With a growing portfolio of natural products companies, New York-based investment firm Room 9 announced its first lead investment last week, participating in Madre Mezcal’s $3 million Series A round.
What is Room 9?
Room 9 Creative + Venture is a venture capital investment firm and branding design house founded by managing partner Anish Bhatia. The firm is an early stage seed investor in the natural CPG products space, including food, beverage and cleaning supplies and its investment size ranges from $250,000 to $2 million. Beginning in April 2019, Room 9 was spun out of Bhatia’s individual brand investments and rebranded in December 2020.
In addition to the traditional financial involvement and industry connections VCs provide brands, Room 9’s in-house design agency provides support for companies including brand identity, packaging design, website development, product photography and content creation. Companies do not need to be in Room 9’s investment portfolio to inquire about creative services, as well not all of the brand’s in its portfolio utilize this service.
Room 9’s current portfolio includes:
- Los Sundays Tequila (seed stage investor and advisory board member)
- Madre Mezcal (Series A lead investor and board member)
- Sports drink brand Barcode (seed stage)
- Jot Coffee (seed stage)
- Cleaning supplies brand Clean Cult (Series A investor)
- Cereal brand Three Wishes (seed stage)
- Better-for-you candy brand Behave (seed stage)
Who is Behind Room 9?
Born into a family of medical doctors, Bhatia studied biology as an undergrad at Penn State and later received a master’s degree in biophysics and physiology from Georgetown University with the intent to follow the family tradition. But after graduating in 2016 he realized his “heart wasn’t in it” and, after a referral from a friend, he invested in Los Sundays in 2019 and became actively involved with the brand’s development from branding and design to helping sell the product to liquor retailers door-to-door in New York City.
“That’s the most humbling experience in the whole world, especially coming from a finance or medicine background,” Bhatia said. “Being in the trenches with the brand made me a better investor, because it’s very easy to harp on a missed sales target while you’re sitting in the ivory tower and checking on the company’s revenue. But until you’ve been out there and made a sale [you don’t realize] it’s really hard.”
According to Bhatia, one of the advantages of Room 9’s in-house design is that its brands can save hundreds of thousands to millions of dollars in agency spending by working with them. The firm currently has five full time employees, including creative director Maneesha Chaudhary, who previously worked on design projects at Studio Maniche, Stessa, CapTech Ventures and Alloy Private Index.
“I think a big thing of the Room 9 ethos is maybe you come in for the design forces, but leave with an intro to another VC or you leave with a co-packer connection,” Bhatia said. “And since all the portfolio companies I’ve invested in are such good friends of mine, you can pull that lever to speak with one of them.”
Bhatia said his metric for good branding is the ability to consume a product “every single day.” He noted a penchant for “clean and modern aesthetics” but also having a strong appreciation for “rustic and grungy” styled labeling. This is reflected in the brands that Room 9 invested in (Los Sundays) as well as portfolio additions that developed their packaging elsewhere (Madre).
The firm has also done branding and design work for non-portfolio companies including pre-launch botanical beverage Hiyo and is also incubating brands of their own, such as Hell’s Square Coffee.
How Does Mezcal Fit In?
When choosing who to invest in, Bhatia said the brand looks for three key qualities: The founders, the brand and the size of the market.
In the case of Madre Mezcal, Bhatia noted the strength of the company’s founding team, including CEO Chris Stephenson, previously a marketing executive in the entertainment industry whose past positions include senior VP of marketing at MTV and VH1 and CMO of Interscope Records. As well, the company’s unconventional Southwestern branding had a “deep-rooted authenticity” that Bhatia believes is essential for emerging alcohol brands. Finally, the mezcal category, he said, is continuing to grow year-over-year, noting a report from Drizly this month that mezcal grew 600% in the 52-week period ending December 26, 2020.
Speaking to BevNET, Stephenson said Room 9’s involvement in the brand is a standard investment relationship and Bhatia has joined the board of directors. However, the $3 million Series A is Room 9’s first time leading a round of any size. The funding will help Madre Mezcal in its continued global expansion including distribution and innovation. In terms of ethos, Stephenson is, much like Bhatia, focused on the importance of branding and storytelling.
“We think much more about the brand beyond mezcal and around the entire story that we’re trying to create,” Stephenson told BevNET. “We think a little bit more like Red Bull thinks more about media and content and storytelling around its world. Our cultural storytelling is around people who are doing interesting things, people who have an alternative view of the world, people are looking at their lives through a creative lens.”
Looking ahead, Bhatia said the firm is continuing to build out its portfolio. The company recently invested in sports drink startup Barcode, which was developed by a former NBA trainer and also backed by Los Angeles Lakers star Kyle Kuzma. Room 9 also is investing in a beauty products brand and a consumer tech company.