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301 Inc. Returns to Lead $6M Series D for Rhythm Superfoods

January 18, 2017

Rhythm® Superfoods, maker of organic and non-GMO plant-based snacks, announced it has closed on a $6 million Series D led by General Mills’ venture capital unit, 301 Inc., and including the CircleUp Growth Fund and Blueberry Ventures.

This is a return for 301 Inc., which led a $3 million Series C for the company one year ago, and is also a re-commitment for the CircleUp Fund which also was involved in two previous rounds. The Series C, which closed in January 2016 was to be used to fund the company’s development of a new dehydrated beet snack chip, as well as to support the company’s existing products. However, the round also was to benefit Rhythm Superfoods through giving the company access to expertise in food safety, supply chain logistics, and R&D that comes from General Mills.

“We are thrilled with our new investment from 301 Inc. and are looking forward to what this strategic partnership will help us accomplish in the months to come,” said Scott Jensen, CEO of Rhythm® Superfoods, at the time in a recent release.

Rhythm Superfoods was the first company 301 Inc. engaged with after its launch in late 2015. Founded in 2009, the company produces a line of highly sought-after superfood snacks including Rhythm Kale Chips, Broccoli Bites, Roasted Kale, and Beet Chips that can be found for sale across the U.S. in Whole Foods, Target, Sprouts, Kroger, Stop & Shop, Safeway, Albertsons, Starbucks, and Costco.

The backing that Rhythm Superfoods has secured has supported the company as it added its newest Beet Chip product to its lineup, expanded its distribution into new markets and added new distribution channels; doubled its production capacity, began production at a new factory in Mexico that is in close proximity to the farms supplying the company’s vegetables, and has become the top brand of kale chips on the market.

“Scott (Scott Jansen, CEO Rhythm Superfoods) and his team have accomplished so much in the year that we’ve been working with them, and we’re excited to continue to help them amplify their existing efforts and differentiate their place in the market as a leader in the plant-based snack category,” said John Haugen, vice president and general manager of 301 Inc.

The New Normal

For years, small, independent food startups were hesitant to collaborate with large, established companies for fear that it would dilute their identity and harm their relationship with consumers, while larger companies were leery of the risks associated with backing startups in such a crowed playing field. These reservations have fallen away in recent years however, as larger companies see investments in startups as a way to capitalize upon their massive potential for growth and adaptability, while smaller companies are realizing that established investors are seeking to tie-in with their unique identity and niche products, and are willing to support them along their path of growth.

As long-term established brands face slowing sales as consumers opt for new products that offer a fresher, more transparent take on food, venture capital investments in food and agriculture have tripled over the past five years, according to Dow Jones VentureSource, to $647 million last year reports the Wall Street Journal.

More recently, in the first three quarters of 2016, venture capital investments in the space have reached $420 million as more and more “Big Food” players launch their own VC funds.

One of the most recent large scale companies to launch its own venture capital unit is Tyson, which only this past December announced the launch of Tyson New Ventures LLC, a new $150 million venture capital fund dedicated to investing in food companies developing technologies, products, and business models that answer the challenges posed by a growing global population. Others include the $125 million Acre Venture Partners launched by Campbell’s Soup; Eighteen94 (1894) Capital launched by Kellogg’s; Startup Next Food & Tech, which was launched by Land O’Lakes in partnership with Techstars; and Techstar Connection, launched by AB InBev’s venture arm, ZX Ventures, also in partnership with Techstars.

As Rhythm Superfoods begins a new year, this new investment will enable the company to grow its brand, expand its capacity, support its marketing and sales initiatives, and drive innovation through new product development according to the company.

“We are elated with our new investment from 301 Inc. and look forward to continuing this strategic partnership and seeing what we can accomplish for the brand together,” said Jensen. “With the expanded support and resources of General Mills behind us we have confidence that we will continue to be the leader in developing innovative plant-based superfood snacks for our growing consumer base.”

 

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com

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