Tiny Organics

Tiny Organics

Growth Stage

Organic and nutritious pre-made meals for babies and kids

Organic and nutritious pre-made meals for babies and kids

Overview

Raised to Date: Raised: $163,784

Total Commitments ($USD)

Platform

Republic

Start Date

05/08/2023

Close Date

07/08/2023

Min. Goal
$25,000
Max. Goal
$1,235,000
Min. Investment

$100

Security Type

SAFE

Series

Series B

SEC Filing Type

RegCF    Open SEC Filing

Valuation Cap

$12,000,000

Discount

0%

Rolling Commitments ($USD)

Status
Funded
Reporting Date

07/30/2023

Days Remaining
Funded
% of Min. Goal
Funded
% of Max. Goal
Funded
Likelihood of Max
Funded
Avg. Daily Raise

$2,730

# of Investors

308

Momentum
Funded
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Year Founded

2018

Industry

Food, Beverage, & Restaurants

Tech Sector

Non-Tech

Distribution Model

B2B/B2C

Margin

Low

Capital Intensity

Low

Location

NEW YORK, New York

Business Type

Growth

Tiny Organics, with a valuation of $12 million, is raising funds on Republic. The company makes organic and nutritious pre-made meals for babies and kids. The business is working towards cultivating healthy eating patterns and creating a willingness to try new things with its delicious and science-backed meals made using real and plant-based ingredients. Tiny Organics generated $5.5 million in gross revenue in 2022 and has delivered over 3 million meals since its launch. Sofia Laurell founded Tiny Organics in August 2018. The current crowdfunding campaign has a minimum target of $25,000 and a maximum target of $1.24 million. The campaign proceeds will be used for retail channel expansion and marketing.

Summary Profit and Loss Statement

FY 2022 FY 2021

Revenue

$4,829,496

$4,170,461

COGS

$3,899,386

$3,980,450

Tax

$0

$0

 

 

Net Income

$-6,559,131

$-4,989,375

Summary Balance Sheet

FY 2022 FY 2021

Cash

$171,474

$3,464,134

Accounts Receivable

$0

$0

Total Assets

$1,480,326

$4,235,697

Short-Term Debt

$4,065,034

$418,713

Long-Term Debt

$172,911

$16,108

Total Liabilities

$4,237,945

$434,821

Financials as of: 05/08/2023
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Overview

Tiny Organics sells organic baby food that teaches infants to love healthy foods from a young age. The foods are frozen, quick and easy to prepare, and taste great (I tried them myself)! The foods contain no added sugar or sodium and are extremely nutrient-dense, ranging from savory meals like Coconut Curry and Baby Burrito Bowl to sweeter options like Apple Pie Oatmeal and Bananas Foster. The company recorded nearly $5 million in 2022 revenue — exclusively through its website — and is planning a large retail rollout in the near future. 

Tiny Organics has been rated a Deal to Watch.

Next Section: Price

Price

Tiny Organics is raising at an extremely reasonable valuation of $12 million. This represents a valuation-to-revenue multiple of just 2.48x. This is one of the lowest revenue multiples I have seen in the consumer packaged goods space in quite some time, particularly for a company with such great traction. I believe this is a great entry point to invest in Tiny Organics.

Next Section: Market

Market

At a $12 million valuation, Tiny Organics will need to be valued at around $200 million in order for investors in this round to see a solid 10x return (accounting for dilution). 

The baby food market is worth more than $8 billion in the U.S. alone. Therefore, the market upside is clearly available for Tiny Organics to become a $200 million or larger company. If the company can reach $40 million in revenue, a 5x revenue multiple exit (standard for consumer packaged goods companies) would lead to a 10x return for investors in this round. Given the company’s strong direct-to-consumer traction thus far and plans to roll out retail in 2023 and beyond, I see Tiny Organics as a great way to gain exposure to this large market. 

Next Section: Team

Team

Tiny Organics is run by co-founders Sofia Laurell and Carolyn Batyske. Both of them have deep experience and expertise in building brands in the consumer packaged goods space. Sofia’s experience is on the marketing side and Carolyn’s experience is in managing supply chains for companies like Fiji and Beyond Meat. The founders have a nicely balanced skill set that I believe will continue to propel Tiny Organics to further success.

Next Section: Differentiators

Differentiators

The baby food market has always been dominated by processed and unhealthy purees created by legacy food companies. However, as younger generations are beginning to have their own kids, a demographic of health-conscious parents is beginning to take hold. 

Multiple baby food brands have answered this call. Once Upon a Farm, a frozen organic baby food company, has a run rate of $100 million and is essentially an exact competitor of Tiny Organics (however, it mostly sells in retail). Little Spoon is another large competitor valued at $300 million. Other than that, there are no other organic frozen baby food brands competing with Tiny Organics. And even so, this is not a winner-take-all market, so investors should actually be happy that Tiny Organics’ competitors are being valued so highly. 

Next Section: Performance

Performance

Tiny Organics recorded 2022 revenue of roughly $4.8 million, up about 15% since 2021. And the company is projecting that revenue will stay flat or rise slightly in 2023. That’s because the company is beginning to focus on diversifying its revenue mix beyond just direct-to-consumer sales via its website. The company has focused on growing its retail partnerships and will be launching in a couple dozen independent health food stores by the end of this year. Because of this, the company had to decrease marketing spend quite significantly and therefore will be seeing similar revenues in 2023 as it did in 2022. 

Next Section: Bearish Outlook

Bearish Outlook

The biggest risk with Tiny Organics is that the company is operating at a major loss (with a roughly $6.5 million net income loss in 2022). While strong revenue at the expense of deep losses is not all that uncommon with startups, it certainly adds to Tiny Organics’ risk profile. According to the co-founders, the company has enough runway to sustain itself through October, but is in active conversations with angels and institutional investors to help get the company to profitability in early 2024. Additionally, $2 million of the $6.5 million net loss happened in the second half of 2022. Therefore, the company is certainly improving its burn rate, but it is still substantial.

The bottom line is that the company will need a large capital infusion later this year in order to reach profitability and sustainability. That is the risk of this investment. Additionally, the company will need to have a very strong retail rollout in order to become an optimal acquisition target. It is too early to determine how Tiny Organics will perform in the retail setting, which adds another element to the company’s risk profile. 

Note: Tiny Organics has $4 million of short-term debt on its balance sheet. However, $3.5 million of that debt is in the form of convertible notes that will convert at the next equity financing round (so the company will not have to pay this money back in cash). 

Next Section: Bullish Outlook

Bullish Outlook

Other than the risks outlined above, Tiny Organics is an extremely attractive investment opportunity. When analyzing consumer packaged goods companies, investors must look at brand, traction, and team. Tiny Organics has phenomenal founders with highly relevant experience in the consumer packaged goods space. Beyond this, the company has established itself as a recognizable baby food brand with a loyal customer base. In fact, 95% of Tiny Organics’ orders come from subscriptions — a remarkable statistic. Tiny Organics’ traction has been phenomenal online (even without selling on Amazon!). With an Amazon listing and retail expansion around the corner, it’s a likely possibility that the company’s revenue will explode in the coming years. And at a valuation as reasonable as $12 million, I believe this is a no-brainer investment. 

Next Section: Conclusion

Conclusion

Organic, healthy, frozen baby food company Tiny Organics represents an opportunity to invest in a strong, women-led consumer packaged goods company that has built a strong brand and loyal following in just three years of business. The co-founders have done a great job of getting this company off the ground and generating millions of dollars in revenue. I certainly believe Tiny Organics has the potential to become a 10x investment within the next five years.

Report written by KingsCrowd Senior Investment Analyst Teddy Lyons on June 7, 2023.

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Tiny Organics on Republic 2023
Platform: Republic
Security Type: SAFE
Valuation: $12,000,000

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