Natral is raising on a convertible note at a $6 million valuation with a 20% discount. This valuation is low compared to the average crowdfunding deal. And though Natral has only made about $20,000 in revenue so far — making its valuation a 300 times revenue multiple — this price is very attractive for investors. The nature of convertible notes means investors are assured a fixed income. And the 20% discount and low convertible note interest rate mean that investors will get a good deal. Natral also reportedly holds patents that increase the company’s inherent value. Therefore, the company’s price rating is its highest.

The global market for protein supplements (including protein powders, protein bars, and ready-to-drink options) was valued at $18.9 billion in 2020 with an expected CAGR of 8.4% over the next seven years. North Americans consume the most protein powder, accounting for more than 50% of global revenue share. That means the US market for protein supplements was roughly $9 billion last year. 

The market is currently dominated by more traditional protein options. Animal-based proteins, namely whey, are driving two-thirds of revenue share worldwide. However, the plant-based protein segment is expected to have the highest annual growth rate over the next several years. 

Natral’s beetle-based protein powder offers a few advantages over traditional options. It has far fewer ingredients and is more environmentally sustainable than whey protein. However, Natral will likely struggle to capture significant market share for many years. It will take time for the market to come around to an entirely new form of protein, particularly one made from something as unusual as beetles. While the total addressable market for protein supplements is reasonably sized, Natral’s obtainable slice is quite small, leading to the company’s low market rating.

Natral was founded by Lucas Wright (CEO) and Eli Fouch (COO), who are childhood friends and fitness enthusiasts. Natral is Wright’s second entrepreneurial venture. He previously started a renewable energy installation company in Alaska and managed it for three years. Fouch studied briefly at Saddleback College (it’s unclear whether or not he received a degree), then spent two years as an operations project manager for a fence installation company in Alaska. 

Both of Natral’s co-founders are quite early in their careers, lack impressive credentials, and aren’t experienced in consumer goods companies or the food industry. Natral might struggle to scale without a more sophisticated direct-to-consumer leader. That’s why the company’s team score is its lowest.

The protein powder market is crowded, with a number of market leaders and a steady stream of new entrants innovating new flavors, nutrition profiles, and more. At its core, though, the protein powder market lacks variety. The most standard protein powder options are whey-based, with 66% of the market share. Compared to the primarily whey-derived competition, Natral is well-differentiated. Protein derived from beetles is unusual, and Natral has a strong argument as to why beetle protein beats whey and plant-based options. It claims beetle protein is more naturally nutritious with a balanced amino acid profile; beetle protein production is more sustainable for the planet; and its products contain just three ingredients. Importantly, Natral has reportedly filed for three patents to protect its proprietary beetle derivation process. 

It’s worth noting that Natral is not the only insect-based protein company. Insect protein is gaining steam for its environmental and health benefits. But no clear market leader has emerged yet, so Natral could potentially benefit from a first-mover advantage (particularly within the niche of beetle protein). 

All in all, Natral offers a compelling rationale for why beetle protein is better than existing alternatives, and the company holds intellectual property to shore up a competitive moat. That’s why the company’s differentiation rating is one of its highest.

Natral is a very young company. It launched its first protein powder in March 2021, so prospective investors have less than six months of performance data to analyze. In addition, Natral understandably doesn’t offer audited financials for 2021 yet, so it’s impossible to assess the company’s exact revenue and spend for this year. 

Anecdotally, Natral reports more than $20,000 in revenue since products launched in March. Its 2020 financials help paint a slightly more complete picture. Last year, the company generated roughly $12,000 in revenue (it’s unclear how it made money before products launched) and incurred a net loss of $108,776. That’s a reasonable burn rate for a product that requires meaningful research and development. 

In terms of other traction, Natral reports having raised $300,000 so far from food tech venture capitalists (VCs), but doesn’t specify which firms. The company also claims to have forged retail partnerships, but it offers few details on that. Finally, Natral’s customer reviews (though few) are quite strong, with a 4.95-star average on the company’s website. 

Natral is a very early-stage company, and it’s too soon to tell whether its beetle-based protein powders have achieved product-market fit. Early signals are positive, though, with decent launch sales and partnerships with VCs and retail stores. Thus, Natral’s performance rating is one of its highest.

Natral is a very young company that only began selling its products in March 2021, so this is a relatively risky investment. The primary source of risk is the company’s finances. With only $12,000 in revenue on the income statement so far (2021 revenues aren’t yet reflected), there’s little proof that Natral can actually make money. There’s also some funding risk, given that Natral will likely require a good deal of capital to shore up manufacturing and distribution (plus additional product development). Details on Natral’s current venture capital relationships are sparse, so investors can’t be sure that the company will have the capital needed to scale.

Natral has only been selling its products for a few months, so it’s unclear whether its beetle-based protein can carve out a slice of the protein supplement market. Without hard evidence on product-market fit or revenue generation ability, it’s difficult to have confidence in the company’s key fundamentals. Plus, there are a few negative signals. Natral’s founding team appears inexperienced and lacks domain expertise. The company also doesn’t offer much insight into venture capital backing or retail partnership traction.  

Prospective investors should also note an interesting point on Natral’s raise page. The company plans to open a gym in late 2021. A Natral-branded gym will ostensibly grow the Natral brand and generate additional revenue from a similar demographic of customers, but it’s unclear why Natral would expand into gym ownership rather than doubling down on product innovation and distribution. It’s usually very difficult to scale a direct-to-consumer food company. Things like securing retail partnerships, improving supply chain to increase margin, building a widely-known brand, and many more are very time-consuming and should be the sole focus of Natral’s small team at this stage. The expansion to gyms could represent a lack of true focus and vision. 

Overall, it’s too soon to say whether Natral’s beetle-based protein powder can really take off, and there are a few operational concerns: lack of founder experience, little transparency about partnerships, and arguable lack of focus. Any of those might be reason enough to reconsider investing.

A protein powder made of ground beetles may not be particularly appealing at first, but the formulation has clear advantages upon closer investigation. First of all, whey protein is inextricably linked to the massive greenhouse gas emissions of the dairy industry. Any fitness enthusiast concerned about environmental sustainability would likely agree that low-carbon beetle pulverizing is a greener alternative. Beetles are also clearly a better source of protein than plants. It’s difficult to find plant-based powders with as many grams of protein as animal options. And Natral’s products have only three ingredients, which is a clear advantage in its pitch as a clean, all-natural fitness supplement. 

Natral doesn’t provide much detail about the patents it has filed, its venture capital backers, or its retail partners. But if all of those facts hold up to scrutiny, the company has made good progress in developing proprietary products and bringing them to market. Customer reviews are strong thus far, and if buyers continue to believe that Natral protein powders taste good and offer clear nutritional benefits, Natral could build a strong consumer brand. If growth continues, Natral could even be a target for acquisition by a health foods company looking to replicate beetle protein production, which could be great news for investors.

Natral is a protein powder company with a proprietary method of farming darkling beetles and transforming them into highly nutritious protein powder. Natral’s products are well-differentiated, even in the crowded protein powder landscape, and the company has filed for three patents on its vertical farming approach. Plus, early customer reviews are quite good, and the company generated $20,000 in sales in three months after launching earlier this year. 

On the other hand, investors have little operating history to evaluate. It’s far too soon to say whether beetle-based protein powder can succeed in the market. Natral’s founders are also very inexperienced, which could be why the company is choosing to open a gym rather than double down on product innovation and distribution. Therefore, Natral has been rated a Neutral Deal. 

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