Water Startup Mitte Lands $10.6M From Danone Manifesto Ventures

Consumer water technology company Mitte has secured a $10.6 million seed round of investment led by Danone Manifesto Ventures (DMV), the venture capital arm of French food and beverage conglomerate Danone. DMV is focused on providing financial capital to innovative and healthy food and beverage companies.

Mitte, a Berlin-based startup, is preparing to launch its first product next year: a tabletop system that infuses water with different levels of minerals through the use of custom cartridges. The company launched on Kickstarter in June 2016 and is set to roll out in three U.S. cities starting sometime next year.

Mitte will continue to operate independently with its own growth agenda and operating model, according to New York-based DMV which will also take a seat on the company’s board of directors.

VisVires New Protein Capital and Kärcher New Venture also participated in the round.

Speaking with BevNET, Mitte CEO Moritz Waldstein emphasized that the machine was not simply a filtration system, but rather is designed to first purify tap water through a proprietary distillation system and then enhance it with added nutrients — in this case, minerals. The machine uses a three-tier cartridge system to allow users to control the mineral content of the water: “balance” is sodium-free water for everyday use, while “vitality” has a high mineral and electrolyte profile that Mitte claims is ideal for athletic performance or recovery. Finally, “alkaline” delivers a high-pH water that Waldstein said has “exactly the same properties as Essentia.”

According to the company, the end result is water with is 60 times cleaner than pitcher filters and three times cleaner than reverse osmosis filtration systems.

Mitte users can purchase the cartridges, which are projected to last around 250 liters capacity, directly from the company. The price of the machine and the cartridges has not been determined yet; on Kickstarter, the machine was priced as low as $199. A company spokesperson said it was “working on developing the cost for our machine and cartridges to be at the most competitive and cost efficient price.” The machine also will connect to the internet and allow users to monitor performance and usage via a smartphone app.

Waldstein said the company will use the investment to support research and development by its engineering team, as well as to set up production and prepare for the product’s launch next year. The machine will be manufactured in China by U.S.-based company Flex, while the cartridges will most likely be produced in Europe.

Waldstein said that, in addition to marketing support, Danone will offer Mitte a deeper understanding of how mineral profiles can affect taste. “For now, it’s an investment where we can learn from their expertise and they can see how it goes,” he said.

While the mineralization system may be Mitte’s flagship product, Waldstein noted that the technology that powers the machine can be integrated into a variety of products. A “smart bottle” format that allows users to mineralize water on-the-go is set for launch next year, while Waldstein said that the company has had initial conversations about implementing the technology into refrigerators, kitchen sinks and other home appliances.

Though the company is based in Europe, Waldstein said that most of the close to 1,000 preorders Mitte has received have come from customers in the U.S. The product will be launched in five cities next year, which could include “experience” stores where consumers can try the product before placing an order online. The company will also be opening a U.S.-based office some time next year.

However, Waldstein acknowledged that, while the product is ultimately designed to deliver savings over the price of purchasing mineral water, the price could prevent it from finding a mass audience right away.

“We really will learn how users react to our offer, then take it on a larger level,” he said. “We have to be realistic and humble in the beginning.”

For its part, DMVs has made several investments in ready-to-drink beverage products over the past year, highlighted by leading a $30 million investment in premium coconut water maker Harmless Harvest in February. The group also led a $5.5 million round of financing in Kona Deep, a premium mineral water brand sourced from deep ocean water off the coast of Hawaii.

Danone itself is the world’s second biggest packaged water company by volume, and accounted for 19 percent of the company’s 2017 sales. Despite its potential to disrupt the bottled water market, DMV views Mitte’s machine and “smart bottle” as complementary to Danone’s other properties in the category.

“What we find really interesting about Mitte is that it does not stop at the purification stage, but invents a convenient way to add minerals after purification,” wrote DMV managing director Laurent Marcel in an email to BevNET. “In a way, Mitte is close enough to our core water business in its ambition, but disruptive enough to bring something truly complementary, and this is the kind of investment we are interested to do with our venture group.”

Danone’s investment in Mitte comes just over a week after PepsiCo announced its $3.2 billion acquisition of at-home carbonated water maker SodaStream, part of the soda giant’s larger efforts to shape its portfolio around better-for-you beverage options. Cocherel, however, downplayed the notion that beverage makers will be increasingly competing for share of the consumer appliance market.

“We don’t really see Mitte as a consumer appliance, but rather as an integrated solution combining appliance and cartridges with a connected technology to offer a unique and convenient solution,” wrote Jean-Francois Hurel, head of investment at DMV, in an email. “This is what drove us into the investment.”