Plant-based beverage brand Koia has completed a bridge funding round with investment platform CircleUp Growth Partners that could possibly represent “the last money into the company,” according to CEO Chris Hunter. Details of the transaction were not disclosed.
Koia has been one of the standout performers among an emergent class of plant-based protein drinks; according to IRI data, sales of its core lineup are up 123.5% ($7.6 million) year-over-year through February 23. Sold refrigerated in 12 oz. PET bottles, the brand has since expanded to include other functional sub-lines, including keto and coffee, which launched exclusively at Whole Foods in January. Two new flavors, Protein Chocolate Peanut Butter and Keto Cookies ’n Cream, debuted last month.
The brand’s existing investors include Monogram Capital Partners, KarpReilly and AF Ventures (formerly Accel Foods), the latter two of which co-led a $7.5 million seed round in 2017.
Koia joins a food and beverage portfolio at CircleUp that includes plant-based brands such as Nutpods, Barnana and Rhythm Superfoods. The company will not take a seat on the board. The San Francisco-based firm launched a $125 million venture capital fund in 2017 which uses its proprietary AI platform Helio to guide investment strategy.
Along with ticking off factors important with consumers, such as low sugar and plant-based ingredients, Koia’s combination of past performance and future potential were attractive to CircleUp, according to Aditi Dash, partner at CircleUp.
“We think it’s riding multiple waves of what consumers are looking for,” she said, noting the product’s callouts for low sugar and plant-based ingredients. “Koia not only has done a good job of performing in the past, as they’ve shown success across different channels, but they also have this ability to innovate.”
Koia CEO Chris Hunter said the company has kept an ongoing dialogue with CircleUp since around the time it entered the market in 2016; in a confirmation of the brand’s mission to connect with mainstream consumers, Hunter noted how CircleUp shared data from Helio showing Koia’s broad appeal. He praised the group for being “very, very patient” as he initially explored raising an internal round of bridge capital before eventually deciding to bring them on as a full partner.
The company’s original plan, according to Hunter, was to “go out for a much larger round” to close in late Q2 or early Q3 that would be “the last money in to our company.” Yet despite taking a bridge round, Koia is still on track to both hit its targets and retain the flexibility to either pursue a future sale, further equity investment, or other outcomes, Hunter said.
“We are actually in a position now where we will have a positive cash position through the end of the year and into early next year,” he said. “The reason why that’s important to us is because we expect some pretty big margin enhancement and being even potentially at break-even by the end of the year, so that could have theoretically been the last money into the company.”
The new funding will go towards supporting retail execution and saturating existing channels, with Hunter noting the company is eager to apply learnings from successful launches at conventional grocers Albertsons/Safeway and Publix. The latter, the first conventional outlet to stock Koia, now counts the core protein line as a top-10 best-selling refrigerated beverage, he said. Though in-store demos and activations are on-hold for the foreseeable future, the company has not made any staff cuts related to the COVID-19 outbreak.
While leaning in to brick-and-mortar sales, Koia is turning away — at least for the moment — from direct-to-consumer, shutting down its e-commerce operations early this year; “It wasn’t profitable,” Hunter summarized. Instead, the brand is working to move products online through fast-fulfillment partners like Amazon Fresh and GoPuff, with an aim to revamp direct-to-consumer sales through its website and Amazon next month.
“There’s a $100 million brand to be built in our existing channels with our existing portfolio,” he said.