Karma Culture, the makers of dispensing-cap beverages Karma Wellness Water and Karma Probiotics, has completed a capital raise of $2.25 million.
Company founder and CEO CJ Rapp discussed the deliberately “modest” raise in a call with BevNET, saying the company raised the necessary funds to support its recent “Push For Better” marketing initiative alongside the recent launch of its Karma Probiotics line.
“We wanted to stay in the realm of private investments from high net worth individuals to secure enough funding to accomplish our objectives for the foreseeable future, the next 12-18 months,” said Rapp. “The way we went about this was very deliberate.”
To facilitate the raise, the company elicited the services of investment banking and advisory firm Green Circle Capital Partners, which closed two rounds for Karma in December of 2015 and June of this year.
Stu Strumwasser, senior managing director at Green Circle and the former CEO of Snow Beverages, credited the company’s measured approach to raising capital.
“CJ’s approach to building Karma has been more traditional compared to some of the entrepreneurs we’ve seen enter the beverage space in the past 5-10 years, who’ve looked to raise loads of money from venture capital firms as early as possible,” said Strumwasser. “We saw that Karma had been extremely capital efficient, already had proof of concept, and that they were on their way to a sustainable business.”
In discussing the recent introduction of Karma Probiotics, Rapp pointed to the emergence of and consumer demand for probiotic beverages, saying the line extension – which is already available at more than 8,500 retailers including Kroger, Fred Meyer, Harris Teeter, Fry’s, Fresh Market, Rite Ade and Meijer, among others – has the potential surpass the brand’s flagship vitamin-enhanced waters.
“The timing of the launch comes at a point where the category is evolving and exploding and retailers are looking for high-quality probiotic products,” Rapp added. “Having a shelf stable probiotic beverage is not only a real benefit to the consumer but it also opens up new forms of distribution and merchandising.”
Rapp would also discuss the licensing of the company’s Karma Caps, an emerging aspect of the business he says may soon extend beyond beverage. Currently licensed to pre-workout supplement company ProSupps and Canadian sports drink brand Biosteel Sports, Rapp indicated he’s been in discussions with multinational companies in the fields of pharmaceutical, chemical and agriculture regarding global applications of Karma’s proprietary cap technology.
“[Before Karma] the dispensing cap space was still in its infancy, and a lot of the early stage players made use of what was available to them but it wasn’t perfected on a technical level, or the supply chain was complicated,” said Rapp. “We’ve brought it all in house. Our caps are made, filled, and assembled in a pharmaceutical grade clean room, and it’s all done first class.”
The company’s press release can be found below
New York, NY July 12, 2016 – Green Circle Capital Partners is pleased to announce the completion of an equity capital raise for Karma Culture LLC, makers of KarmaWellness Water and Karma Probiotics. Both product lines utilize the patented Karma Push Cap. The breakthrough probiotic-fortified beverage is shelf-stable (unlike most products in the category that have a short shelf life and require refrigeration). Karma Probiotics was launched into 8,500 stores earlier this year.
The company raised a combined $2.25MM in preferred equity from a syndicate of investors in a closing conducted in December of 2015 and another in June of this year, according to Stu Strumwasser, Senior Managing Director of Green Circle. Strumwasser added: “It has been a real pleasure to be associated with the team from Karma. They are uniquely experienced and consummate professionals, and we are big believers in the market opportunity they are addressing.” CJ Rapp, the Founder & CEO ofKarma was also the founder of Jolt Cola in the 1980s, and Karma’s President, Jeff Platt, previously held senior sales roles with Snapple and others. Rapp said, “We needed a modest injection of capital to fund our growth and the introduction of our new product line. Stu and his team at Green Circle turned out to be the perfect choice. Stu is tireless, and it didn’t hurt that he had personally run a beverage startup for years, as it enabled him to deeply understand our challenges and opportunities, and articulate them to prospective investors. Green Circle advised us on how to properly structure the transaction, secured the capital we needed from an impressive list of new investors, and also helped us to initiate relationships with several important institutional investors with whom we may reconnect in the future.”
Karma Culture LLC now sells their premium hydration beverage products nationwide in the US and Canada. The company also sells or licenses their patented dispensing cap system to a variety of third-party customers who seek to transform ingredients that would otherwise not be shelf-stable, into convenient “ready to mix” products.
About Green Circle Capital Partners:
Green Circle is an investment bank that focuses on Consumer and related sectors, with a particular interest in companies within the world of Health & Wellness and/or with attributes of sustainability. Our clients typically generate between $10MM to $50MM in revenues and/or positive EBITDA. In the fashion of a true boutique, our team of experienced Managing Directors (some of whom have been operators of companies of their own) personally handle every step of an engagement and don’t hand off project execution to junior associates. Green Circle professionals provide sophistication and transaction experience to small and mid-sized companies that are often family-owned or led by entrepreneurs.