Want to hear about our latest investment? Today I discuss our investment in a natural deodorant startup that’s tripled over the last three years…and share how you can be a part of it. So, read on.
Here’s how things work around here.
We find great startup opportunities to invest real cash into.
Then we share the startup with our members, give them exclusive access to the founder interviews, explain why WE invested in a detailed report, and provide our members with the link to invest.
We just unveiled our investment in a natural deodorant startup.
And they don’t have some boring me too chalky stick in a tube with a natural label slapped on it either.
I’ve never seen anything like this until now.
Get this –– their deodorant is made from denatured alcohol spirits and a blend of natural, food-based ingredients with germ-killing properties.
Here are some quick highlights:
- Tripled their growth over the last three years and are on pace to see $1M in sales this year.
- In-house manufacturing allows them to control costs and generate an 86% profit margin.
- Current wholesale partnerships include Nordstrom, Urban Outfitters, and Faire.
The best part is they just opened an investment round. We’ve invested, and some of our subscribers decided to do the same.
I had a chance to sit down with the founder earlier this week for an exclusive interview and discuss it in today’s edition of Angel Insights.
Buckle up and get ready for an amazing story and opportunity.
Our Latest Startup Deal – A Natural Deodorant Company
The co-founders, a husband and wife team, crafted a spirit-based formula (yes, like the spirits you drink…but armpits only for this one) that kills odor-causing bacteria without irritating the skin like other natural deodorants.
It smells great, it works, and it plays on some of the biggest trends in the personal care industry today.
I got a chance to speak with the co-founder and CEO, Erica, to break down everything from the backstory of the company to its nitty-gritty financials.
Where Did the Idea Come From?
A deodorant made from denatured spirits (alcohol)? That’s a pretty wild idea.
I wanted to know how Erica came up with it, so I asked her.
She told me that other natural deodorant didn’t work for her. She had sensitive skin and the products on the market gave her rashes.
When she relapsed back to traditional deodorant, her husband started working on a solution. He’s a materials engineer and he started honing-in on food-based ingredients that are non-sticky and kill bacteria.
A year-long search led him to create what would become this startup’s flagship product, a alcohol-based deodorant with all-natural ingredients. It comes as a spray as well as in roll-on.
Year Over Year Growth and Secret to Early Success
Year one, the company made $20,000.
Year two, $85,000.
Last year, $285,000.
And this year, they are on-track to make over $1 million.
The journey began with a Kickstarter campaign when the couple had no experience in marketing whatsoever.
Despite being new to the field, Erica and her husband made a successful viral marketing campaign.
Their first commercial shows a man asking real people on the street to smell his armpits. When people give a sniff and report that they smell good and clean, he lets them in on a little secret—he hasn’t washed them in six months…
That campaign, while being really catchy, showed just how effective this natural deodorant is. That one commercial catapulted the company into its next stage of growth.
How Did the Company Scale So Quickly?
So, $285,000 to over $1 million in a year is a pretty big deal and one of the things that really grabbed my attention with this startup.
I wanted to know how Erica managed that.
The first thing she told me is that she runs a lean team that is very agile and quick to pivot. They did some crucial pivoting this year when COVID-19 struck.
For example, they created a natural hand sanitizer right as hand sanitizer was becoming essential.
Next, the dynamic duo decided to put their marketing hats on again. They produced more viral content on a shoestring budget that helped them to reach new audiences.
This brought more customers aboard while also spreading the word of their hand sanitizer.
What’s Next That Can Help Them Keep Growth On-Track?
Erica told me a bit about what they are looking for next.
They have their sights set on a massive untapped market—B2B, or business-to-business, sales.
After starting with a direct-to-consumer model, there are still wide open fields for landing deals and partnerships with retailers. That is the next step.
In fact, with some of the funds from their current investment round, Erica plans to hire a sales-facing Director of Operations to take the B2B market head-on.
Also, the brand is just starting a working relationship with a professional marketing firm that will help to scale the customer base and refine its brand identity.
What Did She Learn About Marketing So Far?
Erica said that the number one thing that she learned was to “strike when the iron is hot.” Timing is more important than anything else.
From there, for follow-up and strength of continuation, you need something of quality.
So playing off of those two facts, she explained that the timing is perfect right now for a natural deodorant that works.
There are so many companies and influencers spreading the word about how undesirable traditional deodorant is,but there is nothing to fill that gap.
She explained how all signs point towards natural deodorant growing rapidly over the next five years.
By getting ahead of the trend and being one of the first to make a real solution here, they won’t need to play catch up later when natural deodorant is a massive vertical.
Now that they have the product in this early market and are growing rapidly, the quality of the product is going to give them that continuation she mentioned and solidify the brand within the natural care products industry.
Customer Acquisition Costs and Next Step For Marketing
The team has been working hard to dial down the customer acquisition cost (CAC) while increasing the average order value and customer lifetime value (CLV).
So over the past year, they managed to increase CLV from $49 to $79.
At the same time, CAC went up from around $12.70 to $15.
What does this mean?
It means they are paying more to get customers—because they are spending more on marketing—but customers are spending significantly more on each purchase, tipping the scales towards more profits.
This segues right into Erica’s new marketing partner…
The goal of working with the firm is to keep customer acquisition costs low while escalating the rest of the marketing spending.
This is the same firm that’s just coming off of a successful campaign with a natural soap company called Dr. Squatch. They bring everything learned from successfully scaling that brand to Erica and her team.
This is HUGE!
Now the goal is to work on the hardest part of the marketing equation, the “top of funnel” advertising. Basically, they are creating catchy and humorous ads and spreading them to capture brand new clients.
Marketing wisdom shows that humor is one of the best ways to connect with people emotionally.
Once you get them in the door with that connection, the next step is easy—education.
Through marketing, they simply tell people about natural alcohol, how it kills bacteria, how it doesn’t cause rashes and reactions, and how it’s good for your body.
People seem to just get that pretty easily.
Finally, at the bottom of the funnel, customers who have a connection and understand the brand are easy to bring back again and again.
Who is the Ideal Customer?
“Organic shopping moms.” Or, as Erica explained, just moms in general.
She says that today, most middle-class and upper-middle-class moms are actively looking for natural products. Once they find them, they aren’t just buying for themselves, but for the whole family.
This type of customer spends a lot on each purchase.
They also like to set up a subscription so they can get the products they like coming to the door regularly without thinking about it.
Erica and her team built the brand experience around these customers but is now working to bring more males into their funnel.
It’s funny because most people assume that this is a male-targeted product. Something about cleaning your pits with spirits just seems masculine I suppose…
Luckily, this is an advantage for the brand. Erica thinks getting guys on board is going to be a pretty easy next step.
Profit Margins and Important Next Steps
The company has an 86% profit margin across the board.
They do all manufacturing and shipping in-house which gives them flexibility and keeps those margins sky-high.
Erica says that as the company grows, more of these processes will become automated, bringing margins up.
And as soon as possible, she wants to take this further and bring distilling in-house.
As it stands, they pay more in taxes for alcohol than for the alcohol itself.
Getting a distilling license and crafting the spirits themselves would complete the system, bringing nearly 100% of the process under their control.
Competition and Similar Acquisitions In the Space
The same year Erica’s company launched, Native was acquired by Procter & Gamble for $100 million and Schmidt’s Naturals was acquired by Unilever for an undisclosed amount, somewhere between $100 and $150 million.
These massive deals are important for understanding the state of the natural care products market today.
Even so, Erica isn’t impressed.
Those two brands made “fairly boring standard deodorants in plastic tubes.” On the other hand, her alcohol-based deodorant is more exciting and is sold in glass bottles to appeal to the eco-friendly customer.
More importantly, she mentioned that neither of them had proven track records for use.
For example, Schmidt’s deodorant uses baking soda which gives 40% of people rashes. While Native isn’t even a “natural” product.
Just last year a company called Tatcha was acquired by Unilever for $500 million. Tatcha is more similar to this startup because it uses food-based products to make natural care products.
Plans for the Future
From the very beginning, the co-founders wanted to start a company, grow it rapidly, and then sell it.
They are three years in and are ready to continue scaling for the next three or four years with the hope of selling for an attractive sum.
Our Biggest Takeaways
Just as we laid out in our last article, the natural personal care industry is growing rapidly and is ready for an explosion.
We chose this natural deodorant company to be our next startup deal because of its timing and the growth potential we see it having in this space.
Let me break it down…
- They tripled their growth over the past three years and are shooting for $3 million next year.
- There isn’t another product like it on the market, but it’s similar enough to recent acquisitions to know that big buyers are definitely out there.
- The founders built the company with an acquisition in mind. They are shooting for a buyout within four years (of course, there’s no guarantee of this actually happening).
The idea is there, the numbers are there, and the roadmap is there.
And of course, the product just ignites that twinkle of inspiration and opportunity for us. It’s something that we know people want to buy.
Let me know what you think in the comments below.
And if you’re interested in learning more about this startup, including the link to invest, I’ve just added their Deal File to our Holiday Blitz 3-for-1 offer.
Yes, that’s 3 of The Boardroom’smost popular deals (including this natural deodorant startup) for the price of 1. This offer is limited and won’t be around long so check it out here.