Real Food Blends, a Chicago-based specialized food startup, announced a $550,000 seed-funding round Tuesday.
More Top Picks Apple 2024 Macbook Pro
The company, which makes all-natural, real-food meals for people on feeding tubes, will use the money to scale up, as sales shift from online-only to distribution through home health care companies, founder Julie Bombacino said.
“We’ve gotten to the point where we’ve proved the concept,” Bombacino said. “We sold tens of thousands of meals in May.”
She declined to give more specific sales figures, either in meals or revenue. But she said the three-year-old company’s emerging track record was enough to convince angel investors.
“It’s easier to get funding when you have sales, and data,” she said.
Harry Gottlieb, founder of Jellyvision and one of the investors in this round, said it wasn’t a hard call.
“Who doesn’t want to invest in something that is going to do so much to help people who really need help and that also promises such a strong economic return?” Gottlieb said.
Other investors in this early round include Jellyvision CEO Amanda Lannert, Lon Chow of Apex Venture Partners, Matt Spiegel of FireStarter Fund, Rick Poulton of Allscripts, Michael Katz of Interclick/Yahoo and Jeff Cantalupo of Listen.co.
Bombacino started the company in 2011 out of concern that her young son, who received all of his nutrition out of a ready-made formula administered by a feeding tube, was not thriving. She searched online and discovered a group of people who were blending real food for use in feeding tubes. She began experimenting, first with baby oatmeal, then with other foods.
Once Bombacino mastered meal-making for her son, she said, she began to hatch the business, first drawing up a business plan, then working with nutritionists to build a balanced meal for an eight-ounce pouch. Then she turned to scientists to make the product shelf-stable.
Bombacino in 2013 raised $15,000 on the crowd-funding site Indiegogo, in part to bring in cash but also to raise awareness, she said. The next challenge was getting insurance companies to cover the cost of her product for consumers. She said Tuesday that about half her sales come through home health companies from people whose insurance companies pay for the product.
“It depends on your condition,” she said of insurance coverage. “It also depends on what state you live in.”
At the start of the year, she said, all of her sales came online from customers paying out of pocket. As insurance coverage of her product increases, she said, she expects most of her sales to come through home health care companies.
Real Food Blends sell for about $4, which Bombacino said is more expensive than basic formulas but far less than more specialized products. She said her main competitors remain large food manufacturers.
She acknowledged the possibility of acquisition.
“I wouldn’t take anything off the table,” she said. “But our goal right now is to grow the company.”
Bombacino said she’ll likely seek a Series A round sometime next year.
“Her tenacity is unbounded,” Gottlieb said of Bombacino, with whom he said he worked in her previous role, as director of marketing for OptionsXpress. “There are certain entrepreneurs you meet, and you think: ‘They are going to succeed no matter what.'”
More Top Picks Best Wireless Mouse