Not Just Any Meal Kit Startup: Raised Real
As a single 23-year-old guy living in New York City, having a kid is last on my to-do list. In fact, the only time I think about parenthood is when my parents ask why I am still single – I, unfortunately, do not have an answer but am open to any (and all) suggestions.
However, it does not take a genius to understand how tough parenting can be. This is where Raised Real comes in. The Company aims at reducing the stress of parenthood through its ready-to-serve organically sourced baby and toddler meal kits. Since its inception in 2018, the company has served over 500K meals nationwide. Babies are not the only ones excited about what Raised Real has to offer. The Company has since secured $7.3M in funding, with the most recent injection of capital arising from Frozen Harvest Intelligence who invested $350K in April 2020.
I too think Raised Real is a promising startup that is poised to grow.
Raised Real meal kits include organic, allergen-free raw ingredients
Out with the Old. In with the New
Incumbents in the baby food space, including Gerber, Heinz, and Nestlé, have historically focused on providing quick, inexpensive, processed food. The Center for Science in the Public Interest warned in a 1996 report that baby foods made by Gerber and Heinz were “adulterated” and “nutritionally inferior” to homemade recipes. More recently, Billy Roberts, senior analyst of food and drink at market research firm Mintel, says that there were four times more product launches in the baby food aisle in 2018 than in 2005, with a majority of new toddler foods containing excessively high sugar content.
A snack bar for children contains 2 teaspoons of total sugars per serving. (Bill O'Leary/The Washington Post)
The good news is parents seem to be on the right track. As millennial parents become more health-conscious, buy more pelotons, and demand greater ingredient transparency, there has been a surge in demand for healthy alternatives that are both dense in nutrients and time-saving. Raised Real focuses exactly on this market trend by providing fresh, organic, ready-to-prepare meals for children aged six months to two years. Each Raised Real meal contains plant-based, allergen-free, and nutrient-packed ingredients that are highly beneficial during a child’s early developmental stages.
Massive Addressable Market + Industry Tailwinds = Clear Revenue Opportunity
As mentioned above, rising demand for ingredient transparency and healthier alternatives has sparked a spike in demand for nutrient-dense, organic baby food. The global organic baby food market (including ready-to-eat baby food, milk formulas, and dried baby foods processed without GMOs, preservatives, or colors) is projected to reach $11B by 2024, expanding at a CAGR of 10% during the 2019-2024 period.
As a result, incumbents are losing market share to new organic alternatives and even good old-fashioned homemade baby food. According to a 2014 New York Times article, the sale of processed baby food has been declining since 2005. As a result, Raised Real stands to benefit from consumer trends while the expanding market presents a sizeable revenue opportunity.
Business Model Fuels Growth
In line with other meal kit providers, Raised Real employs a subscription-based business model, offering 12 – 24 meals every 1 – 2 weeks. Revenues from subscribing customers boost top-line growth while providing increased revenue visibility; effectively empowering the Company to better handle impending business changes and manage expenses.
With this said, meal kit providers including Blue Apron and HelloFresh have come under fire for poor customer retention rates. Yet, I believe Raised Real can bypass this issue altogether. Babies, unlike their parents, are generally less picky and do not have the capacity to readily switch meal kit providers or cancel altogether (although there may be excessive crying involved). According to Santiago Merea, Raised Real’s cofounder and CEO, the customer retention rate is 80% after the initial box is shipped and 90% after the second box is shipped; this translates to a 72% retention rate after the first month. On the other hand, according to research firm 101Data, Blue Apron exhibits a dismal 50% customer retention rate after the second week.
Seasoned Leadership Team Increases Probability of Success
Raised Real was founded by Santiago Merea, former CEO of Orange Chef (acquired by Yummly in 2016). Since immigrating to the US from his home country of Argentina, Santiago has continuously tested and reimagined the way we approach cooking; from his first product, the Chef Sleeve, to the Prep Pad and other products sold under the Orange Chef brand name. Santiago later teamed up with colleague Steven Kontz, former CFO of Orange Chef, and Michelle Davenport, startup advisor and former Director of Nutrition for Zesty (YC ’14, acquired by Square) to scale Raise Real.
The star-studded advisory board includes Birchbox Co-Founder Mollie Chen, former TaskRabbit VP of Marketing, Jamie Viggiano, and Glossier co-founder Nick Axelrod.
By Gyan Kandhari