Plant Protein Looks Strong with Sunwarrior

Key Stats:

Summary

Sunwarrior has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10%-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com.

Problem

Fitness enthusiasts and healthy eaters often use protein powder and other dietary supplements to complement workouts and low-fat diets. The most common type of protein powder is whey, which is derived from dairy products. While whey protein is an effective choice for muscle-boosting protein powder, it is not an option for vegans as they do not consume animal products. 

Vegans enjoy many health benefits from their plant-based diets. Some studies have shown that meat proteins — such as those derived from dairy products — increase the risk of cancer and other serious medical conditions. In addition, plant-based diets reduce environmental impact from the consumption of animal products. Animal farming generates more greenhouse gas emissions than all vehicles (cars, trucks, busses, ships, and airplanes) in the world combined. 

Americans are steadily showing more interest in veganism, or at least a diet more heavily rooted in plants. Nearly seven in ten Americans indicate that they are trying to consume more plant protein, and 52% say that their diet has changed to favor more plants. Over half of Americans report making a permanent diet change toward plant-based nutrition. 

The Game Changers, a recent documentary produced by director James Cameron, Arnold Schwarzenegger, and Jackie Chan, highlighted the impact of a plant-based diet on strength and fitness. It disproved the common assumption that animal products are necessary for elite athletics. The film became the best-selling documentary on iTunes in less than a week. 

The popularity of plant-based protein powders and meal supplements is growing rapidly. More and more companies are competing to replace the staples of meat consumption with plant alternatives. Interest in plant-based protein is at an all-time high. There are millions — perhaps billions — of dollars waiting to be spent on vegan products.

Solution

Sunwarrior is a plant-based nutrition company selling 20 product lines of vegan protein powders, meal supplements, and vitamins. Founded in 2008, Sunwarrior is an established leader in the plant-based protein powder market, with over $168 million in lifetime sales over the last 12 years. 

Sunwarrior produces a large line of products that include various flavors and formulations of protein powder, supplement powders to boost consumption of superfoods and collagen, nutrient pills, and essential oils. Each of these products are vegan, containing no dairy or other animal byproducts. Many are also gluten-free and keto-friendly. All of these SKUs are produced in Sunwarrior’s in-house manufacturing facility, which allows the company to efficiently develop new products and consider licensed manufacturing opportunities as available. 

Sunwarrior products are primarily sold in retailers around the world. U.S. partners include CVS Pharmacy, Whole Foods, GNC, HyVee, King Soopers, and several other major chains. Products are also sold in 67 countries worldwide, for a total of 12,000 retail locations. Sunwarrior also sells some units direct-to-consumer via the Sunwarrior website and offers certain products on Amazon. 

Because Sunwarrior is an established business with significant cash flow, it has 37 employees staffing in-house sales, marketing, and manufacturing teams. This team generated almost $18 million in revenue in 2019, operating at a net loss of roughly $1.1 million. Investors can purchase shares of Sunwarrior at a $58.8 million pre-money valuation. 

The Team

Sunwarrior was founded in 2008 by Nick Stern and Denley Fowlke, natural health enthusiasts and entrepreneurs. Though Fowlke seems to still be involved in the business, the company is managed day-to-day by a separate team of executives. 

Emerson Carnavale, Sunwarrior’s CEO, initially managed the company’s supply chain before transitioning into the executive role. His previous experience comes from UPS, Honeywell, and Henkel, where he worked in inventory analysis and purchasing. 

Sunwarrior’s COO Cody Roberts has over 15 years of experience in operations, product distribution, and capital management. He has been with the company for 10 years, in roles ranging from CFO to Chief Product Officer and head of international sales. 

Wesley Williams, the company’s CFO, spent almost 20 years as the controller for home builders and landscape companies. He has served as Sunwarrior’s CFO since 2011. He is also a Certified Personal Trainer and fitness enthusiast outside of his day job. 

Ryan Blad, Sunwarrior’s CMO, graduated with an undergraduate degree in Graphic Design and an MBA in Design Strategy. He served in Senior Designer and Creative Director roles before joining the Sunwarrior team in 2014. 

Finally, Sunwarrior’s Chief Sales Officer is Russ Crosby. Before joining the Sunwarrior team in 2010, Crosby spent seven years at Kroll Inc, a risk consulting firm. 

Growth Plan

Sunwarrior believes that the true value of an established plant-based brand and in-house manufacturing facility is the ability to move quickly to develop and launch new products. The company cites recent expansions into plant-based collagen and keto-friendly products as examples of product additions that Sunwarrior developed rapidly and saw immediate success from. 

Beyond the hint of new product lines, Sunwarrior is stingy with specific details for growth and expansion. Capital raised in this round will be primarily used for working capital to “catch up on vendor payable” and invest in additional inventory, with the remainder devoted to marketing and brand-building.

Why We Like it

• Proven concept and strong revenue: Sunwarrior is far from an early-stage startup. The company has navigated over ten years of operations and is approaching $200 million in lifetime revenue. Sunwarrior began developing plant-based protein powders and supplements before the recent popularity of that category even began and is well-positioned to capture that increased market growth as a leading brand. In addition, Sunwarrior’s in-house manufacturing facility provides a significant advantage over incoming competitors. The company is poised to develop and launch new products at rapid pace, adapting over time to the new demands of the market.

• Growth of the plant-based protein market: The worldwide plant-based protein market is estimated to reach $35.54 billion in 2024 — a CAGR of 14% between 2020-2024 — spurred in part by the rapidly-expanding vegan population. Sunwarrior is an international brand with potential to capture an increasing share of this market as it continues to expand. Additional retail partnerships and product launches could direct more and more of those billions into Sunwarrior’s wallet. 
  

Rating

Investors have the opportunity to invest in an established and successful business in Sunwarrior, a rare opportunity among startups. This proven traction combined with the significant market opportunity for plant-based protein powder means that investors’ likelihood of reaping a return is higher with Sunwarrior than with most other crowdfunding candidates. 

This exact fact, that Sunwarrior’s business is more established than most startup funding candidates, may give other investors pause. Many efficient businesses would be generating sufficient free cash flow at $18 million in annual revenue to fund channel expansion opportunities without the need for additional capital raises. Sunwarrior’s valuation of $58.8 million may also give prospective investors pause. It’s worthy to note that all investors receive a lifetime 15% discount on Sunwarrior products. It is possible that this capital raise is merely a user acquisition tool to bolster other marketing and growth efforts. Investors may receive such a small share of the Sunwarrior pie that returns would be limited even if the company experiences successful exit. 

With regard to exit, Sunwarrior may have several paths to choose from. The company has many characteristics of an attractive private equity acquisition. For example, the private equity firm Butterfly acquired a majority stake in Orgain (an organic protein product company) last year. Other food brands might also consider adding plant-based protein supplements to their product mix. Hershey acquired ONE Brands, maker of protein bars, last year supposedly to increase the breadth of its snack portfolio. Sunwarrior might also be a candidate for IPO. BellRing, the maker of popular protein products Premier Protein and Power Bar, debuted on the NYSE last October.

Sunwarrior has experienced significant growth over the last 12 years and promises to continue capturing a growing portion of the trendy plant-based supplement market in years to come. The company’s proven traction matched with the undeniable opportunity in this space — including a variety of exit opportunities — makes Sunwarrior a Deal to Watch.