Boston-based functional shot brand DrinkTru has secured $1.5 million in new funding, founder Jack McNamara told BevNET last week.
The brand markets a six-SKU range of 1.69 oz. shots with functional benefits: Energy, Focus, Power, Dream, Rescue and Breeze (with hemp extract). The products are in just over 500 stores via distribution partners including J Polep (New England), Resnick (New Jersey), Prachi Enterprises (Georgia) and Dr. Natural (New York).
According to founder Jack McNamara, the company had been in talks over a potential investment with a venture capital partner for about four months before they pulled out in February, requiring the brand to quickly change gears. To keep the company afloat, at the end of that month the company closed $240,000 in convertible debt with the aim of converting it into equity as quickly as possible with a priced round.
To help with the raise, Tru spent about two months working with Jennus Innovation, a Boston-based accelerator. According to McNamara, in revamping Tru’s pitch deck for investors, Jennus brought a new perspective on the company’s long-term financial prospects. In addition to category analysis, the firm also projected a five-year outlook for the brand, including budget projections for payroll and marketing spend and guidance on managing cash flow.
The $1.5 million priced round, closed on May 15, does not include the convertible notes and comes from 38 different individual investors contributing checks ranging from $25,000 to $125,000. SOS Ventures, the company’s second largest stakeholder since initially investing in Tru in 2018, also participated in this round. Previous backers include former NHL player David McIntyre and current player Chris Wagner, as well as Rob Soni, an early investor in brands like Bai and Sir Kensington’s.
Despite raising money in the midst of a market slump, the brand topped its maximum projection of raising $1.2 million.
“To Jennus’ credit, we literally stuck to the timeline from the day they started to when we got the deck to the day we got the financials to the day we got all of the commitments all the way to the close,” he said. “Honestly I think what they did was a miracle and thankfully some of our investors followed on.”
The funding “truly saved our business,” McNamara said, and puts it into a position to scale over the next 24 months. That includes a shift from the company’s proprietary rectangular bottle design to a 60 mL aluminum twist-top bottle, as well as the future launch of a full-size ready-to-drink version of each flavor in 12 oz slim cans. Those will accompany a new sleek, minimalist packaging design that McNamara said is aimed at what the brand discovered has been its biggest demographic: women. Graphic designer Ellen O’Reilly, who has previously developed packaging for brands like Krave and Dang, is creating the new look.
With conventional retailers seeing disruption from the pandemic, Tru is turning its focus towards digital marketing and creating content for its online channels. The brand, which works with online broker Kepler Group, saw 75% organic sales via Amazon in the first quarter of this year (up from 72% last year) and 20% conversion (up from 13% last year).
“The one nice advantage we have is that so many brands start direct-to-consumer, get $5 million in sales, then switch into retail and have no idea how that distribution model works,” he said. “We understand and have the connections with distributors now. We can fix that D2C model and then go back into retail and know exactly how to get it down.”
Despite enjoying a 112% increase in year-over-year sales in 2019, McNamara said he believes taking a modest, realistic approach to growth expectations with investors has allowed Tru to keep making incremental progress. While emphasizing his gratitude for those who have believed in the brand and his leadership, his approach also has given them a reason to do so.
“Our goal is to raise enough money to accomplish what we need to accomplish at a valuation we can continue to exceed,” he said. “My goal is for there to never be a down round and to have a lot of happy investors when this is sold.”