Due Diligence For

CROWDFUNDING

Vera Roasting Company

By February 9, 2017Due Diligence

Company Overview –

Vera Roasting Company has created a craft coffee, CoffVee, infused with resveratrol, the all natural antioxidant found in red wines.
*Souce: Wefunder

Company Investment
Name: Vera Roasting Company Minimum Raise: $25K
CEO: Mark Galvin Maximum Raise: $100K
Company Founded: 2015 Structure of Raise: SAFE
Location: Portsmouth, NH Valuation: $2M Valuation Cap, 15% Discount
Crowdfunding Portal: Wefunder Minimum Investment: $100
Crowdfunding Link: https://wefunder.com/veraroasting  
Website: https://www.veraroasting.com/  

Review Overview

Positives Risks and Reservations
Highly qualified founders in both the business and technology. The founders currently are not focusing their efforts full time on this venture.
This team has been able to generate significant traction early. The companies competitive/comparative advantage rests solely on their potential patent’s ability to protect from competitors and industry incumbents carrying producing and offering a similar product.
The solution addresses a massive and growing market, not only nationally but also worldwide. Management would benefit from acquiring advisors and additional leadership with experience in bringing food based products to market.
The product is well suited for building a recurring membership-based model and additionally, has inherent upside through JV partnering/OEM opportunities. These sorts of strategic partnership possibilities may also present M&A – liquidity potential.

Problem

It has been found that people who drink red wine regularly and responsibly lead healthier lives with less disease due to the beneficial ingredient resveratrol. To gain the full benefits of resveratrol one should consume it every day. Not everyone likes red wine or drinks it every day but many adults drink coffee multiple cups of coffee each day.

Solution

Current:
Vera Roasting Company has created an infused coffee that contains resveratrol to provide all the same health benefits as drinking a glass of wine

Long Term:
They plan to ramp up their subscription model and land more national accounts.

Business Model

Up until recently, Vera Roasting Company focused on direct-to-consumer sales through their website. Through the website, customers could place one time orders or set up a subscription service. Their coffee retails for $14.95 per bag or $12.95 per box of k-cups. As of Q3 2016, they have gross margins of 51%. Recently Vera Roasting Company has been aggressively pursuing traditional, brick-and-mortar retail channels.

Traction

  • Via earned media, the company quickly sells CoffVee to all 50 states within 2 days
  • CoffVee is available at local retail markets in NH, ME, & MA
  • Awarded U.S. patent for unique process and composition of matter
  • Partners with the Vitamin Shoppe, Baltimore Orioles and United States Coast Guard
  • Invited to participate in Whole Food’s regional showcase
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Mark Galvin Glen Miller
Position: CEO CTO & Founder
Ownership Percent: N/A 53.73%
Linkedin: https://www.linkedin.com/in/mbgalvin/ https://www.linkedin.com/in/glenmillerunh

*New England Innovation Center has 28.93%

Summary:
This venture founded by two gentlemen who appear to be experts in their respective disciplines. This has undoubtedly been the basis for their impressive and early traction. The company is entering a new phase which would benefit from the company leadership being solely focused on the company’s growth. The CEO’s shares are held via proxy through his NEIC.  While this equity is of significant value, the fact the CEO holds shares indirectly, combined with his lack of full-time focus on the venture presents an issue to explore further.

Market Analysis

Industry: Food & Beverage

TAM (Total Addressable Market): $48B (U.S.)
*Souce: Portal Page under details

Driving Trends: growing at 4% annually
*Souce: Portal Page under details

Industry Opinion:
The coffee industry in the United States is a fragmented and mature yet growing industry. There are significant opportunities to partner with large industry incumbents. Further, there are significant trends in the adoption and pursuit of healthy foods. The product is consumed daily and that presents significant opportunities in recurring and membership-based sales.

Competition

Differentiator:
This is the first company that has figured out how to infuse coffee with the health benefits of resveratrol and has filed patents to protect its technology.

Main Competitors

Vera Roasting Company doesn’t have any competitors that produce a coffee with resveratrol and its unique health twist. They do realize their biggest competition is other premium coffee brands that consumers enjoy drinking.
*Source: Portal Page

Company Financials

Revenue to date: $108,380

Revenue Last Fiscal Year: $76,233 (through November 2016)

Previous Funds Raised: $0

Use of Funds

  • Open a new pack and ship facility
  • Marketing, advertising, and customer retention
  • Create a buffer in their cash position to be able to invest in working capital

Exit Opportunities

The most likely exit for this company would be an acquisition by large industry incumbents.  The value of such a transaction would be predicated by the company traction and the nature of the protection ultimately granted by its patent(s).

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Dec 7. 2015 Keurig Green Mountain JAB Holding Company $13.9B
Oct 6, 2015 Stumptown Coffee Roasters Peet’s Coffee & Tea Unknown

Expert Opinion Summary

This company has proven with its early traction, that there is valuable interest from an array of customers and partners. When the leadership makes this venture its sole focus, the question will not be profitable/successful or not, it will be at what scale will this company be successful. The operations for this type of venture are not difficult.

In addition to ensuring competitive advantage through IP protections, the venture will be most successful by creating and managing a world-class brand. In the process of building this brand, the company should continue to develop strategic partnerships with more distributors and vendors in both the coffee and health foods industries.

AngelList: N/A
Crunchbase: N/A

Disclaimer

Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment. 

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Todd Mortenson

Todd Mortenson

Co-founder at Crowdfund Research
Todd is an accomplished executive with experience leading high growth ventures in addition to serving as a board director. Mr. Mortenson has played a leading role in the launching ventures across multiple industries from Real Estate to Hospitality to Manufacturing to Oil & Gas to Industrial Equipment to High Tech. Todd received his MBA with a concentration in Venture Management from the University of Saint Thomas and his Certificate of Director Professionalism from the National Association of Corporate Directors.
Todd Mortenson

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