Having stepped beyond its core identity as a CBD drink last summer, New York-based Cloud Water today announced the close of a $2.7 million seed fundraising round set to fuel further expansion into the overall functional beverage space.
The company assembled a diverse roster of individual investors, including Adam Fox of the New York Rangers, actors Liev Schrieber and Malik Yoba, and former NHL All-Star and current Montreal Canadiens executive Scott Mellanby. For industry watchers, the most recognizable name is former Glaceau board member Bruce Nierenberg, founder of B.I.N. Sales and Marketing, who is reunited with another Vitaminwater veteran, Dr. Carol Dollard, Cloud Water’s COO.
Marc Siden, CEO and co-founder of Cloud Water, said the company raised around half of the total financing in a matter of weeks after opening the round in early 2020 before the pandemic. COVID’s initial squeeze on both retail and financial markets pushed those plans to the side, however, as the brand pivoted to amplify its e-commerce presence and introduce a new immunity-focused sub-line called Cloud Water+. Moving from the core line’s bottles into 12 oz. cans, the three SKUs — Blood Orange & Coconut, Grapefruit & Mint & Basil and Blackberry & Lemon & Rosemary — provide 100% of the recommended daily allowance of Vitamin D & Zinc.
That ability to pivot and stay nimble while under pressure helped the brand manage through the difficult early months, and also served to emphasize Cloud Water’s resilience and business potential to its prospective investors when it restarted fundraising efforts in November, according to Siden.
“I think it really goes back to the team and the advisors that support this brand,” he said. “One of the reasons you go institutional is you get one or two big checks and you are done, and you also get strategic intelligence and backing. We (already) had such incredible strategic intelligence and backing that we made the decision to seek out high net worth individuals who are passionate about the brand and would allow us to evolve the brand through our vision.”
He added: “When we go to institutional investors in the next round, we want to show a strong foundation, good cadence of growth and our ability to be nimble in extreme adversity.”
Those individual investors are set to play different roles within Cloud Water; Fox is interested in being a brand ambassador, Siden said, while Nierenberg, Don Lockton (of insurance group The Lockton Company) and Roger Silverstein (executive VP of Silverstein Properties) bring deep business experience in beverage and beyond.
The new funding will be directed towards supporting Cloud Water’s growth and building off the momentum generated by the Cloud Water+ sub-line, though both Siden and Dollard emphasized that it remains committed to also growing its existing CBD products. In adding a second option to complement its hemp-infused drinks (and to side-step restrictions around selling CBD), the company has been able to “cast a wider net” with distributors by offering a less expensive item (MSRP $2.79 – 2.99, compared to $3.99 – 4.99) that continues to build around its overall story of better-for-you hydration and functionality. Cloud Water is currently partnered with DSD houses in New York City (Big Geyser), Los Angeles (HiTouch) and Miami (Exclusive Brands), while also going through KeHE and UNFI for broad-line retail.
Along with driving brand awareness through marketing and using data to enhance its D2C operations (up 300% this year, Siden noted), Cloud Water has set the goal of adding 2,000 additional locations to its current store count of 1,500. As large strategics like Molson Coors begin to formalize their approach to the CBD beverage market, Dollard compared the situation to her previous experience at vitaminwater.
“When you have a really focused and passionate and well-done start up, I think there’s an element that is really hard to reproduce in a large company,” she said. “I love that they are coming in and building awareness, but I think Cloud Water will always be in the lead there.”