Invest in the Next Vitamin Water

By Matthew Milner, on Wednesday, August 20, 2014

Inc. calls it “One of the smartest, most disruptive startups.”

The New York Times says it’s a “Welcome change to the status quo.”

A few years ago, a similar start-up was acquired for $4.1 billion, making its early investors insanely wealthy.

And just last week, a company in the same sector was valued at $12.8 billion.

What is this smart, disruptive start-up?

Is it focusing on futuristic drones4D PrintersFlying submarines?

No, not this company…

This company is focusing on something that’s far easier to swallow – and for its early investors, something that might be just as lucrative.


Get Naked for $450 Million

Beverage products, especially healthy products like water, enhanced water, and juices, have turned out to be great investments.

The Pur water filtration brand was acquired by P&G for more than $200 million.

Naked Juice, a start-up focused on all-natural juice in a bottle, was acquired by Pepsi for an estimated $450 million.

A few years back, Vitamin Water was acquired by Coke for $4.1 billion. (When Vitamin Water was getting started, 50 Cent, a hip-hop star, helped promote the brand in exchange for a small equity stake. His stake turned into $200 million.)

And just last week, Coke was at it again, paying $2.15 billion for a 16.7% stake in Monster Beverage, an energy-drink company.

Well-Designed Water… By Subscription

Now, a new start-up called Soma Water is tapping into this lucrative market with an interesting product:

It’s a water filtration device, tucked into a beautifully-designed glass carafe.

Here’s what it looks like:

Its patent-pending filter, made from plant-based fibers and coconut shells, was designed by David Beeman, an expert in water filtration. David created international standards for filtered water for such clients as Starbucks and Keurig.

Filters last 2 months, and in an interesting twist, new ones are delivered to customers in the mail via a subscription service.

Subscription services like this – especially when combined with the razor / razor-blade model – can be an extremely effective way to build predictable revenues.

In this case, replacement filters cost $12.99, including shipping.

Why We Like It

There are a few main reasons Soma caught our eye as a potential investment:

1. Traction

Soma is growing fast:

In eight months, they picked up $1 million in sales and 10,000 subscribers.

And they recently signed distribution deals with companies like Williams-Sonoma (250 stores, 20 million catalog subscribers), Target (45 million catalog subscribers), and the Home Shopping Network (95 million households).

2. Doing Well By Doing Good

In another twist, there’s a charitable cause behind all this:

For every filter sold, clean drinking water is donated to people in need.

As it turns out, caring can be a good business practice:

Toms Shoes, founded in 2006, gives away a pair of shoes for every pair sold. Their annual revenues are now estimated at $250 million.

Warby Parker, founded in 2010, has a similar model for eyeglasses. It’s now valued at $500 million.

3. Great Investors

Soma has an all-star group of professional venture investors, including:

  • Steve Anderson – early investor in home runs like Instagram and OMGPOP
  • Kirsten Green – investor in Warby Parker, as well as massive subscription services like Dollar Shave Club
  • Rohan Oza – former senior executive at Vitamin Water, current board member at fast-growing coconut-water company, VitaCoco

An “Easy to Swallow” Investment?

Soma isn’t your “typical” high-flying, tech start-up. It sure isn’t building drones or flying submarines.

But it still has the huge upside potential of an early-stage investment…

Which is why it’s currently raising capital on CircleUp, one of the funding platforms we cover here at Crowdability.

If you’d like to learn more, Soma is holding a conference call on Thursday, August 21, at noon EST.

To sign up for the call or just read more (you’ll need to register for free on CircleUp if you haven’t already), click here >>

(Please note: Crowdability has no relationship with Soma or CircleUp. Crowdability is an independent provider of research and education.)

Happy Investing!

Best Regards,
Matthew Milner
Matthew Milner


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