Powerful Foods, the US firm marketing protein-enhanced food and drinks, is raising more funds for investment as it embarks on its latest plans for growth.
The canvassing for fresh investment comes at the start of a year in which Powerful wants to boost its presence on the West Coast of the US – and comes in the wake of takeover talks that broke down without a deal.
Go deeper with GlobalData
Carlos Ramirez, Powerful founder and CEO, said the Miami-based company is looking to raise US$10m to fund the geographical expansion of the business, which he described as “very concentrated on the East Coast”. The fundraising is to come in two tranches, with investment bank Center View Partners organising the larger piece of the investment.
“I’m closing a bridge round within the next two weeks of $3m, while we raise with Center View Partners another $7m,” Ramirez said.
Ramirez, who set up Powerful in 2013, said last year the company had been contacted by six companies interested in buying the business and had entered into further discussions with one of them.
“I got approached by six different strategics that were interested in acquiring Powerful. We had conversations [with] a dairy company from New Zealand, a dairy company from Switzerland, a dairy company from Mexico, I had two CPG companies in the US and a protein ingredients supplier,” Ramirez told just-food.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHe described talks with one of the interested parties as “pretty advanced”, adding: “In my mind, it was very. We were discussing my transition.”
Asked which side had brought discussions to a close, Ramirez said: “Fifty-fifty. It was both sides. These guys had internal issues in corporate. My problem was I didn’t ask for a terms sheet up-front. I waited until the end. Internally, we decided it had been a huge disruption for the company, so moved on.”
He added: “What I learnt from the experience is that what we are seeing in the marketplace is there are all these companies [that] need to connect somehow – or reconnect – with the market. These guys are launching products – they have these machines that are putting products out there – but they are disconnected, especially from millennials, who don’t want to buy products their parents are buying.”
Powerful generated sales of $14m in 2018 from a portfolio of products including yogurts, oatmeal and drinks. The company has yet to make a profit “consistently”, Ramirez said, though he expects the firm to reach that milestone in the second quarter of 2019.
Asked if he would again be open to talks this year to sell Powerful, Ramirez, the company’s largest investor with a stake of 25%, suggested he would rebuff advances, although he indicated an interest in teaming up with the in-house venture-capital arms of larger food manufacturers.
“I think I would say no. This year is a year in which we need to put our heads down, keep growing the company, keep improving our P&L and then get to a point in 2020 when we are ready for it, with more scale, more volume,” he said. “What I’m open to is all these corporate ventures. It’s an independent entity that sometimes doesn’t necessarily put you in the system. To that I’m open. Right now, it’s a matter of making things happen and keep running the company.”
Once the latest fundraising round is completed, Ramirez plans to weigh up how Powerful could tackle the West Coast of the US. Options on the table include investment from a private-equity firm that “has a huge presence there” and the possible acquisition of a local firm with a protein-centric food brand.
“It’s a high-protein food brand. They focus on one product. They have the consumption and the connections and for us it would be a nice addition. We’re just starting the conversations. It’s a million-bucks company,” Ramirez said.
The fundraising and success on the West Coast are central to Powerful ramping up its sales. “It’s all a matter of funding. At this point, a lot of products are proven. It’s a matter of how deep are how pockets to keep expanding and growing. We have a target between $18m and $20m in sales depending again on the funding. Most importantly, with the West Coast, I know that would start happening towards the second semester of this year, so we have a platform to grow the company next year to $35-40m. That’s when it gets interesting.”
