Investment Roundup: Emerging Brands Announce Funding Rounds

From chickpea snacks to Japanese barbecue sauce, innovative products from emerging brands are attracting investor interest as brands look to enter their next growth phases by increasing production, growing their retail footprints and expanding their teams.

Lebby Snacks Raises $1.1 Million

New York-based Lebby Snacks announced last week it had secured $1.1 million in a funding round led by investment firm Sukhlahi Capital’s Venture Fund. The company plans to use the capital to grow its distribution and expand its team.

The round marks the brand’s first institutional capital, previously funding the company through a friends and family round. Nitesh Kumar, managing partner at Sukhlahi Capital, has joined the brand’s board as part of the deal.

Lebby, which was founded in 2019, offers dry roasted chickpeas in multiserve and single-serve bags, with flavors like Dark Chocolate, Sesame Honey and Mocha. Its products are currently sold in over 3,000 grocery retailers, independent natural retailers and c-stores including ShopRite, Giant and Wawa.

According to CEO and founder Onur Oz, the new capital is needed to jumpstart the “second phase” of the brand’s expansion strategy. While the company first focused on establishing its core team and a strong retail presence in the Northeast, Oz said he now wants to add more staff and expand the brand’s retail presence in the Southern and Western markets. Lebby will also look to grow its presence in Canada and its ecommerce sales, as well as look for opportunities to move into the foodservice and the travel channels. A launch in the United Kingdom is also on the horizon, Oz said.

“We wanted to be patient before we went out for a professional capital round because we wanted to go out with a strong story and promising outlook evidenced by market feedback,” Oz said. “We feel that we reached that inflection point now in which we lead our niche segment. The goal now is to expand this niche as we believe that our product is a great candidate for being a mass better-for-you sweet snack.”

Looking ahead, Oz said the brand has “various prototypes” of new chickpea-based products in its innovation pipeline, though future innovation will not be limited to chickpeas.

Spudsy Raises Closes $3.3M Round

Sweet potato snack brand Spudsy last week announced it has secured $3.3 million in new funding, which the brand will use to enter new channels and develop sales and marketing strategies.

Led by KarpReilly and Stage 1 Fund, the new capital brings the salty snack’s total capital raised to-date to $6.5 million and follows a $2 million round closed in July 2020.

“We’re so grateful to be working with them and hope that they will continue to be our partners for our next stages of growth,” CEO Ashley Rogers said. “We’re really happy with our brand partners and have been lucky to surround ourselves with the right team to help the brand grow. KarpReilly and Stage1Fund both have intricate networks of experts and agencies that have helped us continue our journey to becoming a household name.”

Spudsy launched with a line of sweet potato-based puffs, and earlier this year debuted a new line of snackable fries. The brand aims to ramp up its marketing efforts through in-store demos and supporting new retail placements, Rogers said. Its puffs and fries are sold at over 7,000 retailers, recently expanding into six additional divisions of Kroger. Spudsy is also set to launch in Whole Foods nationwide in January, Rogers said.

Spudsy, which debuted in 2018, uses sweet potato powder made from dehydrated “imperfect” sweet potatoes that are upcycled by its ingredient provider. According to Rogers, the brand has currently “saved” over 920,000 sweet potatoes, with a goal to hit one million by the end of 2020. The company is also working to expand its horizons to more spuds than just the sweet potato, currently souring upcycled potato ingredients that can be used in its fry product, Rogers said.

Bachan’s Announces New Investment

Japanese Barbecue Sauce maker Bachan’s announced last week it had raised additional funds in order to expand its team, grow distribution and develop new products.

The investment was led by Prelude Growth Partners, with other participants in the round including a number of celebrity investors such as Ryan Tedder, Benny Blanco, Aaron Paul, Whitney Port, Max Thieriot, Chase Utley, Abe Burns along with former Whole Foods co-CEO Walter Robb and Latitud co-founder Brian Requarth. The exact amount of the raise, which was closed earlier this year, was not disclosed.

Banchan’s CEO and founder Justin Gill said the two-year-old company had bootstrapped until this year, ultimately reporting seven-figures in revenue while spending just $100,000 in 2020. However, the company found that demand for the products was outpacing inventory, leading to increasingly frequent out-of-stocks.

“There were a few times when we ran out of inventory and didn’t know if we should state publicly that we were sold out or just ride it out for a few days until we were back in stock,” he said. “We took a gamble and went with the latter strategy whenever that happened, but it wasn’t fun.”

These inventory issues coupled with increasing sales in both online and brick-and-mortar retailers led the brand to seek outside investment, he said. Gill said Prelude was an “ideal investor” for the brand, as its mission and value aligned with Bachan. The firm, which also recently invested in condiment brand Fly By Jing, has already also provided the brand with strategic assistance, he said.

“We bootstrapped it as long as we could, which I recommend to every entrepreneur that is trying to build something,” Gill said. “Investors appreciate this and they want to see that you believe in your business, you’re scrappy, and you can be resourceful.”

The brand’s sauces are currently sold in over 2,500 retailers including Costco, The Fresh Market and Bristol Farms. After first launching in Whole Foods’ SoPac region in May 2020 and expanding to additional regions over the past year, its sauces will be rolling out to the retailer nationwide in November. The sauce maker’s new Hot and Spicy flavor will also launch Whole Foods in the first quarter of 2022.

Bachan’s will also use the funding to grow its team, Gill said, looking to add an in-house content creator, graphic designer and operational and warehouse team members, and add a role focused on omnichannel growth.

Atlantic Sea Farms Closes Funding Round

Seaweed farm and CPG producer Atlantic Sea Farms announced last month the closing of a funding round for an undisclosed amount. Desert Bloom Food Ventures led the round, with partner Julia Paino joining its board of advisors as part of the deal.

“It is unique to find a company addressing several critical areas all at once,” Paino said in a press release. “We deeply value the positive social, nutritional, and environmental impact woven into the DNA of Atlantic Sea Farms. This is a company that can fundamentally improve both human and planetary health.”

Founded in 2009, Atlantic Sea Farms markets several products made from Maine-sourced kelp, including Kelp Cubes and spreads such as Seaweed Salad and Sea-chi Kimchi. It also is an ingredient supplier to brands including Daily Harvest.

The company will use the funding to build out its new seaweed processing and innovation center, making the jump from its current 6,000 square foot facility to a 27,000 square foot location in Biddeford, Maine. The new location will allow the company to grow its farmer partner network by allowing it to not only produce its own branded products but also co-pack for other brands and products.

In addition to the new funding, the company also announced the addition of Jason Jones, founding president of Vital Farms, as a board member.

“We are building an entirely unique and regenerative supply chain and bringing all new products to market – and are proud to have incredible partners like Desert Bloom and Jason Jones join our team to ensure that we are able to continue to amplify our impact and bring fresh, regenerative kelp products to the mainstream market,” CEO Briana Warner said in a press release.