They say you should invest in what you know and love.
“Well,” you might say jokingly, “I know and love food. Does that count?”
Funny you should ask…
Foods and Beverages as Start-Ups
Food and beverage products can be great investments.
Once upon a time, Naked Juice was a tiny start-up. They believed there might be a market for all-natural juice in a bottle.
Fast-forward a few years. Pepsi acquired them – for an estimated $450 million.
Five years ago, Chobani was a start-up that made Greek-style yogurt…
Now The Wall Street Journal says they’re worth $5 billion.
Historically, however, food start-ups have been tough to find, and even tougher to evaluate as investments.
But now that's changing... let's take a look.
Great Taste, More Profits
What’s your favorite food?
Truffle fries? Thin-crust pizza with mozzarella and basil? Salted caramel ice cream?
Mmm. Now imagine investing in the company that makes it…
Even better, imagine investing in it before they get big and famous… and before they make their early investors a pile of (excuse the pun) dough.
Good news: now you can.
Say Hello to CircleUp
CircleUp is an equity crowdfunding platform – they connect start-ups that need capital with angels looking to invest.
But instead of focusing on technology start-ups, they set their sights on consumer product companies – many of which make delicious foods and treats.
The start-ups they feature typically have at least $1 million in annual revenue. That means they’ve already survived the highest-risk phase of their existence.
And many of these products are already in stores like Whole Foods – so you can go touch, taste or drink them before investing.
CircleUp is a legitimate company. They have a strong management team, top-tier backers, and they’ve already raised a total of $30 million for about 30 companies.
At the moment, they have dozens of start-ups on their platform to explore.
But how do you know which ones to invest in?
Baskets of Food, Baskets of Start-ups
To help with this dilemma, CircleUp recently created something called Circles.
Circles are diversified baskets of start-ups… like mutual funds for start-ups.
A professional “lead” investor with strong industry experience selects which start-ups to include and provides ongoing advice and oversight.
If the Circle does well financially, the lead investor shares in the profits.
One such Circle focuses on food and beverages. It’s run by an investor named Brad Barnhorn, who has a strong background in these sectors.
As former Founder and CEO of the Fantasia Fresh Juice Company, Brad built the leading fresh juice/smoothie brand in the Midwest. After merging it into Naked Juice, the combined company was acquired by Pepsi in 2006.
He’s currently on the board of a number of fast-growing consumer food companies, and he’s an Operating Advisor to several private equity firms. In other words, he seems more than qualified to pick winners in this category.
Other Circles feature different lead investors, or have a special focus – for example, there’s one that targets Natural & Organic products.
Circles are a smart addition to CircleUp’s platform. They offer the benefits of diversification and a professional lead investor. Not bad.
The Next Chobani?
So what’s the catch?
Well, first of all, Circles have a relatively high minimum – from $10k to $25k.
And despite the early progress that many of these companies have made, they're still start-ups, which means they’re still high risk.
But we must admit: it’s fun to discover new foods and new brands – and it’s exciting to think about backing the next Chobani or Ben & Jerry's.
If you’re interested in learning more, Brad Barnhorn is hosting a free conference call on May 28th. You can sign up here >>
(Please note: Crowdability has no formal or financial relationship with CircleUp. We just think they’re smart folks trying to do smart things for investors.)
Happy Eating – and Happy Investing!