Inside the Deal: How Miyoko’s Kitchen Found a Perfect Match

 By: Brett Epler

When Miyoko’s Kitchen arrived at CircleUp, the gourmet vegan cheese brand already had a term sheet on the table from an interested institutional investor. She wasn’t short on investor interest, but founder Miyoko Schinner and her team wanted more than money—they wanted an investment partner who could bring long-term strategic guidance and relevant industry experience to the business.

Miyoko’s Kitchen used the CircleUp platform to receive more offers, leverage intros into term sheets, revise terms, and eventually form a partnership with lead investor JMK Consumer Growth Partners in a $6 million Series B round. Let’s take a look inside the Miyoko’s Kitchen raise.

Not All Capital is Created Equal

As part of the Business Operations team and primary contacts for companies raising capital on the platform, I act as the liaison between Capital Markets and entrepreneurs. One of the primary goals of my team is to give companies confidence during their fundraising efforts. This comes in the form of coaching, being thought partners and providing objective feedback so the entrepreneurs feel empowered to choose the optimal investor for his/her business.

In the case of Miyoko’s Kitchen, it was no surprise a broad range of investors were interested, given the company’s strong financial performance. This gave Miyoko leeway to hold off on closing the first term sheet and search for a true partnership fully aligning with the company mission.

Investors can provide more than just capital. They can bring longstanding industry expertise, helping companies learn quickly and develop more efficient business models and supply chain management. For an entrepreneur like Miyoko, a strategic advantage was crucial to help build her new manufacturing facility and increase product assortment and distribution capabilities.

The mission of Miyoko’s Kitchen is to promote peace and equality to all species – humans, animals and plants – and her team wanted to find a partner who strongly aligned with their mission, alongside helping accelerate growth.

Empowering the Entrepreneur

Entrepreneurs have it hard enough getting a business off the ground. Throw in fundraising and you have a commanding challenge ahead. At CircleUp, we empower individuals during this process, easing the burden with deep industry knowledge, coaching and management so companies land their optimal offer.

Miyoko’s Kitchen launched on CircleUp in October 2016, and shortly after, received several institutional investor introductions. One of those intros was to a group called JMK Consumer Growth Partners—a growth equity fund focused on emerging consumer product brands. Led by John Kenney, who co-led acquisitions of Burt’s Bees and Tampico Beverages while at AEA Investors, JMK was a great fit for the investment partner that Miyoko was looking for.

JMK drafted a term sheet and eventually became the finalized lead investor due to the combination of strategic expertise and being aligned with the Miyoko’s Kitchen mission. While Miyoko ultimately made all final decisions, CircleUp provided our advice and insights throughout.

For example, two potentially inconspicuous, yet important factors are:

• Key terms out of market (ex: liquidation preference multiples): In a preferred equity round, there’s a clause protecting investors during a downside event, ensuring they have priority. Most commonly, this clause comes with a multiple of 1.0x (if an investor has invested $3 million in your company, they’ll have priority to receive $3 million back). However, in some instances, investors push for a higher multiple. We make sure entrepreneurs are aware of this scenario while reviewing the term sheet.
• Poor communication and involvement from investors: It’s important for entrepreneurs to understand how poor investor communication or little involvement during the due diligence process could manifest after an investment. Some entrepreneurs prefer passive investments, while others search for an investor who plays a strategic role. Thus, it depends on personal preferences, but it’s important to acknowledge the level of communication and involvement before finalizing anything.

It Takes a Village

No one said building a business would be easy, and anyone who said “fundraising is simple” probably has never fundraised themselves. It’s all hard work, and it takes a team to see it all through.

At CircleUp, we’ve helped raise over $300 million in capital for over 200 companies. We focus entirely on our mission of helping entrepreneurs thrive by providing the capital and resources they need. This means creating tailored fundraising programs meeting specific needs of companies, whether they want to find a more strategic investor, fill a round or find a lead. When we do this for entrepreneurs in the CPG space, we catalyze innovation for some of the most personal products we use daily.

ABOUT THE AUTHOR:

Brett Epler is a Business Operations Analyst at CircleUp, the platform providing capital and resources to innovative, early-stage consumer brands, and opportunities for sophisticated investors to participate in their growth. At CircleUp, Brett empowers companies to raise capital with confidence, offering coaching, strategic guidance and objective feedback so reach optimal deal terms. Prior to CircleUp, Brett was an analyst at multi-boutique asset manager WHV Investments. He graduated from Bates College with a degree in Economics.