The Kombucha Shop secures $350k Shark Tank funding

Last night the “Sharks” on ABC’s Shark Tank — a version of  UK’s The Dragon’s Den — invested $350,000 in an online kombucha home brew kit supply company.

 

The Kombucha Shop (TKS) is the brainchild of Madison, Wisconsin-based Kate Field. Like many, she began brewing kombucha as a hobby and decided to share the benefits and the satisfaction of brewing it at home.

 

Kate bootstrapped her way to success. She started the company with $800 and grew it to $3.2 million in lifetime revenue. She is projecting $1.6 million in revenue this year and will take home $300,000 after taxes.

 

The Kit

The TKS home brewing kit is made of the highest quality components. They use 100% organic ingredients and provide step-by-step instructions—everything that a new brewer needs to get started as soon as the package arrives on the doorstep. The kit contains cultures grown using triple-filtered water, organic sugar, organic tea and organic kombucha starter to ensure that the end result contains the highest grade of beneficial acids and bacteria.

 

For $53.97 (which includes $8.97 shipping) or $48.99 from Amazon (free shipping for Prime members) you get:

 

• One Gallon Brew Jar with pre-printed “Brew Notes” on the side to keep track of each brew
• Organic Kombucha Culture & One Cup Liquid Starter
• 1/2 lb Organic Cane Sugar
• 15g Organic Loose Leaf Tea Black & Oolong Tea Blend
• Reusable Cotton Tea Bag
• Temperature Gauge
• Cotton Cover & Rubber Band
• Ph Test Strips
• Pipette -for sipping the brew prior to decanting
• Wet Erase Marker (for recording Brew Notes on the side of the bottle)
• A 16-page Brewing Guide

 

 

 

 

 

 

 

 

Everything is  locally sourced. The teas are from Milwaukee-based Rishi Tea and Michigan-based Arbor Teas.

 

Online Sales

From humble beginnings in a rented warehouse space, Kate’s operation now ships tens of thousands of kits a year. The Kombucha Shop has become of the largest and most reliable home brew kombucha companies out there today.

 

 

This multi-million dollar company has grown exclusively through online sales. Kate boasts “I crush it online.”

 

That’s surprising for two reasons. Kombucha making has obviously come a long way from the era when people were given a SCOBY from a college buddy or the cool guy they met while hitch-hiking through the Oregon backwoods.

 

The world has gone online in ways the original hippie brewers couldn’t have anticipated.

 

However, on the online space, TKS seems curiously difficult to find.

 

A quick search for ‘kombucha home brew’ on Google does not seem to list TKS in the sponsored ads.

 

 

A search on ‘kombucha home brew kit’ does list TKS in both sponsored and organic results. However, that seems a rather specific term — how many prospects would even know there’s a “kit” for kombucha.

 

Booch News was also surprised that TKS’s Twitter feed hadn’t been updated since March before going on a show where Sharks like Mark Cuban have over 7 million Twitter followers. Talk about a missed opportunity to go viral!

 

 

 

They’ve tweeted 185 times and have just 581 followers. On Instagram they have 4,214 followers and 246 posts. Facebook clocks in at 2,612 followers.

 

All these numbers seem on the low side. Given the annual revenue divided by the $45 cost of a kit would indicate well over 30,000 customers this year. And these are folks who buy online. Many might become fans and repeat customers if the company had a more active presence on social media.

 

The Pitch

Shark Tank aficionado Andrew Breiter-Wu summarized the pitch :

 

The night finished with an awesome woman bringing scobies to the tank! Her name is Kate Field and she is the founder of The Kombucha Shop. She is bringing affordable Kombucha brewing to households across the country.

 

Something that surprised many, is that Kate is making no claims for the health benefits of Kombucha. She stays focused on marketing the simplicity and affordability of her product to Kombucha lovers, rather than selling Kombucha itself.

 

She was asking the Sharks for $300,000 for 10% equity in her company to help guide her into getting into retail, i.e. Whole Foods. She’s crushing the direct to consumer sales online so why go into retail? She wants to diversify her sales channels and maximize her potential revenue.

 

Sara Blakely was interested but concerned that she would be taking 10% of the company just to make a call to Whole Foods. With further clarity from Kate, she explained that with the heat of competitors breathing down her neck, she needs the Shark’s resources to blitz the market and beat the competition.

 

Kate is a great designer, has a healthy physique as the face of the company, and has strong business success to date. Barbara and Sara offered $200,000 + $150,000 line of credit for 10% stake and Kate quickly closed the deal.

 

Mark wanted to make an offer but wasn’t able to get a word in before Kate accepted the offer with the ladies. It’s always great to see an entrepreneur that knows how to close a deal!

 

It was hilarious to see the initial reaction of the Sharks to both the SCOBY Kate displayed and their initial taste of the brew.

 

 

 

 

 

 

 

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What was astounding was the total ignorance of some of the investors about the drink. They didn’t seem to have tasted it before now. Indeed, the Shark who ponied up the money claims never to have never even heard of kombucha beforehand. Really? How can you live in New York and not noticed the chillers displaying hundreds of bottles at Whole Foods, Safeway or even WalMart (maybe high net worth people have others to do their grocery shopping!).

Company Culture

TKS certainly walks-the-walk when it comes to being environmentally friendly. Not only do they highlight this in their own operations, but they also seize every opportunity reuse and recycle.  This extends to paying a back-handed compliment to store-bought brands. All home brew enthusiasts collect empty booch bottles — if only to pass excess brew onto friends and family. TKS gives new life to old Kombucha bottles and turned a Health-Ade bottle into a pencil holder using a glass cutter!

 

Backers

 

TKS is backed by legal partner Venture Best who work closely with entrepreneurs, and with their venture capital and angel investors, to help new, high-growth companies find financial backing and grow their businesses. They help companies and investors make connections, structure and close transactions, and maximize returns. They also counsel early-stage businesses on their financial, organizational, and regulatory needs as they grow. But, no surprise, they only have 29 followers on Twitter. so the counsel fell short in that area.

 

Show Highlights

If you are in the US, you can watch the entire show online. However, since ABC geo-restrict their shows, anyone outside the USA won’t be able to watch. Click on the podcast below to hear audio highlights.

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