GEM Closes Round to Bring its Food-Based Supplements into Retail

Vitamin “bites” brand GEM wants to make stores’ supplement aisles more tasty and transparent. The company, which makes functional, granola-esque bites, announced today it had raised $7.5 million in funding last month, an investment the largely direct-to-consumer brand will use to help launch into physical stores and expand its product line.

The round was led by CircleUp Growth Partners with S2G, Pentland Ventures and other unnamed venture capital funds also taking part. Founded in late 2018, GEM previously raised $3 million (which converted to equity with this round), for a total of $10.5 million in funding over the company’s lifetime.

GEM currently has three bites available — a daily multivitamin, a sleep enhancing offering, and an immunity product — each made from ingredients derived from spices, vegetables, fruits, fibers, herbs and algae. The products are sold online for $55 for a monthly subscription or $65 for a one time purchase, which includes a refillable large tin and smaller travel tin.

Over the last year, investors have turned their attention to new brands in the supplement and functional snacking space. Last month, fellow L.A.-based brand Seed raised $40 million for its line of probiotic supplements, while CircleUp is also an investor in HUM Nutrition. But GEM founder and CEO Sara Cullen believes she has something different.

“[The supplement aisle] has a lot of artificial or really synthetic solutions,” she said. “It’s really an antiquated approach that we’re looking to overhaul…and, under the simple premise that food is medicine, create a new kind of nutritional ecosystem with this food-first form factor.”

The funding will go first towards helping GEM launch new products as the company expands into new lifestyle needs and life stages, potentially including kids and menopausal women. The brand plans to launch new “Calm” bites next month — part of its shift away from products that only cater to women (such as its daily vitamin).

GEM also intends to expand into brick and mortar retail in 2021. Most of its sales come from its own website, with a limited presence in Erewhon and at select boutiques and spas. But given the existing higher price point, to go into more channels, Cullen plans to invest in new product packaging and offerings, she said.

Though Cullen declined to share revenue numbers or the average length a customer stays with the brand, she said GEM has seen strong customer retention.

She noted that 80% of GEM’s consumers previously took vitamin supplements in pill or capsule form. However, because eight of out ten shoppers who say they take a daily multivitamin aren’t consistent in consuming these supplements daily, she added, they don’t always see results. By making GEM a memorable experience, shoppers are more likely to take the product daily, actually see results — becoming satisfied, returning customers, she said.

Consumers “are starting to really spend the discretionary money that they do have toward their health and recognize that that is an important investment to make now,” Cullen said.

Cullen said consumers also appreciate GEM’s commitment to transparency. On its website the company offers specific details on the sourcing of every ingredient in its products, identifying the country of origin and functional benefit. Still, some details remain off limits: specifically, the company’s plans to invest in “scientific technologies” and develop IP around some of their algae-derived ingredients.

The transparency continues to the back of pack as well. Because GEM uses food-derived ingredients, Cullen said, its products are not required to use a supplement label and instead carry a standard food ingredient label. Despite the packaging choice, Cullen said GEM is not a “functional snack.”

“What we’re trying to do is reimagine the whole supplement aisle with real food and so we’re not making, you know, snacks. You probably should not have ten of these bites a day,” Cullen said.”We’re stripping all [the] unnecessary things away and giving you kind of just the things that you need in the most whole foods form possible.”