Vital Proteins Plans Collagen Product Expansion With Funding From CAVU Venture Partners

Vital Proteins has secured a large dose of supplemental income.

CAVU Venture Partners poured $19 million in Series A funding into the Chicago-based collagen-boosting nutrition company that sells products in over 8,000 doors at a wide range of retailers, including Whole Foods, Sprouts, Neiman Marcus, Urban Outfitters, Free People, Anthropologie and GNC. Vital Proteins joins Bai, Bulletproof and Health-Ade Kombucha in the growth equity firm’s investment portfolio. 

“I wasn’t even in the market for investment,” says Kurt Seidensticker, founder and CEO of Vital Proteins. “I had individuals and firms approach me and ask to invest. About 30 to 40 people and firms, and one or two were of interest, meaning, I said, ‘Ok, I’ll sit down and listen to you guys, and see what you’re thinking.'” Referring to CAVU specifically, he adds, “I recognized their authenticity, their partners having built iconic brands, that they had walked a journey that I had walked, that they could relate to what I had going on. I thought that would be a valuable partnership to have.”

CAVU believes Vital Proteins is poised to accelerate growth along with a burgeoning demand for inside-out personal care. “Ingestible beauty products are appearing in not only health/wellness and beauty retailers, but also in supermarkets and other retail outlets that want to promote healthy living,” says Bader Alam, senior vice president. CAVU Venture Partners. “We think Vital Proteins is particularly well positioned to capitalize on this trend, given their passionate consumer base and leadership position in the collagen nutrition segment.”

Certainly, Seidensticker is pleased with the result of the CAVU deal, but he acknowledges the fundraising process wasn’t entirely easy. “Because I hadn’t really been seeking out investment partners, I definitely wasn’t prepared for the challenge of putting everything in order to take out an investment: Putting together the pitch deck, the financial reports, the strategy — what do you intend to use the funds for,” he says. “That took months. I would say they took half of my time for 10 months.”

“Because I hadn’t really been seeking out investment partners, I definitely wasn’t prepared for the challenge of putting everything in order to take out an investment: Putting together the pitch deck, the financial reports, the strategy — what do you intend to use the funds for,” says Vital Proteins founder and CEO Kurt Seidensticker.

Seidensticker warns fellow entrepreneurs seeking to attract investors that it takes money to raise money. “It’s not cheap. I think we spent 5% of what we raised to do the deal. We had to bring in attorneys and accountants. I had created the company without the intention of bringing in venture capital, so I had to restructure it,” he says. “Also, prior to this, I did all the accounting, so we had to bring in an accounting firm to review financial statements.”

Seidensticker recommends entrepreneurs wait until their companies have achieved a decent amount of success before chasing outside funds. “An investor is not going to create growth, they will fuel your growth, so a brand has to have growth already. A brand has to have viable product, viable growth, viable margins,” he asserts. “When you’re out there seeking to raise money, you really want to have a value proposition, and you want investor to come to you. You do that through great marketing, great growth and a good brands story, and be prepared to tell that story when the time is right.”

Vital Proteins Kurt Seidensticker

Seidensticker indicates the sum CAVU injected into Vital Proteins speaks to the brand’s prominence in the ingestible segment. “We were growing 200% to 300% year-over-year for the past three years,” says Seidensticker. “We had sufficient capital to fund our growth, but, when you look at [the fact that] we’re the market leaders in the collagen space, it’s really on us to educate the market. When you’re growing at that rate, and you’re taking on the leadership, it takes additional capital.”

The funds are slated for efforts to educate consumers, raise brand awareness, bolster retail support and amplify Vital Proteins’ product assortment. In addition, the brand is building a new corporate office and manufacturing facility. Although Vital Proteins has amassed a sizable retail network, Seidensticker points out there is considerable room left in the retail universe for the brand. “If you look at our revenue, our wholesale customers only make up a small percentage,” he says. “We have a lot of direct to consumer [sales], so I think there’s a lot of white space on the wholesale side.”

Stores are still catching on to collagen products, and Seidensticker believes their enormous potential hasn’t been realized. “We’re creating a new category of inner or ingestible beauty. Collagen is such an amazing protein for health and beauty, compared to plant and dairy proteins,” he enthuses. “I’m always out talking to people about collagen and I’m only seeing a 5% to 10% recognition of the category. Even in L.A., people will say ‘Ingestible collagen? What?’ That’s the opportunity. We probably do 250 demos a week in stores and I see really expanding that education to let people know about ingestible collagen. I want to get out there and do a national education campaign.”

Retailers are rethinking merchandise strategies to incorporate ingestible items. Seidensticker contends additional shelf space is ripe for Vital Proteins’ taking. “If you go into Whole Foods, we’re in Whole Body. With larger mass retailers like Target, we’re in the natural beauty section. With other stores, I see us as a good fit for the inner beauty sections or ingestibles sections,” he explains. “Those are new, emerging categories, so some of the larger mass retailers are just developing them, and I think there’s a large opportunity for them to expand.”Vital Proteins