Following a successful raise in 2016, Black Medicine is going for a second round of funding via equity-based crowdsourcing site CircleUp, a platform that netted the cold brew coffee maker $1 million last year.
According to president Chris Cooper, Black Medicine is currently seeking $800,000 to cover general operating costs, including marketing and efforts to improve and refine production line automation. Two weeks in, the fundraising campaign has already raised about 40 percent of its goal. The previous round, Cooper said, took about five weeks to close.
The decision to crowdsource the funds, instead of more traditional seed round techniques, helped connect Black Medicine with investors in the food and beverage industry who the startup may not have been able to get in contact with otherwise, Cooper said. The crowdsourcing platform also allows Black Medicine to readily do several smaller funding rounds, rather than attempting to raise a large amount of money all at once.
“Since I come from a tech background, I don’t have the contacts in this industry,” Cooper said. “If I had to go out and do it traditionally, meeting people one by one, I wouldn’t reach very many people and it would take a long time.”
The funding round comes after the company completed a packaging transition from bottles to cans that Cooper admitted was “harder and took longer” than planned. Production issues caused hiccups in the rollout of the new cans and confusion over the packaging forced Black Medicine to reach out to retailers directly to discuss the change.
“It was tough,” Cooper said. “We ran into some obstacles that we hadn’t expected. We didn’t realize how tough it is to get the buyers in the stores to realize there were new SKUs … We ended up having to talk to buyers at hundreds of individual stores to make sure they were all up to speed.”
Despite the difficulties, the launch went out on time and thanks to savings in materials costs, Black Medicine has been able to drop the shelf price of its RTD coffee line from $3.99 per unit to $2.99. With the price drop sales have increased and the company is now reporting an increase in overall revenues.
With cans on shelves, Black Medicine has now released a line of cold brew concentrates, sold in eight-serving, 10 oz. bottles for $8.99 in regular unsweetened and mocha flavors. Although they come in smaller packages than most concentrates on the market, Cooper said Black Medicine’s custom hot brewing process makes the product much stronger than other brands. Customers are advised to mix the concentrate at a 5:1 water-to-coffee ratio, whereas most other concentrates are at a 1:1 ratio.
“The result in our case is a drink that is much richer,” Cooper said.
While Cooper believes in the quality of his product, he did express concern that customers may look at bigger bottles of concentrate at the same price point and incorrectly assume they’re getting more servings for their dollar. To educate consumers, Black Medicine intends to up its in-store sampling presence.
“The plan is to continue along with what’s been successful for us with our ready-to-drink, which is getting it in front of customers, getting them to try it, and explaining what the difference is,” he said. “It means mobile sampling, it means in-store demos to educate people but especially getting it in front of them.”
The concentrates are currently rolling out to stores in the Oakland, California area, where Black Medicine is located, and will go on sale at West Coast Whole Foods, Safeways, and other chain stores next month.