Yesterday, insect-based protein snack bar company Exo Foods announced the closing of a $4 million Series A investment round led by CPG incubator and private equity fund AccelFoods. Also investing in the round were a pair of venture capital funds, Start Garden and the Collaborative Fund, as well as celebrities like the author Tim Ferriss, the rap artist NAS and the endurance athlete Amelia Boone. Ferriss and the Collaborative Fund had previously invested in Exo’s seed round of $1.2 million.
The announcement is of particular note as Exo was a member of AccelFoods’ inaugural class while the product was still pre-launch. Exo is also one of the first investments from AccelFoods’ $20 million Fund II — a goal of which was to be able to cut larger checks and invest in later stage companies such as Exo.
“We’ve always believed not only in the concept of insect protein,” said AccelFoods Managing Partner Jordan Gaspar, “but also in this team in particular. I think they have been the forefront of driving innovation and educating consumers about the benefits to insect proteins.”
Over the past two years, AccelFoods has seen the company evolve and grow from concept to successful brand, Gaspar said.
While the insect-based protein market is still relatively small, the competition within it is fierce. Cricket bar producers Chapul notably won a $50,000 investment from Mark Cuban on the television show Shark Tank while cricket chip creators Six Foods raised roughly $70,000 on Kickstarter (over double their goal).
Despite the growing buzz around insect protein, Exo has been selective about its retail strategy, spending the past two years in what co-founder and CEO Greg Sewitz called an “extended market validation that the american consumer base is ready and willing to eat products made with crickets or any insect in general.”
In practice, this has meant slowly testing out different retail placements, including CrossFit gyms and independent retailers, and not moving beyond the bar format.
Online, the company has been more aggressive.
“Having a direct relationship with our customers [has gone] a long way in the educational component of what we’re doing,” Sewitz said. Consumers have been quick to provide feedback, which has led to several innovations such as a savory line of bars that were an online-only limited edition product.
Now armed with the additional $4 million, Exo aims to become synonymous with entomophagy (the practice of eating insects). This past month the brand launched in Wegmans and also plans to try to develop deeper ties with more CrossFit gyms. The money will also go towards increasing staffing and research and development.
Even with the money in, don’t expect to see Exo everywhere. “We don’t want to go too far too fast,” Sewitz warns. “There’s still an innovative yet controversial factor with what we’re doing, in terms of the cricket in the room.”
The long term goal is for Exo to move beyond crickets — as well as bars — and be seen simply as an alternative protein company.
That said, Sewitz says Exo isn’t abandoning the cricket anytime soon. Noting that many of Americans’ favorite foods are fried and crunchy, like crickets, he said, “It’s a gateway bug.”