Invest in Awakened Foods

The Problem: A Lack of Healthy + Delicious Snack Options

Everyone wants to eat healthier.  They want their family to eat healthier.  But most food, especially snack food, is filled with absolute junk such as sugar, fat, sodium, gluten, high-fructose corn syrup, and a bunch of chemicals you can't even pronounce.  Most snack food has very little nutritional value...and even worse can cause obesity and lead to chronic diseases.  Why would anyone want to put that junk in their bodies or feed it to their families?

But let's face it, much of what is being marketed out there as "healthier" food often isn't really that much better for you, or better for the world.  Claims of being "healthy" often aren't authentic as many are still full of artificial ingredients, added sugars, lack sustainability (e.g., ingredients that are bad for the environment), and most importantly...they lack taste.  

What is the point of having healthier snacks that no one wants to eat?!?!

We set out to change that...

It Started with a Personal Need + Kitchen Experiments

Dustin Finkel has been an athlete focused on health and nutrition his whole life.  The only grains in his pantry were ancient grains...densely nutritious, naturally gluten-free, incredibly sustainable, and never genetically modified.  He bought and tried a number of different healthier/better-for-you brands but felt they often misrepresented their real health credentials and lacked taste.  He saw that his kids would never eat healthy unless the products were delicious.  So Dustin started experimenting in the kitchen with ancient grains and found a way to make nutrient-dense sorghum pop like popcorn...and to his amazement his kids were eating it non-stop.  He created a super clean recipe that was vegan, gluten-free, top 12 allergen-free, and non-GMO.  Dustin created snack foods with authentic health benefits without any taste compromise that kids loved to eat...and Ka-Pop! Snacks was born!

Swimming with the Sharks

Dustin and Ka-Pop! appeared on Season 11 Episode 12 of Shark Tank (original air date of January, 2020). Dustin's initial offer was for 5% of the company for $350k (a $7M valuation).  At the time, Ka-pop! was still a very young company with only $150k of revenue.  The sharks loved the product!  The sharks loved Dustin!  Rohan Oza commented that he would hire Dustin and put him in to run any one of his companies, saying "I like you and I would take you anywhere!"  Barbara Corcoran said, "You are one hell of a salesman!"  Mr. Wonderful put a deal on the table and negotiated with Dustin, but they could not agree on terms.  While Ka-Pop! did not get a deal on Shark Tank (most companies do not, and most of those deals that "appear" to go through on TV actually fall through later in the process), the exposure led to an explosion of sales and opportunities for the company and brand.

Vertical Integration Drives Margins and Innovation

One of the challenges of running an emerging food brand is you have to rely on co-packers and co-manufacturers.  Smaller companies usually have to wait their turn for manufacturing runs and beg for help with (or pay dearly for) R&D.  Fortunately for Ka-Pop!, there was another brand in the area that had built its own manufacturing plant for a line of grain-free/paleo/keto snacks called Bubba's Fine Foods, which was recently rebranded as B. Fine Foods.  They merged the two companies together to form Awakened Foods to leverage Dustin's sales, marketing, and branding expertise and the operations and innovation expertise of Jeffrey Schmidgall and Jared Menzel, the co-founders of Bubba's.  In addition to the two brands, the company created a separate division called Awakened Food Crafters to specifically focus on R&D and manufacturing, both for the Awakened brands and other external customers (i.e. to act as a co-packer for other brands).  Together these companies leverage the expertise of each other to make for a powerful combination!

Amazing Range of Products and Strong Innovation Pipeline

Since the merger, Awakened Foods brands have been experiencing repaid innovation and growth, expanding into new forms like puffs and rings and launching a variety of flavors such as vegan cheddar, churro, BBQ, fiery hot, sweet onion, and dill pickle...all of which are made in the USA, densely nutritious (high in protein, fiber, and antioxidants), vegan, gluten-free, and non-GMO. 

If you would like to try some products, we have special Ka-Pop! and B. Fine variety sample packs available (at a significant discount) for those considering an investment in Awakened Foods.

• Ka-Pop! Puffs Variety Pack
  
• B-Fine Foods Grain Free Ungranola Mix Variety Pack
• B-Fine Foods Savory Snack Mix Variety Pack

Truly Better For You (And The World!) Snacks

The following provides an example of the nutrition information and ingredients for our Cheddar Puffs and shows how that stacks up against the competition:

Ancient Grains...Our SUPERPOWER!

We love the way opening a bag of our snacks gets people smiling.  But those feel-good vibes go beyond the delicious taste...we are also dedicated to taking good care of our home planet.  Almost 80% of the world's grain production & consumption today is corn, rice & wheat – genetically modified to maximize the sweetness and yield of crops, destroying our soil and gut biome.  The Ancient Grains in Ka-Pop! products are not only packed with nutrition, but the plant also actually replenishes nutrients in the soil and over 90% of the land sorghum is grown on uses ZERO irrigation.  This is why we call them super grains!

Likewise the ingredients in B. Fine Foods products are better for you and the environment. For example, saba green bananas are highly nutritious and an excellent source of vitamins A, B, C, fiber, and iron. The regenerative growth of our bananas means less agricultural disruption, which is better for the environment. And whenever possible Awakened Foods partners directly with local family farmers to source our ingredients. We pay attention to the big picture as much as the small details of what goes into every bite.

Fantastic and Growing Distribution

Awakened Foods products can be purchased online through the Ka-Pop! and B. Fine Foods website and Amazon as well as in over 3,500 retail doors across the United States including major grocery stores, natural food stores, convenience stores, and other specialty/independent retailers. The following shows examples of retailers that carry Ka-Pop! and B. Fine Foods products:

Demand for our products is strong and they sell great both online and at retail.  For example, our new Rings products were a #1 launch on Amazon Grocery.  At one of the largest grocery store chains the total puffed/popped category is growing at over 25%...which is great, but even better is the fact that the Ka-Pop! brand is growing at over 100%.  Ka-Pop! is outpacing the leading brands (including Cheetos, Popchips, Pirate's Booty, and Hippeas) in terms of growth!

Our Manufacturing Capabilities

Awakened Foods is a vertically integrated food company.  We have an in-house R&D team along with production capabilities that span five different production lines:  chips, crisps, puffs, granola, and baked goods.  We have hot air compression poppers, extrusion, and baking equipment.  Our plant can process a variety of ingredients including proteins and fibers, grains, legumes, vegetables and more.  We can do dry-powder, slurry, and blended seasoning.  Our facility can handle a range of packaging from single serve bags to club packs.  And we are focused on and conform to top-tier food safety and quality standards (e.g., rigorous certification requirements such as SQF, gluten-free, vegan, peanut / tree nut-free, and kosher).  All of this means that we can out innovate and produce with greater margins than our competitors...resulting in more amazing products with delicious flavors for our fans and customers!

How Does Awakened Foods Make Money?

In short, we sell money by making 50 cents for every $1 of product sold.  In just a few years, Awakened Foods has gone from a single brand on Shark Tank with $150k in revenue to a company with strong gross margins (approximately 50%) approaching $10M in sales and profitability.  We are a vertically integrated better-for-you / better-for-the-world snacking platform with its own R&D / manufacturing capabilities and multiple omni-channel brands.  The following chart shows the historical net revenues (sales minus trade spend) and gross margins for the past four years and projected for the next three years:

Note that prior to 2021 the financials reflect the Ka-Pop! business only (i.e., pre-merger) whereas the financials starting in 2021 are post-merger.  Awakened Foods LLC's financials are prepared by an outside, third-party accounting firm to ensure we are properly accounting for inter-company transactions and consolidation of the separate business units (as the brands are essentially "customers" of the co-packing business unit).

Capitalization and Deal Terms

Like most start-ups, Awakened Foods was initially funded through a combination of friends-and-family and angel investments. Each of the pre-merger (Ka-Pop! and Bubba's) businesses had separate rounds of funding that was used to develop and launch their brands, and in Bubba's case build a factory. Once the companies were merged into Awakened Foods the company raised convertible notes over time to continue funding the business. In July of 2022 Consumer Ventures led a Series A financing, Awakened Foods first priced equity round (the notes also converted into the Series A equity). The following chart shows the historical financing of the business:

The Series A financing consisted of existing / prior investors like the Consumer Ventures fund that are excited to continue to invest into Awakened Foods and drove the pricing and terms of the round. We are opening the round up to fans of Awakened Foods, Ka-Pop!, and B. Fine Foods via crowdfunding so YOU can have an opportunity to invest ON THE EXACT SAME TERMS as our current investors who led the Series A round. The terms of the Series A are as follows:

• Security: Convertible Preferred Equity
• Liquidation Preference: Upon an exit the Series A has priority (i.e. gets paid out first) over all other classes of equity
• Pre-Money Valuation: $7 million
• Dividends: 8% (will accrue until the preferred equity converts into common)
• Conversion: At the time the company goes public, is acquired, or other similar event the preferred equity will convert into common on a 1:1 basis

Use of Funds

We've been  growing quickly and want to keep our foot on the gas, but it costs money to build a business e.g. marketing costs to get the word out and build our brands, working capital to build up inventory so we can fill all the orders coming in, etc.  We need to cover these expenses and the fixed costs of running our own factory until we are profitable (we are currently burning about $150k/month).  Our crowdfunding campaign helps the team focus on building and growing the business...and providing our customers and fans with our AMAZING and HEALTY snacks (instead of spending all our time raising capital...blah!).

How Do Investors Make Money?!?!?

We created this business to bring fun, authentically healthier but also delicious snacking products to market so families could eat better, live better, and help make the world better.  Investors love all that, but at the end of the day investors are looking for exits and a return on their investment.  Yes, the tech companies seem to get all the press coverage, but did you know that some of the biggest exits in the venture and private equity space have been in good old fashioned consumer goods?  Here is a rundown of our thoughts on one of the most common investor questions:  HOW DO I MAKE MONEY?!?!

• IPO:  While an IPO is possible, it is not the likely outcome for Awakened Foods.  Beyond Meat was one of the biggest and most successful IPOs of the last few decades, but it takes a significant amount of capital and growth for a public offering to make sense for emerging food brands (for example, Beyond Meat raised over $120M of private capital before going public...yikes!).  Our focus is on building a great business...solid growth plus good fundamentals result in a myriad of exit opportunities such as financial buyers or a strategic acquisition.
• Financial Buyer: There is a lesser-known segment of the finance industry called private equity, the big brother of venture capital. These PE firms buy small, growing, and usually profitable companies and invest money in them to create much bigger and more profitable companies that they then sell to strategics or take public. There are a TON of financial buyers and capital looking for these businesses...the kind of business that Awakened Foods should be in the next few years.
  
• Strategic Acquisition:  Many larger CPG (consumer packaged good) companies grow through acquisition.  They acquire emerging companies that are innovative, on trend, and building strong brands with customer loyalty.  We've all heard the story by now of how Unilever acquired Dollar Shave Club for $1B, but this is just one of the many acquisition that happen all the time in the CPG world.  The following graphic illustrates just some of the companies that were acquired by larger companies (for valuations in the tens of millions to hundreds of million to billions of dollars):

A Word From Our Lead Investor

I’ve known Dustin since the start of Ka-Pop! and my firm Consumer Ventures has been an investor across several rounds since the merger, including leading the recent Series A financing.  It has been amazing to see the progress over the past few years and the positive impact the merger has had on the company.  The amount and speed of innovation and great new products Awakened Foods has launched (enabled by the internal R&D and manufacturing capabilities) has been extremely impressive, and I’ve had a front-row seat to the fantastic reception by both consumers and retailers.  Awakened Foods is not just a platform for growing a great food business, it is an opportunity to help bring healthier eating to families across the country…and increase the sustainability of our food systems in the progress! 

--Jason Starr, Founder and Managing Director, Consumer Ventures

Why Invest in Awakened Foods?

• A Real Business with Great Traction:  Awakened Foods is a fantastic, growing emerging CPG company approaching $10M in sales and profitability 
• Product Market Fit: Amazing products filling a hole in the market for healthier but absolutely delicious snacks that are better-for-you and better-for-the world
• Amazing Brands and Growth Potential:  Awakened Foods has built multiple exciting brands with strong consumer demand, national distribution (3,500 doors and growing), and great gross margins (approximately 50%) 
• Proven Team:  Seasoned team of leaders and investors with experience and past success creating, building, and scaling CPG brands and companies 
  
• Innovation:  Strong, proven innovation pipeline through internal R&D and vertical integration
  
• Attractive Deal Terms:  This is an opportunity to invest alongside veteran CPG industry venture capitalists...you are investing on the same investor-favorable terms as the VC's who led and negotiated the deal.  

Together we can empower Awakened Foods to keep their foot on the gas.  Let's build a company we can all be proud of...a company that brings delicious, healthier snacking products to market that are better for consumers and better for the world (and we can all have a great return on our investment in the process)!

Any questions?  Post them below or email us at [email protected]

THANK YOU!