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This issue was a big hit last week, so I’m bringing it back. I’ve rounded up a few of my favorite headlines from the past week. Read on so you don’t miss a beat.

Part of being an educated investor comes from keeping an eye on what’s happening around you.

In the world of startup investing, it’s about spotting trends early on, uncovering budding business sectors, and learning from the moves and deals big money are making.

Here’s a glimpse of what went down this week:

  • Kustomer Acquired by Facebook to Better Serve Business Users
  • MedTech Marriage Streamlines Backends with AI
  • Amazon, Apple, and Sony Set Sights on Podcasting
  • SaaS Customer Service Unicorn Acquired by Vista Equity Partners
  • End of Year IPO Surge
  • $350 Million Round for Self-Driving Trucks Startup
  • The Boardroom Bets on Natural Personal Care Brand

I break each of these stories down for you and add some of my personal commentary along the way in my latest edition of Angel Insights.

 

Kustomer Acquired by Facebook to Better Serve Business Users

 

Today, there are around 175 million people whose main online presence is their Facebook page.

Many of them also operate on other Facebook-run apps like Whatsapp and Instagram, forgoing a traditional website.

These are quick, easy to set up—and best of all—free.

Facebook recognizes this and is taking steps to serve their entrepreneurially-minded users with better tools and services.

The acquisition of Kustomer is the latest example of this.

Kustomer helps businesses achieve an “omnichannel presence,” unifying data from multiple sources and allowing companies to service customers through a single timeline.

This deal—going down for around $1 billion, according to close sources—marks the biggest event in Facebook’s foray into the customer services industry.

It aims to make a cheap and convenient option for businesses into a powerful and desirable one.

Critics have expressed antitrust concerns, citing this as yet another example of Facebook buying up and neutralizing a competitor. Nevertheless, Facebook (and many happy small business owners) believe this is the right move.

Read the full story, here.

 

MedTech Marriage Streamlines Backends with AI

 

Proving that big things can happen anywhere—not just in Silicon Valley—Minnesota-based Verata Health just found a suitor that pegs it at a whopping $1.5 billion valuation.

The AI-charged MedTech platform tackles the “prior authorization” problem in the healthcare industry.

In layman’s terms, Verata plugs into a healthcare business’ tech stack to collect and manage patient details quickly and easily (bye-bye fax machines).

The buyer, Olive, looks to gain a foothold in the Twin Cities and expand its current AI offerings aimed at the Medical sector.

Olive is a success story in its own right. Having raised over $385 million of capital this year, it is now valued at $1.5 billion.

The new pair tested their collaborative abilities and found that working together, they could reduce turnaround time by as much as 80%—which could save health care providers billions of dollars.

Read the full story, here.

 

Amazon, Apple, and Sony Set Sights on Podcasting

 

Wondery is the world’s largest independent podcast publisher. It’s home to some of the biggest podcasts around.

Just this week, news broke that Amazon is considering a big buy-up of Wondery, which could see the network valued at $300 million. This would be the biggest podcast deal of all time.

Turns out, Amazon isn’t the only company with its sights set on podcasting, both Apple and Sony were in contention to close the deal with Wondery.

And just last year, Spotify acquired major podcast player Gimlet Media for $200 million.

Gimlet and Wondery show the potential that independent podcast networks have as the industry enters into a new era.

We can expect huge corporations like Amazon, Apple, and Sony to continue to push into this market.

Read the full story, here.

 

SaaS Customer Service Unicorn Acquired by Vista Equity Partners

 

Gainsight is another startup that is serving businesses.

This “customer success technology” gives businesses a powerful cloud-based platform for carrying out customer services.

These services include product experience, revenue optimization, customer experience, and customer data.

Carving out success with customers and investors alike, the San Francisco-based startup earned $150 million in private investments.

This caught the eye of Vista Equity Partners, sparking an acquisition that values Gainsight at around $1.1 billion.

What’s even more exciting, there are already IPO-whispers. Gainsight’s founder and CEO, Nick Mehta, said that he and the team at Vista Capital have already begun testing the waters with bankers for an IPO in the near future.

Read the full story, here.

 

End of Year IPO Surge

 

As we come to the end of the year, several huge IPOs are still in the works.

This week new info rolled in that gives us a clearer picture of what these soon-to-be-public companies have to offer.

 

Airbnb

 

Everyone’s favorite rental app, Airbnb, plans to go public this month for an incredible $35 billion valuation.

After a strong 2019 that saw gross booking revenue up 29%, the company took a dip in 2020 as travel and rentals dropped dramatically.

Luckily, over the past few months forecasts have improved.

Airbnb thinned out its workforce, cut execs’ salaries, and the founders went totally without pay. In July, August, and September, the number of nights booked was only down 28% (year-over-year), a big improvement from the triple-digit declines earlier this year.

It seems like a 2020 IPO—while not originally in the company’s plans—is the right move. The capital injection will help Airbnb ride out the storm and coast into its recovery stage.

 

DoorDash

 

The pandemic had the opposite effect on delivery startups like DoorDash.

In 2019, DoorDash placed 263 million orders. In just the first nine months of 2020, it placed more than twice that many orders. Over the same period, revenue increased by 224%.

Today it holds the highest share of the market against competitors like Uber Eats, Grubhub, and Postmates.

For its NYSE offering, DoorDash could be setting its valuation as high as $32 billion.

 

Roblox

 

Gaming phenomenon Roblox is going public and it’s likely to happen before the end of the year.

The entertainment platform had an incredible breakout year…

It raised a $150 million round.

It clocked in 22.2 billion hours of engagement in the first nine months of the year, up from 10 million last year.

Over the same period, active users were up 82% and revenue up 68%.

Third-quarter revenue is up 91% since last year, standing at $242 million.

In addition to its IPO, Roblox has some huge stuff coming down the pipeline, like an upcoming China launch in cooperation with its partner and part-owner Tencent Holdings.

For the offering, Roblox is reportedly seeking a valuation of about $8 billion.

Read the full story, here.

 

$350 Million Round for Self-Driving Trucks Startup

 

TuSimple was one of the first companies to tackle self-driving trucks.

Coming out of China, the startup has set its roots in San Diego and Tucson.

It is now developing a commercial-ready fully-autonomous driving solution that could change the shipping industry.

TuSimple just finished a $350 million funding round. Investors included Goodyear, Union Pacific, Kroger, and Volkswagen.

The company’s success and its wide range of partners and investors seem to give it an edge against competitors like Aurora, Kodiak, and Waymo.

Read the full story, here.

 

The Boardroom Bets on Natural Personal Care Brand

 

By far the biggest news in our neck of the woods is our investment in a natural personal care startup.

The company makes a liquor-based deodorant that kills bacteria and keeps armpits fresh without irritating skin like other natural products.

Since 2017, this startup has tripled growth each year, bringing it up to $1 million in 2020.

The team just partnered with a major marketing firm that will help to grow the customer base through viral marketing.

Down the road, the direct-to-consumer brand plans on expanding into its untapped business-to-business channel.

We chose this company as our next investment because the product is great, the numbers are right, and—above all—the timing is right.

Natural personal care products are growing fast right now.

And within the natural deodorant space, recent acquisitions point toward a great potential outcome for us.

Native and Schmidt’s Naturals each make natural deodorant and were acquired by huge brands Procter & Gamble and Unilever, respectively. Each company was bought for over $100 million.

The founders of our latest startup deal built their company from the group up with an acquisition in mind. Though it’s too early to say, they are aiming for a potential acquisition just a few years down the line.

Read the full story, here.

Author: Chris Graebe

 

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’ve included this startup and TWO MORE of The Boardroom’s most popular startups in this Holiday Blitz 3-for-1 offer.

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…

  1. They tripled their growth over the past three years and are shooting for $3 million next year.
  1. 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.
  2. 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’s most 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.

Author: Chris Graebe

Let me tell you a little about Moiz Ali.

Moiz was an Axe deodorant kind of guy (keep reading, it’ll make sense).

And like many, he found himself reading the labels trying to decipher ingredients, and wondering exactly what he was putting on his body.

Life went on.

It wasn’t until his sister’s pregnancy when she expressed her frustration with deodorant that he had his aha moment (Trends.co).

This set Moiz on the path to creating a safer, natural deodorant.

People thought he was crazy for charging $12 per stick…

But were blown away when he landed one of the biggest deals in the natural care products space.

In today’s Angel Insights issue, you will hear how the natural care product sector is nearing a $30B market, the factors contributing to its growth, significant acquisitions in the space, and why you should be paying attention.

 

 

Why Care About Personal Care?

 

Personal care products include soap, deodorant, makeup, toothpaste, hair products, shaving cream, perfume, and much much more.

Anything used for hygiene or beautification falls into this category.

I’m sure you can think of around a dozen products you use that are personal care products. This is a massive and essential industry.

In 2016, the U.S. personal care industry generated around $237 billion. This number has only grown since then.

The hottest niche within this industry is “natural” products.

These products are the same as their traditional counterparts but without the irritating or potentially harmful chemicals.

I’m going to go over the trends in the industry, the most interesting recent acquisitions, and let you know why you, as an investor, need to have this on your radar.

 

Natural Personal Care Products Growth and Trends

 

The global natural personal care market is expected to grow around 11.1% each year (CAGR) from now until 2026. This would bring the industry up to just under $30 billion.

Growth here is driven by increasing awareness of the danger of certain chemicals found in traditional personal care products.

And with social media and celebrity endorsement, the popularity of this trend is spreading rapidly.

For many consumers, synthetic products are dangerous, undesirable, and off-trend.

Just take a second and think about the growth of brands like Whole Foods and the rise of organic, gluten-free, and eco-friendly products.

This movement is extending into other industries, maybe none more than personal care.

Care for the body and the environment is a big deal today. Any product that can make a healthier alternative of a personal care product, is a hot-ticket item.

While startups, especially those that sell direct-to-consumer, have led innovation, established brands are starting to catch up.

For example, Procter & Gamble recently cut around 140 fragrances from their products that are linked to effects like endocrine disruption, reproductive harm, and cancer.

And what’s even more impressive than big brands tweaking their formulas is the incredible number of startups they buy.

 

Biggest Natural Personal Care Acquisitions

 

Here are just a few recent acquisitions within the space.

These show just how much major corporations value natural products. They are willing to spend big bucks to buy up strong brands that can modernize their product lines.

This way, they can innovate through acquisitions.

 

Procter and Gamble Buys VC-Backed Native Deodorant

 

Natural is a San Francisco-based startup that makes natural personal care products.

Its most popular product is Native Deodorant, a handcrafted deodorant that contains no aluminum, parabens, talc, propylene glycol, or phthalates.

The company found huge success with its direct-to-consumer channel. By going D2C, Native was able to acquire over a million customers in just a few years.

Native attracted venture capital investors from Azure Capital who put $500,000 into the young startup.

Just a short time later, Proctor and Gamble acquired Native for $100 million.

 

Unilever Acquires Deodorant Startup Schmidt’s Naturals

 

Another company making a killing on natural deodorant, Schmidt’s Naturals crafts award-winning formulas for natural care products.

In addition to deodorant, Schmidt’s Naturals makes soaps and toothpaste, all of which are plant- and mineral-based.

Unilever is a huge multinational consumer goods company that is no stranger to acquisitions. It has bought a total of 41 companies with a majority of recent acquisitions involving natural-leaning personal care and food companies.

At the very end of 2017, Unilever decided to pick up Schmidt’s naturals to add its natural product line into its portfolio. The deal went down for an undisclosed amount.

 

Natural Skincare Line For Men Bought by S.C. Johnson & Son

 

Oars + Alps makes natural products designed specifically for men.

What started as two wives making products for their husbands turned into a successful startup that landed a huge deal.

The company’s first three products were natural deodorant, eye cream, and facial soap. Again, through great success with the D2C model, the startup quickly amassed followers and got the attention of big brands.

Since then, Oars + Alps has expanded its product line, raised $1.3 million of capital, and landed a huge deal with S.C. Johnson & Son.

The same year it bought Oars + Alps, S.C. Johnson picked up another natural brand, Sun Bum, that makes natural and cruelty-free sunscreen.

 

Japanese Cosmetics Leader Buys Natural Skincare Company

 

Drunk Elephant makes a line of clinical-quality skincare products without any of the irritants, allergens, fillers, dyes, and colorants that other products use.

The result is an effective product that doesn’t irritate the skin or have any harmful side effects.

Despite being Houston-based, the company caught the attention of Shiseido, a publicly-traded Japanese company.

Shiseido started way back in 1872 and is today the top Japanese company in the global cosmetics market.

The deal was announced in October of 2019. Drunk Elephant is to be purchased for a huge sum—$845 million.

 

Why Big Consumer Product Brands Acquire “Natural” Startups

 

The reality is, so many “natural” and “healthy” personal care companies get acquired because the big guys in the space were too slow to innovate.

These trends snuck-up on them. While they were busy with their long-running product lines, small companies were tapping into new consumer desires.

Now that the cat’s out of the bag and the huge potential of these natural personal care startups is clear, companies like Procter & Gamble and Unilever are playing catch up.

Their solution is to acquire the innovation rather than develop it themselves. So far, this strategy has proved to be incredibly successful.

 

Takeaway

 

As an investor, I find this space super exciting for many reasons.

First of all, we all have seen natural and organic products grow from a small niche into a huge industry over the past few years. I think most people get by now that if a potentially harmful chemical doesn’t need to be there, it shouldn’t be there.

Simply put, natural personal care products get the job done without the risk.

Next, we all use these products every single day of our lives (most do anyway). Everyone needs toothpaste, shampoo, and deodorant, these don’t just target a small audience, they target the entire population.

Lastly, the market is ripe with acquisitions.

The big brands can’t keep up with the multitude of successful startups making natural products, so they go the M&A route to keep up.

This creates loads of opportunity for entrepreneurs in the space and gives us investors a quick and profitable exit strategy.

 

Ready to make a move?

 

The Boardroom’s next startup launches this week (a natural personal care company) and I’ve included them in my latest 3-for-1 offer.

Check it out here and reserve your spot for when investing opens!

Author: Chris Graebe