NBJ
'We'll Get Financing': Q&A with MooBella

'We'll Get Financing': Q&A with MooBella

Nutrition Business Journal spoke to Ted Gerlach, controller at MooBella, while reporting our issue about the finance & investment climate for nutrition companies. Our conversation provides an insider's perspective on the challenges of being an industry entrepreneur in this difficult and prolonged economic downturn.

Before summer makes way for falling leaves and Sunday football, there's a story about ice cream waiting to be told. Many industry insiders will know of, or at least have heard of, MooBella, the maker of hard ice cream on demand. The company has been around for years in various stages of development, but a large investment from Inventages last year ($18 million) took MooBella's disruptive and innovative approach to ice cream from concept to practice. The company now has 30 machines located in 4 states, and is focused on expanding that footprint. MooBella is also focused on the capital markets, as it should spend through its current funding in the next four to six months.

Nutrition Business Journal spoke to Ted Gerlach, controller at MooBella, while reporting our current issue about the finance & investment climate for nutrition companies. Our conversation provides an insider's perspective on the challenges of being an industry entrepreneur in this difficult and prolonged economic downturn.

NBJ: How hard is it to raise financing right now?

Ted Gerlach: It's tough. The economy is a reality. There's money out there, but it's not available at the frantic pace you saw in the past. With MooBella, we're not truly a startup, but we are still proving our technology, so we're not in a lot of investors' sweet spot. Food capital players tend to want an established brand and proven economics. We're just not there yet. We've only been in the commercial phase for a relatively short period of time. It's a challenge, but not insurmountable. We just have to find the right partner, given our stage of development.

NBJ: Where do you find the right kind of investment partner?

TG: A year ago, the economy was cratering and we were still in the laboratory. We still carried a lot of technology risk. Now we've answered a bunch of those questions. The investment from Inventages allowed us to complete development and launch commercially, so we'll definitely talk to them again. We'll always talk to Inventages. If we had 12 months of data in the field—how consumers are buying, how robust the technology is—we'd have more options in this environment. We do get some of that—'Come back to us once you've seen more from the marketplace and we'll talk.'

NBJ: Do you think MooBella's valuation has improved during the downturn?

TG: Until somebody inks the paper and wires the money, it's all just guessing and opinions. I do think our valuation has improved, but we're not far enough into the process to talk specific valuations. Is the next round an increase over the last round? Is it a down round? That remains to be seen, but I'm optimistic.

NBJ: Are you confident you can secure another round of investment within six months?

TG: No doubt. We're expecting deeper due diligence, but we'll get financing. It's a process. You line things up and then just work it. Our next partner could be Inventages, or it could be someone else. We're also making some inroads with strategics, now that people can see the process and taste the product.
 

NBJ bottom line: There is light at the end of the tunnel

Maybe it's not so bad out there after all. More to point, maybe the company's technology is innovative enough—MooBella machines can make fresh ice cream on demand in any number of new retail locations; and the distribution process for ingredient mixes requires no refrigeration, opening up entirely new sales geographies—to attract financing from industry investors, and maybe the company has successfully weathered the darkest part of the economic storm. If Gerlach encounters warmer faces across the table during his next round of financing, we'll have more anecdotal evidence that future growth and expansion for nutrition companies is on steadier ground. As we report in our current issue, the mood among investment professionals is one of cautious but growing optimism, and there are increasing data points suggesting that more deals are starting to happen across the spectrum—from strategics to private equity to venture capital.
 

Related NBJ links:

Global Supplement & Nutrition Industry Report 2010
 

2010 Healthy Foods Report
 

NBJ Asks Industry Executives: Is There Light at the End of the Economic Downturn?