Before startups go out and look for investors, they typically put their own money into the business. Some may get investment from family and close friends. This is commonly referred to as Pre-seed Funding.
Seed Funding is the first official equity funding stage. It typically represents the first official money that a venture raises from outside their inner circle of friends and family. Fun fact: less than 10% of startups ever make it to the next step.
The next step is the first Seed Funding campaign, referred to as a Series A. Founders typically move to secure Series A funding after they’ve developed an established user base and consistent revenue figures. Investors who part with their cash in a Series A are looking for more than a great idea and/or a great product. They want to see a strong strategy.
The investors involved in the Series A round come from more traditional venture capital firms. Well-known venture capital firms that participate in Series A funding include Sequoia Capital, IDG Capital, Google Ventures and Intel Capital. Sometimes, funders turn to Crowdfunding platforms instead of venture capitalists. We see a lot of that in coffee.
To move a company beyond this development stage, founders move Series B funding. Companies that have gone through seed and Series A funding rounds, have already developed substantial user bases and have proven to investors that they are prepared for success on a larger scale. Series B funding is used to continue to build a winning product and grow the team beyond the initial founders. The hiring starts for business development, sales, advertising, tech, support and other employees.
This is the stage Fellow is in today. On June 15, 2022, Fellow’s founder, Jake Miller, announced that the company has raised $30 million through a Series B funding round.
Leading the Series B round was NextWorld Evergreen, a growth equity firm also based in San Francisco that focuses on “conscious” consumer brands. Miller told Techcrunch:
“Over the years, we’ve learned that achieving our mission to help customers make exceptional coffee at home is more than just about great product design; it’s also about giving them access to the best quality beans and equipping them with guidance on how to use those products. This new funding will allow us to expand what we do and move our brand into this position.”
The funding will be used to accelerate product innovation, expand its retail footprint (construction is already underway on a second brick-and-mortar retail storefront in Venice, California), recruit additional talent and invest in something we keep circling back to here on FLTR, Education. Fellow will invest more into offline and online platforms designed to educate the consumer on how to brew the best coffee at home.
The $30 million investment is a milestone for another reason. In 2013, no investor would consider Fellow. And so they turned to Kickstarter to raise money for their first product, the Duo Coffee Steeper. The campaign raised $200,000. Which sounds fantastic. Until you consider it cost Fellow $330,000 to fulfill those Kickstarter orders. Since then, the company grew 100% for 8 years running and grew from 2 employees to 4 to 10 to 20 to 30 to today, 85 people.
For this writer, Fellow is one of only 3 brands who I look forward to seeing what they do next. The other two are Apple and Porsche. And like Apple and Porsche, Fellow is no longer a bootstrapping startup.