TaDah! Foods is raising a SAFE with a $12.5 million valuation cap and no discount. The multiple for this valuation cap is rather high given the industry. Therefore, the startup’s deal terms are rated only slightly above average compared to the other active raises in our database.

The US plant-based foods market is worth approximately $5 billion. Compared to various other markets in the food industry, this particular market is quite small. But it’s growing at a promising compound annual growth rate of 11.4%. This small but fast-growing market gives the company an overall below-average market score.

TaDah! Foods founder John Sorial has a strong educational and work background. Sorial grew up in a family of food service and restaurant entrepreneurs. He holds a chemical engineering degree from the esteemed Johns Hopkins University. Additionally, Sorial’s marketing and sales experience at various companies lends itself well to his current venture. Notably, Sorial has been running TaDah! Foods and its parent company Eat Good Do Good for more than 10 years. His cumulative marketing experience, years of running Eat Good Do Good, and execution thus far lead to a strong team and founder score.

Although the plant-based foods market is still rather small, the increasing popularity of plant-based food products has brought many companies to the space. This means TaDah! Foods has plenty of competition. The company, fortunately, has significant product differentiation as its current offerings of non-processed falafel wraps and poppers look and taste much better than similar products. Unfortunately, it would not be difficult for current competitors to create their own frozen falafel wrap products. The company plans on releasing future products (unannounced as of yet) that may further differentiate it from competitors. Altogether, TaDah! receives an average differentiation score.

According to TaDah! Foods’ financial statements, it generated revenues of a little over $1.5 million in 2020, which represents 182% growth from 2019’s revenue figure. Although this is impressive, investors should consider that the founder started his brand more than 10 years ago. So the company should ideally have more traction at this point. Still, it’s undeniable that founder John Sorial has executed at a fairly high level with very little capital. TaDah! Foods’ products are sold in more than 3,500 US stores at high-profile grocers like Kroger, Whole Foods, and more. Investors should also consider whether Sorial can successfully raise more capital in the future given he has no formal fundraising experience, having only raised from family and friends up to this point. As capital and fundraising is the lifeblood of any early-stage venture, it remains to be seen if TaDah! Foods can successfully raise multiple rounds of capital from crowdfunding investors as well as institutional investors.

As TaDah! Foods’ products are not particularly definsible, it is entirely possible for a competitor to create similar foods at an even cheaper price in an effort to replicate TaDah!’s success. Additionally, the company’s valuation cap is rather high for a food consumer product brand. Companies in the retail grocery and food industry generally have a price-to-sales multiple of less than one. As this is a startup, the multiple will probably be higher. However, TaDah! is setting a multiple of over seven times, meaning investing in this round will make it hard to see the high return that investors crave.

TaDah!’s already successful raise could help the company accelerate its store expansion and product development, potentially leading to a massive increase in sales. Achieving such growth in the next five or so years would put the company in a good position to get acquired at a higher-than-average multiple. The nationwide trends toward healthier eating and veganism also create a greater opportunity for the company to grow. Lastly, the founder of TaDah! Foods, John Sorial, has done well to get TaDah! to where it is today, and there is little reason to believe that he can’t continue this success.

TaDah! Foods has a lot going for it. The company has seen healthy revenue growth, distributed its products to retailers, appeals to a growing market, and has a strong founder. However, investors should note the company’s products are overall not very defensible, and its valuation cap is quite high for its industry. Although revenue is decent, it could be much better since the company has been in business for over a decade. Finally, there is the question of whether or not this raise will allow the company to acquire institutional investors in the future. Thus, balancing the positives and negatives of the company, we ultimately gave it a Neutral rating.

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

Analysis written by Francis Vu.