Funding Round: Seed
Total Round: $1,262,817 (CSF + Wholesale Investors + Existing Investors)
CSF Portion: AUD $457,817
Total investors (CSF): 233
Average Investment (CSF): AUD $1,965
Overview
In March 2022, “better for you” snack brand Chief successfully raised a Seed round of nearly $1.3m. This included support from existing investors, new wholesale investors, as well as a portion from CSF investors; a great example of Equitise helping to orchestrate a fundraise using different pools of capital (all at the same valuation of course!), for a bespoke result.
This raise continues Equitise’s strong track record in the food and beverage space, and is another example of success working with a “mission-led” consumer brand.
The funds from this equity crowdfund will help Chief increase brand awareness and build their strong community through marketing spending and sales & marketing hires. Chief will also use the raised funds for product expansion, and growth to new geographies, including the US.
Who are Chief?
Launched in 2015, Chief is a fast growing “better for you” snacking brand made up of the core Chief beef bar/ biltong and collagen bar range (80% revenue) and a complementary collagen brand, Beauty Food.
The brand is sold across direct-to-consumer online (currently majority of sales) and wholesale channels in Australia and internationally. They are present in major retailers such as David Jones, IGA, BCF and Harris Farm, as well as gyms and fitness groups including Barry’s Bootcamp. During the campaign, Chief also successfully converted a trial with Woolworths and will be rolling out to 200 stores in May 2022 as a starting point.
At the time of launch, Chief had an ARR of $1.6m, set to hit $10m by the end of 2023. Around 20% of online revenue is coming from customers on a monthly subscription.
Importantly for emerging brands, the Company had a near term path to positive EBITDA (by mid 2022). This was due to growth marketing spend to date focused on building community around the brand, and new packaging suppliers going forward.
Launched in 2015 by Brock Hatton and Justin Babet, alongside Libby Babet (health expert, author and former trainer on Channel 10’s “The Biggest Loser”) and Veronika Larisova (nutritionist and ultra marathon runner), the founders have used their passion and expertise to build Chief into the brand it is today.
Within the c.$98bn global healthy snack market, consumers are moving away from big food companies with their perceived healthy snacks which are actually full of artificial ingredients and/or sugar. Consumers are instead looking towards alternative, “purpose led” brands which use genuinely healthy and sustainable ingredients.
Investment Notes
Why We Liked The Opportunity
We first met Justin in late 2020 after reaching out when we saw a growing community online around the highly-marketable brand. We had also seen previous success in the “better for you” food space, with Food to Nourish. Challenger food brands have a great track record in crowdfunding both for investors (many of the best exits and returns have been in this space) and the brands themselves (the marketing and community building benefit is huge).
HUGE target market, ripe for disruption
We recognised the potential for growth in the c. $98bn global healthy snack market (growing at 6% pa), and saw Chief’s products as being a real disruptor in the Australian snacking space.
Working from home in lockdown, we at Equitise team saw ourselves snacking more frequently or replacing proper meals with snacks, but often snack bags and bars aren’t as healthy as perceived. With sugar-filled snacks lining the shelves of most Aussie supermarkets, we expect to see a continuation of the big shift towards challenger, “purpose-led” brands which use genuinely healthy and sustainable ingredients.
Unique, “Purpose-Led” Brand…
We recognised Chief’s mission-led branding as one of its key highlights and key to building its loyal community of customers.
As well as innovating and striving for genuinely healthy snack foods, the founders put great emphasis on sustainability of their Australian supply chain, which we viewed as especially important given they are beef-based. Justin and team are avid supporters of the “Regenerative Agriculture” movement, which is essentially about using a combination of farming practices (some ancient, some modern) that actively regenerates the land, rather than degrading or simply sustaining degraded land.
Not only are these practices becoming widely recognised as one of the most important strategies to combat climate change, it’s also winning the hearts and minds of consumers. Through this, Chief also supported the not-for-profit Thankful For Farmers.
Founders who have done it before…
The first filter for any company we work with is the people: the founders’ vision, ability and leadership, and the skills and passion of the team who are all on the rider together. In the immediate term, we will be working on a time-intensive fundraise together and going forward we want the company to grow to new heights, do great things and ultimately achieve a liquidity event for investors.
We loved working with the Chief team; they had a great mix of complementary skills and were all so passionate about the brand and the community around it. Their advisers were also world-class across the board. What impressed us the most, was that the team have had 5 successful scale-ups and exits between them so far; we can’t wait to see what happens with Chief!
Multiple exit opportunities at attractive multiples
The “better for you” snack space has seen a lot of attention from both private equity and large food groups, looking to snap up challenger brands. In particular, there are some great examples in meat-based jerky brands in the US in M&A and even IPOs (Stryve).
Relevant M&A examples include:
- Chomps acquired by Stride Consumer Partners (US, Jan 2022, $300m, 3.0x revenue)
- Openway Food Co. acquired by Five V Capital (AUS, Sept 2021)
- Kind Bards acquired by MARS (US, Nov 2020, $5,000m, 3.3x revenue)
- Chefs Cut Beef Jerkey acquired by Sonoma Brands PE (US, Jun 2020)
- RxBar acquired by Kellogg (US, Oct 2017, $600m, 5.0x revenue)
- Epic Provisions acquired by General Mills (US, Jan 2016, $100m, 5.0x revenue)
As Justin and team scale to a near term $20m target revenue, we see some very attractive exit opportunities for investors.
What went well?
Support of existing investors / hybrid approach
Chief already had a very impressive roster of investors from earlier pre-Seed rounds. These included Ordinary Equity, a leading consumer growth equity fund founded by Alex Cornish and Chief’s Chairman, Gavin Ezekowitz, former Managing Director of Royal Bank of Canada (APAC).
Existing investors committed almost $600k into this round, at the same valuation as all Equitise investors. There is no better show of confidence in the Company than the Chairman and existing investors committing in a follow on round.
This also shows Equitise’s flexibility to tailor funding structures to suit the needs of the raising company, and draw on our large network of sophisticated and institutional investors.
Broad community of customers and fans
Chief has built a brand that has been seen by over 4M Australians in the past 12 months. Through the direct-to-consumer online channel, Chief has developed strong customer loyalty and a real sense of community. Investors in Chief ranged from health and fitness fans, to those interested in regenerative farming and involved in the beef industry.
Positive newsflow throughout campaign
The success of the Woolworths trail, announced during the fundraising campaigns was a great testament to the strength of the opportunity and the speed of the growth. Positive updates during the course of a campaign can really help to get people's attention and accelerate investment.
“Equitise was great to work with. From day one we had a team of 4 experienced people supporting us on everything from valuation work to writing our offer document to promoting our campaign via social, advertising, EDMs and more.
They provided a large amount of examples for everything which made an otherwise imposing job that much more achievable. It’s tough raising capital at the same time as your day job so the weekly WIP kept me on track and I'd often get texts out of hours as the team worked hard to help us secure some of our bigger investors.
We did things a little differently than the norm with a hybrid investment round comprising two tranches, one for existing and significant new investors, and one for crowd investors. Equitise introduced us to some great contacts from their wholesale network. While this approach is probably not suitable for everyone, it ultimately delivered us a fantastic result beyond our stretch target.”
- Justin Babet, CO-Founder & COO, Chief Nutrition
Looking Ahead
We are excited to follow Chief on their journey to expand operations and become one of one of Australia’s leading health food snack companies. Since completing their raise with us, they are focused on their rollout across Woolworths stores, and their wholesale channel which will be the key driver of growth.
Once we’ve established ourselves in major retailers in Australia, we will shift focus to other international markets including the US, Asia and Europe with the goal of being a global business. New product launches will also feature in the growth plan.
They will look to raise a Series A at the end of 2022 so we look forward to working with them again!