup, increased distributions, do a lot of brand building, and increase our online sales. We are excited and extremely capital efficient and careful with every investment that we take. We’ve built this business in a very organic way, and we’re looking to bring the right partners to bring this to the next level. $700,000 raised in 2019 from friends and family and we’re looking to raise $2 million in the next round. Thank you everyone for all of your time and we are looking forward to your questions.

It’s interesting to see your early growth and Costco has been a great initial partner for you guys. Within that set, there’s a limited option of coconut waters and you have an adventurous shopper that is willing to do that initial trial. My question is in the saturated landscape of coconut waters. Once you get into retail and move beyond that channel, how are you going to get the consumers to try the product? How are you going to tell them that the taste is different? In that split second, that’s going to have them to try yours versus all the incumbent brands?

Our business is two pillars, coconut waters and milk. With our general positioning is that we’ll offer an organic offering in line with non-organic incumbent brands. We find that coconut lovers or connoisseurs like to try all brands. We feel that on the shelf positioning, being in line with a Vita Coco or a Zico, that’s been a winning strategy for us. Being a single ingredient, organic checking all those boxes. The same applies to the milk or creamers. Outside of traditional retail, we’re focusing heavily on B2C, also opening up more within foodservice to build within influencers to drive additional trials outside of the platform that we have with Costco.

Steven, you are up.

My question is around the margin profile. If you’re offering a single source organic product inline or with the incumbent brands, are you priced similarly? If you are, how does that impact your margin profile?

Our two product lines would be our more mature items which are 1-liter organic water and 1-liter organic milk. Those are going to have margins that are pretty traditional and in Costco, it’s around 30 and in traditional grocery probably around 35 to 40. Our innovations within the creamers and the Pinks. Those are going to be more in the 45 to 50 range. As far as compromising margin. I’d say one of the big advantages we have is because we have that relationship with Costco, we for sure have some of the best costs of goods in the space. That allows us without giving up margins to execute that strategy. We also run a very lean business. Our model is using fractional services rather than hiring staff. We have the best in class with our accounting, sales, and marketing that allows us to be capital-efficient and still maintain the right margin requirements.

Nick, you’re up for the question.

I love that you’re generatively farmed. Playing that up, you guys are ahead of your time. As much as you can play that up that’s going to be a rising tide for you over time. My question was going to be about margins. I’m glad you asked that, but related to margins, in your talks outside of Costco with retailers both in the natural and the conventional channel, how much of a price premium do you think that you can have based on the supply chain work that you’ve done and it’s going to be a better quality product than what’s there? That’s your differentiation because that’ll also play into your margin long-term too.

Going one by one, for example, our 1 liter organic pure, it’s not featured in the deck, but you can check on Amazon will retail at $399, going in line with $399 with Zico or Vita Coco. Our 1-liter organic coconut milk, that’ll go against like a So Delicious or Silk. It’s $399 because it’s our magic number. It’s nutpods within our creamer space. Typically, they are retailing around $350 to $399, depending on what’s on a deal in line with an organic offering, checking all those boxes. Lastly, with the Pink, we’re going right up against Harmless with that item. On average, we’re probably on a 30% value per ounce against Harmless at around a $349 price point. We don’t even necessarily sell at a premium, we’re going in line with these non-organic or cold press incumbents.

In fact, if I can add on sales calls and meetings, we send samples with our competitors to have them cut it side by side so they can taste the difference.

Jeff and Brian, nice job. We’re impressed. We’re going to bring up Jared with Lillabee is coming back. He did participate in our prior one but had technical difficulties that prevented him from being able to do his full pitch. We’ve invited him back to do it fully this time. Jared, thanks for joining.

I want to share that for my entire working life, my passion has been to make healthy food that people love. I took that passion and the skills learned in working in some of Colorado’s best restaurants to create what would become the snacks that you see now. Before I knew it, I become the founder of Lillabee. We are all about making that better for you, healthier and alternative to traditional cookies and snacks and then we level up. We bring it with amazing flavor, crunch and delight because I never lost sight of the intention that these cookies taste most health full indulgence that you’ve ever tried. To satisfy, not only the need for eating better, to feel better but more important for eating better, to feel better about eating. Indulgence without the guilt.

This is a worthy mission. I would like to invite you to become part of helping me grow this amazing brand. I’d also like to answer a question that I often hear which is, “Why Lillabee? Why is this a thing?” In 2020, consumers worldwide are going to spend $8 billion on cookies, $2 billion alone on Oreos. Our category is one of the largest in the entire grocery business, a giant sleepy category. I saw an opportunity because I think it’s full of products offering little more than filler ingredients, empty calories, boring line extensions, and chemically-derived sweeteners that offer dubious health claims. I believe those cookies are stale and consumers deserve a better choice. I’ve dedicated Lillabee to making products that solve a problem. Snack serves many purposes and there are many good snacks. A good snack meets a singular need, a specific purpose.

For example, a bar offers to refuel, Oreos offer indulgence, but that leaves the consumer stuck. Nobody has an Oreo after a workout. Does anybody eat in RXBAR for a delight? The right snack, need not sacrifice nutrition, function, or indulgence. Lillabee snacks are the right snack because there’s no sacrifice. They unify the functional and emotional. They solve the problem, but will consumers connect with our solution? Here’s how we found out the answer. Our go-to-market strategy focuses on Amazon, Thrive and curated profitable retail. Next up is a Lillabee 2.0 website where we go B2C. When the pandemic eases, a thoughtful entrance into Grab-and-Go and that strategy are working.

In 2019, with only four SKUs, we did $440,000 in eCommerce’ sales. We generated 400 unpaid reviews. Our subscriber and save was 7%, our cost was 10% and we did all of this with zero paid media or marketing. The engagement is there, the repeat business is there, the potential was activated through minimal platform advertising, and mostly word of mouth. Imagine what could be done if we spent $200,000 on the digital discovery and consumer acquisition. We had true pros in charge of that spend. We utilized Instagram, Facebook, and Google ads to tell our story and to grow our tribe. What if we doubled our SKUs? With your help, that’s exactly what we’re going to do. To execute our strategy fully and accelerate our momentum. I’m seeking to raise $250,000 of growth capital. As an investor, you’ll find favorable post-pandemic terms, which manifest the great value that I place on your joining us at this critical time.

That $250,000 will last us twelve months, take us to $1 million in sales and more significantly bring us to EBITDA positive and cashflow positive because growth capital should be used for growth. Unfortunately, many CBG brands can’t do this because of their overhead, but we built Lillabee to be different. Our capital efficient structure, our channel strategy, and product margins, all support this impactful use of funds. It’s not lip service. $0.95 on every dollar we raised this way will be spent on building consumer awareness and brand-new equity online. I’d like to ask each of you to please consider setting aside 30 minutes of your time so that I might share more in-depth about this vision for the future of snacking. If I might borrow a tactic that I learned. During a moment of weakness, I signed up for Tony Robbins’ email list. Our time together has been amazing and I don’t want it to end. It’ll be gone soon so I don’t want you to miss out. Please, if you can offer me that time, I’m going to send you these amazing cookies. There’s no downside here. It’s 30 minutes and great cookies.

I’m going to start the questions with Sabrina.

As an investor, when I see things like $1 million in revenue, EBITDA, and cashflow positive, I get a little suspicious. What I want to understand is a $250,000 ask is not a lot and a twelve-month runway off of that is a lot. What I want to understand is how are you planning on scaling this business and how sustainable do you think it is that you will remain EBITDA positive with such a new company and little revenue?

The most important thing is to do this, we have to be focused and very clear on what our strategy is and what we’ll do and what we don’t do. What we’re not going to do is try to drive discovery and activation in retail because that’s expensive. What will happen is exactly what you described, is that money will run out? We wouldn’t be able to do that. What we’re going to do is do that discovery and activation digitally, where that can be efficient, where our margins are fantastic, where the fulfillment aspect is taken out of our hands. Amazon takes care of it or our fulfillment does.

We can tell that story and the country is our customer. We’re not paying for slotting, we’re not paying for brokers. We’re not paying all that overhead to have a product on a shelf and then try to activate it. By focusing on digital, in the merits, in the emergence of digital, which is where consumers are going to discover and purchase food like snacks, we can do this. It’s a new way in effect to go to a market where those burns that you’re describing and that risk that should be wary about is taken off the table.

We’re going to go to Nick for a question.

Thank you for being here. This is interesting. I would love to try this product because I’ve tried a lot of the other ones out there. I’m assuming that taste is going to be very favorable here and it’s going to be something that people are going to like. Thinking about your customer positioning, you’ve got Paleo, grain-free, number of organic ingredients, egg white powder, which is the one non-real plant-based thing that I see in there. I’m trying to think about, if you’re going to get to mainstream retail, what is the core customer that’s going to be buying this? It feels like you could do a little more and go organic, and that would differentiate you against everything, you could get rid of the organic egg white powder and put something else. Potentially, that would put you into completely plant-based. I’m trying to figure out your vision there.

In a sense maybe, what you’re asking is who is this for? It’s for folks that are interested in plant-based, but their diet isn’t completely plant-based, because we’re able to offer the nutritive aspects along with the indulgence. That may be what is what they’re seeking out of plant-based. There are certain nutrients aspects that we want to drive and the egg white does a lot of lifting in that in terms of delivering protein and its availability as a protein source. Without getting into the weeds of a formula, I think that I am interested in plant-based, but it’s not my whole diet.

I try to take that as a guide of, “What’s the best product that we can make that can deliver on a promise? Let’s make that and let that be the story that we tell,” Rather than trying to shoehorn ourselves into what is ever of the moment. Maybe it’s moment will pass in six months or will get crowded. I’ve seen that happen many times in food where people that are very clear about the vision for the benefit seem to maybe have a little more durability.

I want to shout out to all four founders who are groups that did this because it takes one courage to get up and do this, especially when you know that a fair amount of your founder peers are going to be listening and going through the mental critique of it and also because they’re left in a black hole to hear the feedback. It’s a fantastic learning opportunity, not only for them but for all of those attendings. I’ll start with Sabrina. Overall, on the four pitches and some of the elements you liked and some of the things that you thought might be missing. Give us some feedback from your perspective.

When you look at these, I come at it from two angles. One is as an investor and as a consumer. Both of those are important viewpoints for me to bring to the table. As a consumer, there are lots of merits to having a beautiful pitch or a nice communication strategy or how you market it, the colors, and the things that draw you in. All of that, across the board, the founders did a great job. Obviously, this is something that was practiced. It was something that they have fine-tuned. As an investor, there were some key things that I was missing also across the board. One was, some of the top-line financial progress that these companies have experienced. With the acknowledgment of other than Real Coco, all of these are early-stage brands that are starting out and are trying to get some traction, I also need to know where are you in terms of your revenue?

I need to know what are you forecasting. There were some questions for me around valuation. You have an ask, “What is your valuation? Is this your series seed?” Real Coco expressed what they’ve raised to date and what they want to raise moving forward. That was helpful to understand how much capital has been poured into your company to date. That is important for me to know. I want to understand what’s the valuation and where are we going from here? Every company, there were some questions around how to use the funds, which is important. If we had more time, I would drill into those use of funds.

For example, Real Coco has a more robust team than the other three. One of their use of funds was to build out their team more. Fluid Cold Brew is looking to bring on some key hires. They have a more robust team than the other three and I want to understand if, “Is this the right time for you to build out additional team members?” All four of them did a great job. They have interesting products. They are differentiated, they have items that they can position differently. I like that as a consumer. As an investor, there were certain key things that I was missing. More from a technical standpoint that I would drill into more.

One thing I will say is there is a balance between this being very public and not disclosing things that are going to be widely available. I’m going to make a statement and will ask Ben to react to it. One of the things that I encourage founders to do as their pitch is to think about it in this aspect, investors are going to invest. That’s what they do. It’s not a question of whether they’re going to invest. The question is, “Why should they invest in you? What is your path to monetization? How are you going to show that investor how you are going to make them money?” That’s ultimately what the objective is. My question is twofold. One is, do you agree with that coaching? Two, reflecting back on the four pitches that you witnessed, do any of them stand out as to ones that seemingly, maybe did a better job or missed the mark on expressing that monetization?

I do think that’s effective coaching. After we speak to you, what we’re going to do is go back and verify whether we agree with what your positioning is, what your projections are or whether your product is clearly differentiated enough and your message is clear enough. We do our own modeling to see if you grow at X amount, what would our underwriting expectations be? To answer that proactively is great coaching. Across the board, something that I would have liked to see more of to your second question is real clarity on the hierarchy of brand values and positioning.

It felt a little bit like we were trying to do everything, we’re trying to be tasty product, or ethically source, or paleo and that split second, that a consumer is looking at your product either online or in-store trying to do everything, waters out everything. I don’t think there was a clear example of this brand clearly laid out. We are this first and these other things we believe in because it is part of our mission and our ethos. It’s on our website and we’re going to have that be part of our brand values, but it’s not our first selling proposition.

We’ve talked a lot about that is that too many brands are making too many messages. They’re trying to be everything to everybody. In fact, the best marketing tends to be polarizing. It tends to be, put a stake in the ground, and stand something. That’s good feedback interesting and coaching. Nick overall, what do you think about the presentations?

It’s a five-minute presentation and it’s very public. Taking that into account. One thing I think about at this stage is you’re founding a brand and you’ve got a good idea and you’ve got initial traction. There’s a seed of an idea that’s planted. The question is, what is that going to grow into the long-term because an investor is going to need to exit the investment one day. The question is if you’re Amazi and you’re in a category where you’ve got brands, like Bear that have been less than $50 million in revenue or so when they sell. You may not be a $100 million brand, are you going to build that brand and build it for margin and hold a price point and build for profitability?

That would mean for an investor that you may not be raising that much money. You may not need to go get a $10 million check one day. You might be raising a smaller amount and exiting based on EBITDA. The other piece of that too is a little clear definition of the white space. All of these brands are all benefit because they’re not trailblazing. They’re all in categories where there are related products out there that you can reference velocity, you can look at SKUs and how things do on a shelf. How is Real Coco’s long-term vision? They’re not going to be Vita Coco. Vita Coco is the biggest of coconut water. They’re going to be something much larger. They’ve got the creamer and the supply chain. How are they going to fit when they’re very large one day?

It’s hard to pitch period and to do it in five minutes. It gets back to Ben’s earlier point and the fact that if you’ve got five minutes to meet with an investor and you almost never even get a full five minutes before many will tune you out are already predetermined in their head if this is something they’re going to go forward. You’ve got one chance to make it interesting enough to get a second meeting. You’re never going to get a check after one meeting. The whole objective should be, “Let me tell you something compelling enough that you walk away going, ‘I need to dig a little deeper. I want to know a little bit more,’” in an initial meeting.

The earliest you can put that clear positioning in the presentation, the better. I find a lot of founders will give me background, reason, story, and history. I have ten pages into a deck and I don’t even know what the product is. The quickest you can tell me why I should be paying attention, how your product is different and how you’re positioning it? I thought the snack purposefully did that to some extent. I’m not sure if the product was an exact match to that. I don’t know what I’m Amazi’s messaging matches snack purposely, but assuming it is, that was very clear like, “I get what she’s trying to do.”

It’s being a songwriter. You want to have a hook. You want to hit something quick to get people to keep listening.

I wanted to say that it’s hard to get everything you want to get to in five minutes. What Ben mentioned before, which I think is very apt, is that you have a second to get the consumer. If you can’t get your pitch down to five minutes for an investor, how are you going to differentiate for a consumer off the shelf? These things are very much related. You need to be able to fine-tune it enough so that even off the shelf for a second, with hundreds of other products in front of a consumer, they get it.

An exercise that I encourage everyone to do is if you could only have one sentence to describe what it is that you are offering, what would that one sentence be? If you could get that down, you’re a long way down the road for most people who cannot describe what they’re doing in ten minutes. It’s hard to do because you’re excited about it. You want to tell everybody about everything. I’m going to come back to Nick with my follow up question and get your thoughts on what you heard and any constructive feedback that you can offer?

Five minutes is difficult to explain the whole company however when you do have meetings with investors outside of this is that sometimes, I ask questions not to hear the answer. “I want to hear your tone and your perspective on it. Can you take an unbiased look at your company? Pull your head out of the weeds and look at it from a 10,000-foot view?” I want to see that. One of the good examples of that is asking a more detailed question to Real Coco. Brian knew those answers right off the top of his head, and it wasn’t necessarily like, “Are your margins great?” It was, “Do you know the information? Do you know it well? Can you present it well to me?” If you can give those answers to me well, it shows me that you are very involved in the company at a detail level and you did all the operations all of it. Sometimes we ask questions not to know the answer, but for other questions behind it. Some of the companies did well with that. Overall, they all did a great job.

One of the things that I was coaching one of them on is that “If you got five minutes to pitch and you got a five minute Q&A if you could work in a way that moves the questions so that you get to leverage that additional five minutes to be able to strengthen your argument as to why that’s in your benefit and you have to think. You have to be a good prosecutor. You’re out there trying to prosecute a case.” It’s simple to take these things and have this conversation and talk about what you could do, deconstruct it and make suggestions.

It’s hard to try to convey to somebody in five minutes when you care deeply about what you’re doing when this is everything, and you’re trying to birth something or grow something or do it. I say this a lot so those who are reading this often were probably going to roll their eyes when I do, but the superpower ultimately still comes back down to empathy. You have to go into these conversations with a bent towards empathy in terms of who your audience is.

If your audience is an investor or an investor cohort, looking through their lens and trying to identify what is it that they would want to know, to hear, to understand or get a sense of before they further the conversation, and also then know what your next goal is, your next step. Nick, my follow up quick question was you are the data guy. These brands with the exception of Real Coco, but they’re still because they were driven through Costco. All of these brands are pretty early stages. Any suggestions on how they get their hands or how they can leverage data in these types of presentations, in these pitches, but also internally to make better decisions?

I did take a look through SPINS at all of them and even Real Coco is not going to be in there a lot because they’re in Costco, which does not report the SPINS. You have to use what you have. Whole Foods don’t report to SPINS, but they have a great portal. Use the portal, it tells you every store and what your average price was that you sold in a week? It’s got a tremendous amount of information and you can use that data to show, “When I have a TPR of $0.50, look at my lift,” “If it’s $0.25, look at this lift if I demo it to this.” In Amazon, you can track your trends there’s a lot of data there. In Costco, knowing in each region how much you sell per store per week is important. It varies a lot by region and a lot by category. Investors are going to be smart? They’re going to have a lot of data points and know what’s good and what’s not. Use what you have.

Every time you have a conversation with a retailer or an investor who sees things more globally or holistically, it’s a great opportunity to ask for input or feedback, or what have you seen in the market. That’s the other thing that I wish founders would do more of is ask for help, input, and feedback. At the same time, make sure that they’re saying, “Here are some of the mistakes of things I’ve tried that didn’t work,” which Jared does a fairly good job of doing. It’s hard to do in five minutes, but he learned his lessons rushing to retail. Ben, do you wanted to add something?

Stephen mentioned something and this is important to elaborate on. There’s a whole meta-conversation that’s going out throughout this process that entrepreneurs need to be aware of is how you do this interaction is almost more important than what. “Are you on time for our meeting? Do you send materials when you’re asked to send materials? Do you follow up in a timely manner? Are you respectful of our time? Are you knowledgeable about the information?” Whether it’s fair or not, whether you were able to be responsible within our timelines could be a reflection of how you run your own business. Whether you are respectful and knowledgeable about the questions asked could be a reflection of how you might be to work with us if we sit on your board. Be aware of that larger umbrella process is at least for us very much top of mind.

If I can build off of that for a moment because I think it’s important that as investors who’ve been doing this for a little while now, and we have sixteen companies in our portfolio and we could argue that all of them have brilliant products. The truth is at the end of the day, what we’ve learned is we’re investing in entrepreneurs and in the team that they’re building around themselves. The product could be the most brilliant cutting-edge thing in the world, but if it’s the wrong team, it’s done. We’ve experienced it firsthand.

How you are presenting yourself is super important, but also how you see the landscape beyond your company and beyond your product is also equally important. Frankly, as an entrepreneur, with blinders on, you are putting your heart, soul, blood sweat, and tears into your company and your product. You’re coming in pitching to an investor who is frankly inundated, particularly, in the food and beverage space with opportunities of the next best thing. You have a limited amount of time to not only express your vision and your passion but why you are the person or you are the team that an investor should risk their capital in. It’s not just the product, it’s much more the team and that’s something that should also come through in the pitch.

Working with an investor is a relationship. It’s like being in a marriage and we’ve all seen those that have gone well and those that haven’t. As a founder, you should do a little pre due diligence on the investors you’re going to talk to. Know what’s in their portfolio and maybe call one of those founders up and say, “What’s it like to work with them? Tell me about when the shit hits the fan and what’s it like then?” Be able to communicate that, “I talked to this founder and they had great things to say,” or one of the things that were mentioned by a founder who shall remain nameless was that Stephen’s difficult to work with. That’s fairly public information.

I like how Sabrina referenced the landscape around the product. That’s a clear way of also saying the white space and that is important. I liked the way you said that and I’m going to use that.

We might do a future episode on this, talking with investors about what they’re seeing and what they’re wanting. It’s a hard and necessary part of this business for founders. Many of them don’t understand that a capital strategy is as important as your go-to-market strategy and everything else around it. Because if you build this great race car and fail to focus on having the right fuel to get it down the track, then you’re not going to go very far. In closing, I’ll go around the circle, starting with Sabrina. Any last remarks and thank you for joining.

The thing that I want to leave with everyone is that what I alluded to before, we are in the Renaissance of organic, natural, food, beverage, and many different products coming to market that are exciting and new, which provides a challenge and it provides an opportunity for entrepreneurs. The challenge being that, there’s so much already out there that it’s rare that your product is going to differentiated enough. A lot of people in our generation fancy themselves as entrepreneurs and they think it’s easy.

They think that they can be their own boss and the high life. Before going into this challenge yourself, “Are you filling a white space? Are you filling a consumer need or demands that are not being filled? Are you ready for the unbelievable challenge that you are going to be faced with in building a company and the immense responsibility of taking other people’s money and being that custodian?” It’s not growing on trees. It means a lot to people, particularly in your Series seed round or even before that. Oftentimes, entrepreneurs are raising money from their friends and family.

That is meaningful for these people who are putting their trust and their money in your company. Before you create a pitch, that sounds exciting and sexy, make sure that you are coming to market and coming to investors with something that you are ready to back with the challenge, the ups and downs, and everything that is associated with that. There is a lot of capital, opportunity, and white space out there when you see it and angle it in the right way. Make sure you’re coming with a clear picture of what that looks like.

Going to you, Ben.

First, a real acknowledgment of the immense risk, bravery courage it takes to even consider being an entrepreneur. A lot of times given how much is going on for investors and most of us try our best to be courteous, give responses, and give feedback, the truth of the matter is, sometimes we don’t. To acknowledge that could be hurtful. This is your baby. You’re pouring everything into it, potentially your capital as well. The thing I’ll say to it as much as I can is to not take it personally and as much as you can, when you are launching as a follow up to Sabrina’s challenging your relevance point is, get clear on the why.

The why for you, for the consumer, the community, and your stakeholders, which are your retailers, your investors, and anybody else who’s a stakeholder in your business. I’d put that up so you can look at it every day so that as you come up against your challenges, noes and rejections, you can circle back to your why and say, “How can I fulfill these whys from a different avenue? If Echo’s going to say no to me, how am I going to get the capital that I need? If Erewhon says no to me, what’s the right stakeholder for the product that I’m trying to position?” Having a North Star emotionally and commercially is important because it’s a rough and tumble journey. Thank you for all that you’re doing to launch what you’re launching.

Going to Stephen and Nick, you guys got to come with goods here.

I want to say it takes a lot of courage to get up here and pitch your companies and how passionate you are about it. I want to say thank you for that and then I acknowledge that. I also want to say that the food ecosystem is a very tight-knit community. Everybody knows everybody, not just investors, but the retailers, buyers and service providers. We all know each other. We all have this overriding thought of we want to make this space better and we want to make it better for everybody. If it isn’t right for us or retailer, ask who else can you put me in contact with, or connect me with because we want to see everyone succeed because it’s going to make this category better.

Nick, bring it home.

A couple of quick things. One is, I do think that it is humbling for me to see what founders do to grow their companies, particularly, in the early stages. Every winning formula is very different. If you were talking to other founders and other people who have done it successfully, more data points are good because everyone is like a unique puzzle. That’s a puzzle where it’s daunting to me to think about if I was ever a founder and trying to do it, how difficult it would be, and how inadequate I would be at doing it? The second one is as your investor checks get larger, the importance of the strategic visionary fit and culture with you and that investor goes up too because you’re bringing somebody into your team that is not going to go away.

A lot of people will get that first offer of a $5 million or $10 million check and it’s very exciting, but they don’t fully vet out, “Do we see the world the same way? In three years from now, are we going to be still on the same page with decisions?” A lot’s going to change between now and then. Remember investors all have money and the reason why successful investors are successful is because they can do something in their playbook, most likely that’s different and better than other investors. If you can find the investor that has the playbook, that lines up with you and the strategic vision and the culture, you’re going to be that much more successful. The larger the check, the more important that is.

First of all, thank you to the founders for doing this. Not only for being here and being willing to be vulnerable but doing this. Being part of innovation and part of an entrepreneurial economy. It’s awesome and it inspires me. I love working in this space and it’s something that few people get the opportunity to witness is that passion and that deep conviction in doing something meaningful. I also want to thank the investor panel for joining because one of my hopes is to somewhat demystify and make this whole process a little less scary for founders. The reality is that most founders are going to get 99 noes for every 1 yes.

That’s crushing to have that happen if you take them as noes. If you take them as not now, not yet, not for us and move on and know that it’s very difficult. Use every one of these conversations as a learning opportunity to become better at being able to express what it is that makes you different and makes you a monetizable or an exciting investment. Take back some of the hard questions that are asked and can you use them to become a better business, founder, and brand because there’s always room to do that. I wanted to thank everyone for reading. I appreciate this. Take care, everybody.

Important Links

• Whipstitch Capital

• Echo Capital

• Amazi

• Fluid Cold Brew

• Real Coco

• Lillabee

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