Another Seattle coffee startup wants to generate buzz through crowdfunding.
Coffee subscription company Bean Box this week launched a crowdfunding campaign on StartEngine and raised more than $30,000 within a day.
The equity crowdfunding platform opens the door for non-accredited investors to buy equity in early-stage startups. The company operates under laws introduced in 2016 that permit regulation crowdfunding, a framework that gives small businesses and startups the opportunity to raise capital by selling shares of their company to the public through online platforms.
Bean Box’s crowdfunding launch comes about month after Seattle-based coffee robot barista startup Artly started trending on StartEngine for its own crowdfunding campaign. It has raised more than $1.1 million. Other Seattle startups that tried equity crowdfunding include Tokki, American-Made Amaro, and Green Canopy Node.
Bean Box CEO Matthew Berk said the decision to go the crowdfunding route comes as traditional venture capital moves away from consumer-oriented investments and focuses more on newer technology like artificial intelligence.
“As venture shifts their focus of opportunity toward new tech or new opportunity, those who have longevity in a particular space like e-commerce or food tech need to think about other forms of liquidity and capital,” he told GeekWire on Wednesday.
Crowdfunding also allows the company’s customers to participate in its upside, Berk said.
“The model of direct-to-consumer, philosophically, is to engage a large audience directly with your product, and part of the product we offer is indistinguishable from the company we are building,” he said. “And so our philosophy here is let our community participate.”
The 9-year-old company previously raised $2.4 million in a Series A round in 2021, following $3.2 million in seed financing. Its backers include Seattle VC firm Ascend along with a number of family offices and angels.
Berk said the company has not experienced any pushback from existing investors regarding dilution or mandatory disclosure requirements.
The crowdfunding campaign lifts the hood on the company’s financials. Bean Box generated nearly $11 million in revenue last year from subscriptions, up 26% from the year prior. Its first-year wholesale revenue came in at $2.1 million, including placement in 3,400 stores.
The company’s cost of goods sold was $5.3 million and it reported a net loss of more than $4 million.
Berk said the company will allocate funding to growing its subscriber base, using wholesale as an onramp to attract new customers.
“We’ve already invested in infrastructure,” Berk said. “The point of this fundraising is to engage more of an audience, cultivate more lifetime revenue, and scale the company in that perspective.”
The company said its valuation is $54 million.
Bean Box’s campaign, which expires Dec. 18, set a goal of raising $1.23 million. It plans to sell 471,373 shares and investors must commit at least $497.80 to participate.
Founded in 2014 by Berk and Ryan Fritzky, the 14-person company offers coffee products from top-rated, small-batch roasters, to make those items accessible to more people at home. The startup seeks to bring cafe culture to people at scale, using human and algorithmic methods to select coffees that are tailored to customers’ tastes.
Berk said the startup has built out its software stack to optimize shipping and product recommendations. The approach resembles wine subscription company The Waves, which developed its own algorithms to better recommend wine pairings.
Prior to the JOBS Act in 2012, startups could not raise equity from non-accredited investors. The goal behind the bill was to democratize venture capital investing, allowing ordinary Americans to invest in early-stage companies.
It took four years for the bill to become law. The Securities and Exchange Commission set a number of safeguards: startups must use SEC-approved platforms, raise a max of $5 million yearly, cap non-accredited investors’ ownership stake, and reveal financial details.
Equity crowdfunding got off to a sluggish start. However, it has gained momentum, with StartEngine alone reporting more than $189 million raised on its platform in 2022.
