The ingestibles category received another stamp of approval from investors with Hum Nutrition finalizing $5 million in Series A funding from CircleUp Growth Partners, Imaginary Ventures and Strand Equity Partners.
The deal follows Unilever Ventures’ bet on Nutrafol, CAVU Venture Partners’ infusion into Vital Proteins, Goodwater Capital’s backing of Care/of and Founders Fund’s support of Ritual Vitamins, and demonstrates confidence in the upside of inside-out beauty as it matures from early adopters to a broad consumer base. A leader in the prestige beauty supplements business, Hum Nutrition has been buoyed by its rise and registered quarterly sales increases of at least 30% in each of the last 12 quarters.
“There’s been a lot of traction in the space, and it’s definitely growing. We see new entrants probably every couple of months. It’s really exciting to be a part of,” says Hum Nutrition CEO Walter Faustroh, who founded the brand with Chris Coleridge in 2012. “The biggest change I’ve seen is not so much the competition, but a real shift in the consumer mindset to understanding that everything they put inside themselves has an impact on how they look and feel.”
While American brands such as Borba and Nestle’s Glowelle faltered in pursuit of personal care vitamin shoppers in the past, the segment is climbing today due to a swelling interest in wellness, eye-catching design that makes Instagram posts pop, and millennial rejection of traditional antiaging solutions in favor of glow-boosting ingredients. Faustroh and Alison Ryu, managing director of CircleUp Funds, also point out that the current crop of ingestible products functions better than its predecessors.
“Hum has followed through on the efficacy. I’m a user of the product, and I feel the difference. I notice it day-to-day, and that’s incredibly important in this category to be successful,” says Ryu. She adds, “They have branded themselves in an incredibly distinct way. The packaging makes you feel great about what you are putting into your body. It’s bright, cheery and feels inviting, which the supplement industry has previously been the exact opposite of. Hum has positioned itself to welcome and include all consumers.”
Hum Nutrition’s colorful bottles and beauty-oriented formulas won over Sephora in 2014, and its retail distribution now spans Neiman Marcus, Dermstore, Nordstrom, Free People, Urban Outfitters, Anthropologie and Goop as well. Faustroh detects further prospects for Hum Nutrition to penetrate prestige retail, and suggests fitness and wellness outposts are promising avenues for expansion, too. Hum Nutrition sends nutritionists into stores to train salespeople on its merchandise.
“We love the channels we are in, and want to carry on building strong relationships there. It’s a good environment for the Hum brand, and there remains a ton of room,” says Faustroh. “You have to really think about where you consumer is during the days and weekends, and want to be present there. There are so many ways of being in front of that consumer, especially when you are talking about where health and wellness merges with beauty. Retailers that haven’t traditionally been in this game are thinking about getting into it.”
Although it has established a significant physical brick-and-mortar footprint, 70% of Hum Nutrition’s sales are direct-to-consumer. Subscription is a substantial revenue driver, and the brand is working to improve product compliance to enhance subscriber retention. Hum Nutrition’s assortment contains 38 items, and bestsellers are Daily Cleanse Clear Skin And Acne Supplement and Red Carpet Hydration Supplement.
In 2018, the brand anticipates launching three products. Faustroh is paying attention to probiotics and called digestion “huge.” Hum Nutrition will dabble in different types of ingestible products, but he indicated it wouldn’t venture into the topical territory. “I believe in focus. Let’s be good at one thing,” stressed Faustroh.
The Series A round will be put toward doubling the size of Hum Nutrition’s staff, which currently sits at 20 people, marketing efforts, and research and development to maintain an innovation edge in the ingestibles segment. Prior to the latest round, Hum Nutrition raised $2 million in two angel rounds.
Faustroh counsels fellow entrepreneurs to seek funds from a place of strength. Hum Nutrition crossed into the black quickly and didn’t chase investors because it desperately needed to replenish its financial reservoir. “That was helpful because it allowed me and my cofounder to really shop around for the best partners to grow this business with,” says Faustroh. “We didn’t have a gun pointed at our head that made us raise money by a certain time from anybody. My advice is, basically, don’t run out of cash.”
Faustroh continues that brand founders should make sure they have excellent chemistry with their investment partners and scrutinize the details of funding arrangements. “You want to fully understand the terms you are getting yourself into. It sets the precedent for the next deal. Once you have certain terms in your agreement, it’s going to be really hard down the line to change that,” he says. “You have to really think that through, especially when it comes to things like liquidity preferences and multiples.”
At the moment, Faustroh isn’t concentrating on the next deal. “Don’t think about an exit strategy. Think about building a fantastic business that grows and has a healthy bottom line,” he says. “We live in such a dynamic world. You never know what’s going to happen. What you can do is build a healthy business, really focus on that, and don’t focus on an exit and an artificial timeline.”
