Baby Barista is raising a Crowd SAFE at a $10 million valuation with a 20% discount. Presumably, this valuation is driven almost entirely by Baby Barista’s intellectual property, as it has three patents for its bottle-preparing device. Baby Barista has not yet generated any revenue, and the company has a long way to go before proving that there is demand for its product. But given Baby Barista’s patent portfolio and discount, the company’s price rating is still a bit higher than average.

The US baby formula market was estimated at $3.7 billion in 2019 and is expected to grow at a compound annual growth rate of 5.8% to reach $5.8 billion by 2027. About 3.6 million babies were born in the US last year. As roughly 75% of infants are breastfed exclusively through six months, that leaves only about 900,000 infants that require formula each year. And many of those babies probably drink mostly breastmilk with only some formula supplementation. Overall, the baby formula market is quite small. 

So while a number of parents would undoubtedly benefit from Baby Barista’s product, this core of consumers is very small. Baby Barista’s universe of eligible buyers is reduced even more by the fact that the device will likely sell for at least $100, potentially limiting the market to higher-income families. All in all, Baby Barista’s market opportunity is very limited, so the company’s market rating is its lowest.

Baby Barista was founded by Cara Armstrong, a registered nurse and mom of three. She founded the company while caring for her youngest daughter, who has Down Syndrome and couldn’t breastfeed. During one of many late-night bottle feedings, Armstrong looked at her coffee pod machine and wondered why there wasn’t a similar option for baby bottles. Armstrong has led Baby Barista for almost seven years now and has an additional 12 years of experience as a nurse. 

Armstrong appears to be Baby Barista’s sole full-time employee at this early stage. The team also includes part-time advisors COO Sho Guo, CFO Lisa Silverstein, and Vice President of Sales Jud Currie. Guo is a marketing professional with an MBA from the UCLA Anderson School of Management. She previously held roles at NBCUniversal and Caesar’s Entertainment. Guo currently works for a different startup and is a startup advisor in her free time. Lisa Silverstein is a freelance accountant with an MBA from the University of Chicago Booth School of Business. Before obtaining her MBA and launching her accounting firm, Silverstein worked for four years as a senior financial analyst at the Walt Disney Company. Jud Currie is an experienced sales executive, specifically at baby food companies. He served as the director of sales in North America for Baby Gourmet and vice president of sales for Love Child Organics. He is now a sales consultant for emerging grocery brands. 

The Baby Barista team includes part-time advisors that have wide-ranging experience at major companies and within the baby food industry. However, none of these consultants appear to be heavily involved with Baby Barista’s day-to-day operations. The company is led solely by Armstrong. Armstrong’s personal founding story is inspiring, and her background as a nurse is certainly relevant to the development of an infant health-oriented product. However, she lacks business experience, and scaling the manufacturing and distribution of Baby Barista might prove a challenge. Thus, Baby Barista’s team score is below average.

Baby Barista is an innovative idea. Coffee pod makers have taken off in the last decade because they’re much easier to use than traditional coffee makers, and it makes sense to apply that concept to making baby bottles. Exhausted moms and dads would likely see the value in a device like Baby Barista immediately. Beyond the basic concept of an automatically-dispensing baby formula machine, Baby Barista seems to have taken care to develop a high-quality product that can seamlessly fit into the homes of new parents. The Baby Barista machine looks stylish and elegant. Its accompanying mobile app appears to be well-designed and helps parents save time by making a bottle from bed before they wake up to retrieve their crying baby. 

Baby Barista faces competition from at least three other formula-making machines: Baby Brezza, Baby Exo, and LivingEZ. Each of these products offer similar benefits. However, Baby Barista reports that its device is much better designed and easier to clean than these competing products. The other brands also seem to be less developed than Baby Barista. Baby Barista has a strong design and sleek branding identity, whereas the competition appears cheap and poorly marketed. Baby Barista’s authentic origins — built by a mother who has personally struggled with the problem her company is aiming to solve — also give it an advantage.

Overall, while Baby Barista faces competition in the formula dispenser category, it is a strong contender. The company’s product is supposedly better-designed than its competitors’ products, appears to be high-quality, and benefits from a compelling brand story centered on “mompreneur” Cara Armstrong. As a result, Baby Barista’s differentiation rating is its highest.

Baby Barista has been around for seven years, but the company hasn’t generated customer traction yet. It’s pre-revenue and plans to use proceeds from this fundraise to continue manufacturing and get closer to bringing the Baby Barista machine to market. Over the last two years, Baby Barista’s burn has been relatively low, with a net loss of $84,074 in 2019 and $5,832 in 2020. Developing the device prototype likely cost more than this, which might be revealed in expenses before 2019. 

Apart from financials, Baby Barista has made decent traction in developing a product and preparing it for the market. The Baby Barista machine was awarded three patents. Baby Barista secured a partnership with a formula manufacturer to develop its single-serve formula pouches (though Baby Barista gives no details on this partnership). Plus, the company reports that five retailers are interested in the device, though early interest isn’t yet proof of success. Lastly, Baby Barista has already raised $800,000 in capital from friends and family to build the business. 

There are some signals that Baby Barista is performing well, namely its portfolio of intellectual property, its funding history, and its partnership with a formula manufacturer. Financially, though, Baby Barista hasn’t made any income yet, so it’s too soon to say whether the company has developed a viable product. As such, Baby Barista’s performance rating is below average.

Baby Barista is a fairly risky investment with high scores across almost every category of uncertainty. Most notably, there is significant financial risk in that Baby Barista has not yet generated any revenue. A single founder who lacks business experience presents team risk. And the company’s product is merely a prototype at this point, so lack of distribution proof sparks product and time risk. Overall, there are many reasons for prospective investors to pause and consider that there’s no guarantee of a return from Baby Barista.

Though Baby Barista has been in development for seven years, the company is still extremely early-stage with no proof of product-market fit. While the Baby Barista device has been patented, it has not yet been sold to any customers or distributed by any retailers. The company still faces many hurdles in manufacturing before a consumer launch, and its team doesn’t have any experience navigating the manufacturing process for a complex machine like this one. 

Moreover, Baby Barista’s target market is very small. The majority of infants do require some formula preparation, but most of these babies likely drink a hybrid of breastmilk and formula, so their parents might not find it worthwhile to buy an expensive formula dispenser for the small number of bottles they need to prepare each day. That means that Baby Barista’s potential universe of customers is limited to the low millions each year, even if the company reaches 100% saturation (which is essentially impossible, particularly at Baby Barista’s presumably high price point). With no proof of distribution so far and serious doubts as to whether Baby Barista can ever be distributed widely, prospective investors might feel that an investment in Baby Barista is simply too risky.

Baby Barista’s founder, Cara Armstrong, founded the company because of a problem she faced as a mom. The company’s brand is built around this compelling founding story, and it has generated decent press as a result. Plus, the Baby Barista machine is consistent with the polish of the company’s founding story. The formula dispenser is elegantly designed and would be a natural fit on the kitchen counter of millennial parents. It also seems to be high-quality and easy to use, particularly via a mobile app, which differentiates Baby Barista from its handful of competitors. 

Baby Barista has a long way to go before it achieves consumer success, but many key ingredients are there: three patents, a subscription-based business model, a compelling founder made for PR, and a strong team of advisors with good corporate experience. This is a risky investment opportunity due to the company’s lack of customer proof, but there are reasons to believe that Baby Barista has what it takes to build a strong brand in the baby industry.

Baby Barista is a Keurig-like machine that helps parents make formula bottles for their babies. The elegant machine can dispense bottles at precise temperatures and sizes with the touch of a button, either on the front of the machine or through the Baby Barista mobile app. It’s a high-quality, elegant product that meets an obvious need for parents, and Baby Barista’s founder is an excellent spokesperson with a very compelling origin story. 

On the other hand, Baby Barista is merely a patented prototype at this point. There’s no proof of product-market fit, and the company has a long way to go in manufacturing and distributing these complex machines. The market for bottle dispensers is also very narrow, with only a couple million infants requiring formula each year. Therefore, Baby Barista has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.