Yesterday at NOSH Live Summer 2018, frozen baked good company Soozy’s announced it had closed a $2.5 million dollar round of funding. The round was led by investment firms BIGR Ventures and AccelFoods, with an additional two undisclosed angel investors from the CPG industry also taking part. The capital represents the first institutional funding that the brand has taken.
Just under a year old, Soozy’s produces a line of grain-free, gluten-free frozen muffins that are sold in over 500 retailers, including HEB and Wegmans.
Susan Chen, Soozy’s co-founder and CEO, told NOSH that the capital will go toward expanding distribution and bringing other baked, frozen items to market.
“BIGR and AccelFoods both have proven track records of working with entrepreneurs to help take their business to the next level,” Chen said. “As first time entrepreneurs in the food CPG space, my partner and I were eager to align ourselves with experienced investors who can help augment our operational efficiencies.”
Both AccelFoods and BIGR told NOSH that Soozy’s grain-free product attribute was a key point of interest when deciding to invest in the brand. There’s a belief that many gluten-free baked good create products have a lower nutritional value. Soozy’s muffins fight that stigma by using a nutritionally-dense proprietary blend that includes almond and coconut flours.
“We’ve been looking at the grain-free category for some time,” Jordan Gaspar, managing partner at AccelFoods, told NOSH. “ We consider it to be the next generation of gluten-free.”
BIGR managing partner and co-founder Carole Buyers previously managed the M&A practice at Boulder Brands and, while there, she helped to spearhead the acquisitions of gluten-free pioneers Glutino and Udi’s. Buyers told NOSH that she expects to see a similar growth in the grain-free category.
According to Buyers, from 2004 to 2017 the gluten-free category grew from $600 million to $3.5 billion. While the paleo and grain-free category is only at $200 million today, Buyers said it’s expected to grow to $4 billion by 2020.
In addition to Soozy’s product attributes, Buyers said she was also was impressed by co-founder’s Chen and Mason Sexton.
“We look for scalable and defensible financial models. While Mason and Susan are entrepreneurs at heart, they also have a keen understanding of business operations, cost accounting, financial modeling and cash management,” Buyers said. “Having this business acumen builds transparency and trust among the management and investors.”
For more about the deal, watch the interview with Chen above, filmed at NOSH Live Summer 2018.