Alpha Foods Raises $7M in Quest to Become Plant-Based Leader
Plant-based frozen foods brand Alpha Foods announced today the close of a $7 million round of capital with $6 million in new capital and a convertible note of $1 million. The round consisted of two tranches — one that closed in December and one that closed this month. New Crop Capital and AccelFoods led the round with Stray Dog Ventures and other previous investors also taking.
According to a U.S. Securities and Exchange Commission (SEC) filing, Alpha Foods previously raised $5.4 million dollars in March 2018. Previous investors have included VegInvest, Arbell Growth Partners (which is headed by former Snyder Lance CEO Carl Lee). Co-founder and CFO/COO Cole Orobetz and co-founder and CEO Loren Wallis told NOSH that, for now, they have chosen to raise smaller rounds more frequently rather than a single large round.
“Every time we’ve raised a round, it’s always to get us to the next milestones or goalposts,” Orobetz said “We thought it was a more balanced approach to raise as needed to give us the right amount of runway. It also gave us flexibility to change course.”
Orobetz said this current round will help the company staff up and invest in marketing programs. He expects the brand will start fundraising for its next round in six to eight months. Many of Alpha’s investors are also stakeholders in other plant-based companies, but Orobetz and Wallis say that’s not a concern.
“I’ve never seen an ecosystem that is so supportive of one another,” Orobetz said. “It really seems to be that everyone is there to collaborate and build from the inside a very large sector with a critical mass.”
The path to building the company has been deliberate. Alpha spent two years developing its products and then locking down the intellectual property around the formulation of its plant-based proteins. Despite that, Alpha is focusing on selling “prepared meal solutions,” Orobetz said, rather then ingredients (such as patties or ground “meat”) to be used in cooking.
When developing new products, Wallis said, Alpha tries to look for white space in the category and build out a shelf that either doesn’t already exist in plant-based (such as tamales) or has only lower quality options (such as “meat” pies).
Once products are in hand, the company has gone after large, mainstream retailers — the opposite of Wallis’ sales plan with his former company, Good Karma — instead of starting in the natural channel. Alpha Foods’ first retailers were mass retailers Walmart, Kroger and Publix.
Wallis said this approach has helped the brand scale quickly; Less than two years after hitting its first retailer’s shelves, its products are currently sold in 6,000 stores.
“We wanted to create a company that could truly be scalable with virtually no limits — a $100 million to $500 million company and business,” Wallis said. “Cole and I like to think of ourselves as big picture thinkers so it really matters to us to make a big impact.