On this food-focused episode of Entrepreneur Elevator Pitch, will our contestants be able to appetize investors with a potential deal? They have the passion and the belief in their products — but will our picky panel of investors find their ideas mouth-watering or half-baked?
As consumers look for tastier, healthier and easier-to-prepare food options, the market is both massive and competitive. And although it's not easy, a new brand can still break through and become a household name with proper backing and support.
As consumers look for tastier, healthier and easier-to-prepare food options, the market is both massive and competitive. And although it's not easy, a new brand can still break through and become a household name with proper backing and support.
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NewsTranscript
00:00Hello, investors. Welcome to the elevator. Going up. I'm Mark Randolph, co-founder and
00:10first CEO of Netflix. I'm Kim Perel, CEO of 100 Knot Co and serial entrepreneur. Hi, I'm
00:16Gary Swart, Polaris partner and serial entrepreneur. And today I'm seeking entrepreneurs that will
00:22bring nutrition to the 21st century. I love their energy and chemistry. That is going
00:28to be a fun one to watch. Yes. But wait, there's more. This is Entrepreneur Elevator
00:36Pitch presented by Amazon Business. First in the elevator, an entrepreneur who wants
00:49to improve the health of the world one sprout at a time. Going up. Hello, Doug. Welcome
01:06to the elevator. Your pitch begins in three, two, one. I'm Doug Evans, founder and CEO
01:15of The Sprouting Company. I'm a serial entrepreneur and I wrote the national bestseller, The Sprout
01:21Book, which broke into the top 70 bestselling books on Amazon. People think sprouts are
01:27a garnish when in fact they are a vegetable that is 20 to 100 times the nutritional value
01:33of mature vegetables. And last month we sold over $50,000 of them and we are growing 20%
01:40over a month with 70% gross margins, a $30 CAC, and we are on track to do well over a million
01:46dollars this year. We are raising $500,000 at an $8 million pre-money valuation. So the whole
01:56idea is that sprouts create food justice, food equality, and there's never been any
02:01advancements in the sprouting movement in the last 300 years. So I've lived on sprouts. I
02:07promote sprouts and sprouts are the way that we can change the world together.
02:14Wow. He can breathe now. Obviously he's been eating his sprouts, not smoking them. Who knew
02:21that much about sprouts? Did you? I had no idea. But not only were the sprouts nutritious, I heard
02:28a lot of good things about the business. Yeah. Yeah. Sprouts aside, the numbers, he has a handle
02:32on the numbers. I like the sound of CAC and a million dollars in revenue. And gross margins,
02:38I mean, they were high. Serial entrepreneur. I mean, a bunch of things there that I heard
02:43that I liked. I say we take it to a vote. Let's see if he's sprout worthy.
02:49Attention, Doug. Your pitch has been
03:07approved. Yes. Let's go.
03:12Wow. How's it going guys? Doug, congratulations. Glad to be here. I need to know if I eat sprouts,
03:18can I have this kind of energy? Sprout energy. Most food that's in the supermarket is dead.
03:23Sprouts are one of the rare foods that are alive. You're eating the root, the shoot,
03:27the endosperm, the whole living organism. I've been living on sprouts for 30 years.
03:3350% of my diet is sprouts. The other 50% is fruit. Doug. So I love the sprout enthusiasm.
03:41Tell me about what it is you sell. This is a direct to consumer play. Is that the product?
03:46This is the product. We sell a sprouting kit. So we sell this complete box. I have one for each of
03:53you, including my bestselling book, but it contains a glass jar, a stainless steel filter,
04:00a recycled plastic stand, and we sell the kit. And then we sell these seeds. We did over $50,000
04:09last month. We're growing 20% month over month. I mean, I like the uniqueness, but how big is this
04:15going to really get? So the sprouting market in the U.S. is a billion dollars. The fresh produce
04:21market in the U.S. is $63 billion. Tell me the pricing, Doug. The pricing is $69. For what? For
04:27the jar. The kit with the jar and the two packs of seeds is $99. And we have a subscription business,
04:34and 15% of our customers today are subscribers, and we have only a 10% churn. I mean, I'm kind
04:41of hungry. Should we try the sprouts? I'd love to try the product. I mean, if we could get your
04:45energy by eating a sprout. What I made for you today was a little piece of broccoli sushi wrap
04:53with tahini and broccoli sprouts. This is just a simple thing. And then I made you a dessert.
05:02Remind me what you're looking for economically. We're looking for $500,000 at an $8 million pre
05:08money, and all of you can afford it. And I think that we're looking to do a 10X to 100X return for
05:16you. And Doug, break it down for me. Competitively, I can go to the grocery store and buy sprouts
05:21for a couple of bucks and not spend $100 to grow them. Right. But if you're buying sprouts in the
05:27store at $5 a pack, after 20 packs, you've spent your $100. Do I need your device and your seeds?
05:34Can I get a mason jar and a paper towel and grow my own or? You can use a mason jar, but the mason
05:41jar was designed for canning and pickling. And the paper towel was designed for cleaning up a mess.
05:47But Gary, you've heard enough. Are you in or you out? Wait, do you want to taste the dessert first?
05:54Oh yeah, we must taste the dessert before we make a decision. But wait, there's more.
05:58How much capital have you raised already? I've raised a little over $2 million. We have a half
06:05a million dollars cash on the balance sheet. We're burning $30,000 a month and that's going to R&D
06:12and it's going to testing our various ad models on Google and Meta. How is that? It is so good.
06:19This is really good. Is it all sprouts? That is 75% sprouted garbanzo beans. Wow. And then a little
06:27date, a little coconut, fresh cacao powder and fresh cacao nibs. Doug, I've heard enough.
06:36I love your energy. I actually love the product. Not only the raw sprouts, but the delicious date
06:41dessert is really good. I worry about the cost of the components and getting to market and it
06:49becoming an appliance that goes to the appliance graveyard. So for that reason,
06:56I think I'm a pass. I thank you for going through that thought process.
07:07I accept your pass. I love your energy and your passions for sprouts without a doubt.
07:16It's so far out of my wheelhouse that I'm not sure even where to start. So Kim, Kim, Kim, just
07:25take a breath. Most things in your wheelhouse didn't start in your wheelhouse. Right. The fact
07:33that with one ounce of broccoli sprouts, you get the nutritive content of this. And so all you need
07:40to do is do a deep dive. You learn about it. I wasn't a sprout expert. I think at this point,
07:46I would need to do a little bit more eating of sprouts before I could invest.
07:53Yeah. So are you in or sprout? I'm sprout.
07:59All right. Here's the big question. Are you ever going to give up? Never. That's what I expected
08:04to hear. I think this is awesome. I wouldn't know a sprout from a hole in the ground, but I love the
08:11first of all, the passion, love the energy. I love the fact you clearly have your hands around what's
08:16going on here. And I've always been someone who bets not necessarily on the product or even the
08:22category I bet in the person. And holy mackerel, you have got a energy to spare. Although I could
08:29afford the $400,000. I don't love the idea that much, but I wouldn't be able to come in
08:36at a reduced offer of at your terms, but doing $50,000.
08:44You know, Mark, I think that you would be a phenomenal asset and I can use a mentor and I
08:51can use someone who figured out the subscription business. So do we have a deal? I think we have
08:55a deal. All right. Now I feel I've got here. Come on in here. Oh, you're solid.
09:03Yes. I feel the best ever. That's exactly what I wanted. I want Mark Randolph, the co-founder of
09:10Netflix to invest in my company. Look out. We'll be sprouting in your home soon. Now,
09:17ladies and gentlemen, watch and listen, because that is what's considered an investment in a seed
09:23round. All right. I see how you go. Well, I hope it sprouts up from here for you. Listen,
09:28before this gets completely out of hand, what do you say we look at the next pitch? Let's do it.
09:36The ride on the elevator didn't go as planned for our next batch of entrepreneurs.
09:42My name is Joe. And if you're like me, you've seen trends of credibles,
09:47but I made them into jewelry. Wait one second. Let me just start again. Did you get any of that?
09:54I have no clue what's going on. Fun guy spirits is a mushroom based
10:00liquor alternative. And I'm looking for a partner on my mushroom trip.
10:07I'm here today to ask for one million dollars to develop an app
10:11so we can connect with brands to sell direct to consumer. Let's get help.
10:18Well, the energy was there.
10:22As they fell from glory back to the bottom floor.
10:27Next up in the elevator, two entrepreneurs looking to upgrade
10:33everyday meals with their versatile sauces and dressings.
10:46Going up. Hello, Catherine.
10:50And Jacqueline. Welcome to the elevator. Your pitch begins in three, two, one.
10:59Hi, I'm Catherine. And I'm Jacqueline. And we're the co-founders of Not Just Co.
11:03After 10 years as a personal chef and a food writer and a culinary instructor on TV,
11:08I wanted to build a food brand that would help people across the country get dinner done,
11:12not just folks who could afford a personal chef.
11:14And I'm here today to ask for one million dollars to develop an app so we can connect with brands to
11:18not just folks who could afford a personal chef.
11:20So Not Just Co. is a line of meal-starting sauces and dressings.
11:24Not only is everything delicious and nutritious, but it's made with zero junk.
11:27Plus, all of our products are designed to do more than dress up a plate of pasta or a bowl of salad.
11:33Scan the QR code on any jar and you'll find recipes for chana masala, enchiladas,
11:37Italian bolognese, and so much more.
11:39We're currently sold online and in over 500 stores nationwide, including in Target.
11:44We have over $750,000 in lifetime sales and are on track to do over a million dollars this year.
11:49But we're just getting started in these $3.5 and $3.2 billion categories.
11:54Now that we have national distribution and strong velocities,
11:56we're here today to raise $250,000 on a convertible note.
12:00That will support our marketing and trade spend efforts and allow us to go into new grocery
12:03markets. No one understands the weeknight dinner.
12:08They just had to bring it in and they would have had a great pitch.
12:11So close.
12:12I love their energy and chemistry.
12:15Ah, just not their timing.
12:17I thought they did a pretty good pitch.
12:18The question is, they're raising, what, $250,000 at what valuation?
12:21Yeah, on a note.
12:23They didn't say.
12:24But $750,000 in sales, 500 stores, pretty good market traction.
12:29Pitching with two people requires almost an extra level of coordination and effort to get that right.
12:35They were in unison, though.
12:36They had like a lot.
12:37They were in unison.
12:38They practiced that pitch, for sure.
12:40I think they packed too much information into the pitch.
12:43I wonder if they put too much ingredients in their sauce.
12:46Well, let's vote, Gary.
12:47Come on, Mark.
12:48You guys ready?
12:49Yep.
12:56Attention, Catherine and Jacqueline.
13:00Your pitch has been
13:07approved.
13:09Yes!
13:11Hi, ladies.
13:12Hi.
13:13Welcome.
13:14Welcome to the boardroom.
13:16First of all, I want to say you did a great pitch.
13:19Thank you so much.
13:20Congratulations.
13:21Oh, wow.
13:22Hey, go straight into that.
13:24Okay, here we go.
13:24Yes.
13:26Well, I thank you.
13:27Guys, we need to get you some sauce on this bread.
13:29Don't want to be grilling you on an empty stomach.
13:32Yeah.
13:32We figure snacks might warm you guys up a little bit.
13:34My goodness.
13:36Do we have a silverware for this?
13:37Yep.
13:38I don't have time for silverware.
13:41Just go in.
13:42Not to cut to the chase, but the salad dressing is delicious.
13:47Yeah, it's our lemon miso.
13:48It's our number one seller in the dressing category.
13:51Everything we make is vegan, gluten-free, no refined sugar.
13:55Amazing.
13:56Your pitch was good, but it reminded me, you know, the thing where you're basically,
14:00you're racing for the elevator as it's closing and you kind of squeeze your way through.
14:05That's basically how you got into the boardroom.
14:07Was just barely squeezing in there because of the lateness of the pitch.
14:10But I am interested in the numbers.
14:12Tell me what the revenues are right now.
14:14Yeah, so we're doing about $375,000 for our trailing 12.
14:17We have over $750,000 in lifetime sales and we are on track this year to do over a million.
14:21And is that happening because you're opening up new shelves or is that?
14:25Yeah, it's a combination.
14:26So we've added SKUs to different retailers that we've been in longer.
14:31We've opened a bunch of new doors, about 100 new doors in the first quarter alone.
14:34And then we're also seeing our most important metric,
14:37which is velocity growth in the accounts that we are in.
14:39What was the motivation?
14:40Why this of all the things you could be doing, you are a home chef.
14:44Why start this business?
14:45Yeah.
14:45So, you know, as a personal chef, I was helping people get dinner done,
14:49but I knew there was a ways to help more people.
14:52And also I think when Jackie and I became parents, you know,
14:57something that I thought I understood, I thought, oh, dinner, you know, can't be that hard.
15:00It is so hard.
15:01I'm a professional home cook and it was hard for me.
15:03And I know Jackie felt the same.
15:04And so we thought if we're having the struggle, we know other parents are too.
15:08And when we would stand in those crowded categories,
15:10we didn't see anything that was speaking to us as, you know,
15:13food loving people who cared about health and taste and our kids.
15:17We just didn't see products that were speaking to us.
15:19I love the fact that you're focused on health,
15:21but how are you going to compete against the conglomerates?
15:23How do you get known?
15:24So we're not naive at what kind of, you know, categories we're in and how we're doing.
15:28We actually just got some Nielsen data last week and it turns out in the last 12 weeks,
15:32we have grown 389%.
15:35We are the number one performing brand in the new super targets.
15:39And on top of that, 25% of that growth came just from velocity growth.
15:42And I think the most important thing to say there is we have not had the capital
15:46to have end caps, to have big displays, to heavily promote.
15:49Everything that we're doing is really sleepy categories as well.
15:53So a lot of the brands in the pasta sauce aisles and the dressing aisles are old.
15:56They're kind of tired.
15:58They're made by giant conglomerates, not by moms,
16:00not by young women who are interested and know the consumer struggle of getting dinner done.
16:05So we really feel like there's a lot of space for innovation
16:07in center grocery aisles and this is just the beginning.
16:10The most important aspect of any CBD company is what is the margin?
16:14Yeah, so we have worked really hard.
16:16Our blended margin across all five products is about 46% right now.
16:20Our dressings are in the mid fifties and we have a path to getting everything to over 50%.
16:24What's the total amount you're going to be raising?
16:25A million dollars.
16:26So raising a million, we have the first hundred thousand in the door.
16:29What's the terms?
16:31It's a convertible note.
16:32We have an eight million cap and a 20% discount.
16:36So one of the things I really like is you do have your numbers down
16:40and you understand the business.
16:41You understand the categories, your differentiation, all those things.
16:44I still don't get it how you can compete against all the other brands out there.
16:50It's like so much competition.
16:51And I'm listening, trying to see where is the daylight?
16:55Where is this dramatically different?
16:58And despite the fact that it tastes good, I just don't see it.
17:03And so I'm afraid I have to pass.
17:07So I don't disagree with Mark.
17:09I think as a consumer, I love the products.
17:14But as an investor, I struggle to see how you compete
17:17and get to the part where you make money in this business.
17:20But that said, it's not just you guys.
17:23It's a delicious product.
17:26But I think I'll pass.
17:29First of all, I love seeing female entrepreneurs.
17:32So congratulations.
17:35I'm stuck on the valuation.
17:38The eight million cap to me in this environment with only having raised 100,000,
17:43it just doesn't make sense.
17:45So for unfortunately, with that, I'm going to pass.
17:48Thank you so much for your consideration.
17:50We really appreciate the opportunity to be here.
17:52Best of luck.
17:53Rejection happens to entrepreneurs all the time.
17:55We get multiple no's a week.
17:57And at this point, you just have to grow kind of a thick skin and keep going
18:01because you believe in the idea that you're trying to bring forth.
18:03We're so excited to support families across the country
18:06with their weeknight dinner struggle.
18:07And it's too bad these investors missed out on a great opportunity.
18:13The market for entrepreneurship is soaring.
18:16The market for entrepreneurship is saturated.
18:19And investors are looking for things with breakout velocity.
18:22They want uniqueness.
18:23They want innovation.
18:24They want something that's going to be differentiated.
18:26For me, I want something that's 10x better than the previous version.
18:33Entrepreneur Elevator Pitch is presented by Amazon Business.
18:37For every organization at every stage of growth.
18:46Our final entrepreneur aims to enhance pantries and diets everywhere
18:52with her revolutionary seasonings.
18:55I'm Raina Kumra and I'm the founder of SpiceWell.
18:58I started SpiceWell because of a family health crisis.
19:01My husband had knee surgery and my daughter broke her collarbone on the same day.
19:05And I just wanted to get them better.
19:07So I focused on Ayurvedic recipes, vegetables from the garden,
19:12and I got them the most healthy, nutrient-dense foods.
19:15And that was sort of the jumping off point for SpiceWell.
19:26Going up.
19:28Hello, Raina.
19:30Welcome to The Elevator.
19:32Your pitch begins in 3, 2, 1.
19:38Hi, I'm Raina, the CEO and founder of SpiceWell.
19:42And I'm on a mission to get more nutrients into your diet, starting with everyday foods.
19:47And salt and pepper is where we begin.
19:4994% of Americans have a nutrient deficiency, which leads to chronic illness.
19:54And if we could eat better, we would be better.
19:56But habit change is really hard, which is why I chose to focus on ingredients instead.
20:02SpiceWell gives you 10% of your daily vitamins in a half teaspoon serving.
20:06And is organic, non-GMO, anti-inflammatory, and low-sodium.
20:11And is backed by one of the finest doctors in the world.
20:15And we are growing and people are loving us.
20:17We have a 50% repeat purchase rate.
20:20And we recently sold out on QVC and The View.
20:23We have 300 retail doors across the country.
20:26And a 400% growth rate on Amazon.
20:29Today, our ask is 50K to complete our 1 million raise at a 5.5 pre, 20% discount to fuel.
20:39Perfect pitch.
20:40Come on.
20:41She got everything that I would want to know in order to make a decision I heard.
20:46I can't believe we saw the same pitch.
20:47Oh, stop.
20:48It was excellent pitch.
20:50Mark, she was buttoned up.
20:51She was crisp.
20:52She just ran a little bit long.
20:53True, but it was yet one more lookalike product that's going to crowd up the aisles.
20:58Haven't you seen enough of those to know these are not investable?
21:01The data was rock solid.
21:04QVC, her increase on Amazon.
21:07She had great stats.
21:09I saw enough to want to learn a little bit more.
21:11Listen, I'm overruled, clearly.
21:12And I'll enter with an open mind.
21:14But you guys had better put your money where your mouth is.
21:22Attention, Raina.
21:26Your pitch has been approved.
21:38Raina, welcome to the boardroom.
21:40Thank you for having me.
21:41Congratulations.
21:42We're actually excited to learn more.
21:45Some of us perhaps a bit more excited than others.
21:48So what I'm curious about, though, is tell me a little bit about the traction here.
21:52So our first year, we were at 80K.
21:54The next year was 250K.
21:57And this year, we are on track to be over half a million.
22:01But we have a few huge contracts that are about to come in that may get us to a million.
22:06What makes your product different than all the other spices on the market?
22:10We are the only spices, the only seasonings that are clean label and also nutrient dense
22:17and also functional and also ayurvedic.
22:20So you won't find anything like this anywhere.
22:23It's a first of its kind.
22:24This is basically salt, right?
22:26Yes, it's salt, it's pepper, but it's cleaner and it's better.
22:31I think a lot of people don't know that the spice trade is incredibly dirty.
22:35Okay, you've thrown out some numbers.
22:36You've told us about the product.
22:38Can we try it?
22:39Yes, I would love to have you try it.
22:42This is puffed lotus root, which is an ayurvedic snack.
22:46It is very common.
22:48What?
22:48It's puffed lotus root seeds.
22:51Oh, I just had that for breakfast.
22:53Oh, right.
22:54It's high in magnesium and potassium.
22:56And then it's got our superfood seasonings on there.
23:00It's 10% of your daily vitamins in both the salt and the pepper.
23:04That's a sneak preview of some of the expansion
23:06that we might be doing into snacks later, not just now.
23:11So how are we going to scale this business?
23:13Like how big can this really get?
23:16So it's a $300 billion opportunity overall in functional foods.
23:21Salt and pepper is smaller, but we're not staying in just that category.
23:25We also have some new products that we're launching that are higher velocity
23:28because these are not super high velocity.
23:31And what are those products?
23:32They are in the hydration category.
23:34They're spices in the hydration category.
23:36Kind of.
23:37Yeah.
23:37It's something that you've never seen before, but that we all need.
23:40Give us a little bit more because I'm excited about act one,
23:44but I worry about buying salt and then not buying it again for six months.
23:48So tell me what hydration product I'm going to need more frequently.
23:52Okay.
23:53So of course we're a salt company and we know that electrolytes are very important.
23:58What we're looking at is the first hydration products that are also Ayurvedic and taste amazing.
24:06I love the traction that you've had.
24:07I love your passion for what you're creating.
24:10Trying to understand how, from my investment point of view, I'm going to get a return.
24:17Well, there are some interesting dynamics in the seasonings category.
24:22We've already been reached out to by some very big players when we were just nine months old.
24:27And so I know they have their eye on us because it's really hard for them to innovate.
24:31It's really easy for us.
24:33I get act one and these players interested, but act two could be considered a distraction.
24:40Fair enough.
24:41We are getting this business on its feet.
24:44We are going to continue our growth, but the snacks and the hydration and the other
24:49sort of higher velocity products that we're adding to it will only help increase all of that top line.
24:55I think you've done an amazing job of getting to where you're at.
25:01I think there's a big enough opportunity at least to get started.
25:04So my concern on the product extension to hydration and then you said maybe snacks.
25:11Just given the uncertainty of where you're actually going, I'm going to pass.
25:17I feel that timing is everything.
25:20And we're hearing this pitch almost at exactly the wrong time.
25:25I think you buy salt once, the repeat rate is going to be really, really slow.
25:30So I kind of applaud the fact that you're saying we need to begin looking
25:34elsewhere for more highly consumable products.
25:38But that's not an investment for today.
25:41That's an investment for later, at least in my book.
25:44So because of that, I'm afraid I pass.
25:48OK, thank you.
25:49I'm intrigued.
25:50I mean, I love the product.
25:51I keep reaching over and grabbing more of the snack.
25:54But I worry about the competition on the shelf.
25:57I also worry that every second you're thinking about hydration is the second you're not focused
26:02on spice.
26:04And that distraction worries me a little bit.
26:08As far as investing today, it's a pass for me.
26:11But I'd love to continue the conversation and see if there's a way that I could be helpful.
26:17Well, Ryan, I'm afraid that we're sending you home without money,
26:21but maybe an offer of potential assistance from Gary.
26:24Thank you so much.
26:25Good luck.
26:26Thanks, Ryan.
26:28Despite everything that happened, Spicewell is in stores right now.
26:31We're at the Fresh Market, we're at Gelson's, we're at Air One.
26:34Wherever you go, you will soon find us.
26:37You know, if anything, we're here to help you.
26:39You will soon find us.
26:40You know, if anyone wants to invest later, it's going to be at a higher valuation.
26:45She had me till hydration, and then literally she's lost me.
26:49She could have been nervous because we were peppering her with questions.
26:52But I'm intrigued enough to want to learn more.
26:57Well, unfortunately, we weren't able to send her home with the deal she was looking for.
27:01But, you know, listen, it was a pretty good day, at least for me.
27:05Of all the entrepreneurs who stepped into the elevator today,
27:09just three companies made it into the boardroom,
27:13and just one was able to secure a high-flying deal with our investors.
27:19In the high-stakes world of business, if you want to achieve your dreams,
27:24you must rise to the occasion to get to the top.
27:30Yes!
27:30Let's go!
27:31Let's go!
27:31Let's go!
27:31Let's go!
27:32Let's go!
27:32Let's go!
27:32Let's go!
27:32Let's go!
27:32Let's go!
27:32Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:33Let's go!
27:34Let's go!
27:35Tune in next week as Entrepreneur Elevator Pitch continues.
27:4160 seconds is up!
27:42A vote is necessary.
27:44I'm not sure what I'm going to do here.
27:46And to apply for the next season, go to entrepreneur.com slash elevator pitch.