Food and beverage startup The Naked Market bagged $27.5 million of Series A investment, led by Integrated Capital, to continue developing its line of healthier food brands.
The company was founded in 2019 by Harrison Fugman, Alex Kost and Tim Marbach, who created a “fast fail” method to develop new foods that includes an end-to-end infrastructure that can go from idea to market in about three months. The company also handles distribution.
On the other side is a proprietary data tool called The Machine that gathers over 15 million data points from places like Shopify, direct customer feedback, Amazon, retail point of sale and search engine trends, to unearth category opportunities for the company to pursue. In addition, a direct customer feedback loop enables The Naked Market to quickly gauge which products are winning with consumers so they can be scaled.
“This portfolio approach is different because we are using a data-driven fast fail strategy,” CEO Fugman told TechCrunch. “We can start to identify foods and bring them to market in a matter of months versus years, and if we see a brand does not have product market fit, we can shut it down quickly.”
Since its inception, The Naked Market has produced five brands, including Flock Chicken Chips, AvoCrazy, Project Breakfast and Beach House Bowls. Its latest brand, Rob’s Backstage Popcorn, is a joint venture with the Jonas Brothers.
Joining Integrated Capital in the round are Great Oaks Venture Capital, Pacific Tiger Group, Sope Creek Capital and Clearco. The Naked Market has raised over $33 million, which includes an earlier $6 million seed round.
Jeffrey Yam, executive director at Integrated Capital, met Fugman and Kost in Hong Kong and had already gotten to know them well when they presented Yam with their business plan.
Yam said he liked the approach of going after the market size and the white space for challenger brands. He also was intrigued by the data-driven technology.
“The data-driven approach to identify winners and losers early on makes them a perfect platform to go after this market,” he added. “Their ability to bring products to market in a short amount of time, with asset-light infrastructure, is a big opportunity.”
The Naked Market founders Alex Kost and Harrison Fugman. Image Credits: The Naked Market
Meanwhile, the snack food market was valued at $427 billion in 2020, and is expected to grow 3% annually through 2026. Fugman said a multibillion market like that “gets us excited to have this kind of landscape for disruption.” He notes that customer preference toward more healthier snacks over the past decade are giving companies, like his that are investing in R&D, a seat at the table.
“Incumbents aren’t investing in R&D, or if they are, they are spending low, single digits there, and this creates an opportunity,” Fugman added. “We are looking for categories where we can create a brand that goes after a market leader, and we feel that we have cracked the equation to identify the market and create a brand and reasonable scale.”
The Naked Market’s products have been on the market for just over 12 months, and the new funding will “pour fuel on that fire,” he said. The new capital will enable the company to scale its existing brands, create new products and pursue M&A opportunities.
The company has 10 employees and is experiencing triple-digit growth since its founding two years ago. Fugman expects to launch new brands in the first half of 2022.
For now, the company is selling online but has intentions of going into retailers in coming years and has some partners already lined up.