‘We always joked that the elephant in the room was the elephant in my dress,’ Yumi cofounder Angela Sutherland told Moneyish.
This is the latest piece in a series about the nitty gritty of entrepreneurship, for which Moneyish asks founders of successful startups how they got funded. Read more here.
Now this is delivering the goods.
Parents and investors have been going gaga over Yumi, a year-old organic baby food subscription service that’s raised $4.1 million in seed money. But early on, cofounders Angela Sutherland, 35, and Evelyn Rusli, 33, were concerned that potential business partners would pay more attention to Sutherland’s baby bump than their sales pitch. Sutherland was pregnant with her second child as the duo was getting their company off the ground.
“We always joked that the elephant in the room was the elephant in my dress,” Sutherland told Moneyish. “The line of questioning suddenly becomes really different; instead of focusing on the baby food market or the scale of our business, people would ask me, ‘Oh are you gonna have more kids?’ Why are we going down this line of questioning?”
“And would you ask a guy that?” chimed in Rusli.
So in lieu of initial coffee dates with new potential investors, they would often Skype, “so we would just see each other’s faces,” said Sutherland. “That would allow us to really control the conversation, and not tell them I was pregnant. And then based on that conversation and how interested they were, we would schedule the next conversation to be in person.”
Rusli also noticed that people assumed their motivations were more emotional than economical. “Sometimes it’s hard to be taken seriously by male investors when you’re a woman in a traditionally female-oriented business,” she said. “It was almost like, ‘Oh, that’s kind of cute. You’re passionate about baby food because you have one kid and another one on the way.’ I mean, would you assume a man who was running a female shoe business must be really passionate about shoes? Or is it just a really good business?”
This kind of bias is a major reason why male-led startups are almost twice as likely to get funding from male investors than female-fronted ones. So the L.A.-based best friends turned business partners drew on their skills and experience, and demanded to be taken seriously. “It’s a lot of believing in yourself, and believing in the idea,” said Sutherland, who was working in investment banking and private equity. Rusli was a business journalist who had written for The New York Times and The Wall Street Journal (the latter is owned by the same parent company as Moneyish). Both had spent years investigating startups and working with entrepreneurs, which Rusli said was like “being paid to go to business school.”
So to show they were all business and that they had a clear plan moving forward, they put together formal presentations for every potential investor — including friends and family — where they laid out exactly what they would spend this seed money on.
“Everyone wants to know where those dollars are going, so we had a purpose for those dollars — similar to when you’re fundraising for a charity, and you say ‘this dollar amount goes to research,’” explained Sutherland, who would tell investors that amounts were earmarked for marketing research, for production, etc. And when people did invest, she and Rusli asked each one to give them three other contacts in their network who might be interested in signing on. “It helps the investors who are interested continue to be a part of this, and with every investor building that out, you can get a really large pool of potential investors,” said Rusli.
“We also tried to identify potential investors who were very comfortable doing tech investments, who could better understand what we were doing,” Rusli added, noting that you still need the stomach to put up with a lot of rejection. “You get more ‘nos’ than ‘yesses,’ and that’s just the nature of the game,” she said. “But you also have to be open to the idea that your next investor could come from many different areas or sources, which was another muscle that was honed in part by working in journalism. You never know which source is going to have a great tidbit of information.”
Take their very first investor, who taught them the most priceless lesson of all. “The first check we got was from someone we had asked for engineering help, and at the end of the conversation he goes, ‘I hope you’ll let me invest,’” Rusli recalled. “I was like, ‘Wait, what? I didn’t know you’d want to invest.’”
He told them, “I want to stop you right there: You should realize this is a privilege for me to be able to invest in you, and that’s how you should treat it.”
“And since that conversation, whenever someone wants a piece of our company, we remind ourselves that they’re the lucky ones. We are the ones doing all of the work,” added Sutherland.
That includes copious research into the $55 billion global baby-food industry to see where they could shake things up. Yumi was first conceived when Sutherland was researching the best food to feed her first baby in 2014, and came across a 2008 Lancet study that states the first 1,000 days (up to age 2) is the most important period in a person’s life for nutrition and development. After all, 85% of the brain is formed at this time.
“That was really eye-opening and daunting to me,” she said. “The shelf-stable options in grocery stores are often older than your baby, and that doesn’t feel good. I didn’t want my daughter eating two-year-old chicken stew that I didn’t even want to eat.”
So she and Rusli (they had been friends for several years through Rusli’s fiance) dreamed up their superfood subscription service, a la Daily Harvest’s smoothies, that sends jars of chef-prepared baby food made from fresh, organic ingredients, with flavors like “kale ‘n pear” and “dragonfruit.” Meal plans start at $35 a week for five meals ($7 a pop) up to $90 a week for 20 meals (at $4.50 apiece.) Yumi is only available for delivery in California for now, but they plan to expand nationally later this year.
Sales of traditional baby food have been in decline since 2005; iconic brand Gerber, the nation’s top-selling baby food, dropped by 2% in 2016, according to Euromonitor. That’s largely because birth rates are down, but the report notes more parents are also making their own baby food, which is easy enough with gadgets like the $20 Infantino Fresh Squeezed Squeeze Station at Target, or the $38 NUK Smoothie & Baby Food Maker at Jet. Plus, millennial parents, which are Yumi’s target audience, are picky feeders.
“The average age of the first-time mother is on the rise, and she has much more life experience under her belt by the time she has her kids,” said Rusli. “This is a generation of foodies that doesn’t want to do things the way they used to be done. It is also a group that is more distrusting of big bands.”
Sutherland added that while millennial moms want to give their kids the best food, many of them are working and don’t have time to puree peas from scratch, so they’re willing to pay for the convenience of having fresh, organic baby food delivered.
And Yumi isn’t the only startup trying to satisfy millennial parents’ hunger for nutritious whole foods. Little Spoon, launched in April 2017, creates a customized meal plan drawn from your baby’s medical information. Actress Jennifer Garner co-founded Once Upon a Farm last September, which squeezes blends like “caroberry mousse” and “banana-berry cacao fairy” into pouches at 24 for $60, or you can buy them individually in Whole Foods. But Yumi boasts being the fastest-growing baby food delivery service, and through word-of-mouth, at that.
Yumi has raised $4 million in total seed money over the past two years. While they would not disclose what the company is worth now, or how many subscribers they have, they said sales and subscribers are growing 30% month over month. And 85% of that is happening organically; through social media and recommendations from friends and family.
And to their surprise, about 6% of adult subscribers are actually buying Yumi for themselves. “We’ve noticed there’s actually a pretty large and growing contingent of adults now ordering for themselves, maybe because they want to get an extra serving of vegetables during the day, like a vitamin,” said Sutherland.
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