Dear Startup Investor,
Black Medicine Iced Coffee is a company we’ve been following for about a year now.
We first recommended BMIC in May of last year. You can read the original write-up here.
The original raise closed, but the company just reopened for a new round.
The company has done well since, with sales increasing 74% from 2015 to 2016.
If you’re new to Startup Investor, or if you missed our original recommendation, I’m going to quote our write-up here to give you an idea of why we believe this company offers an attractive investment opportunity.
Black Medicine uses a unique heat- and pressure-based process to brew its coffee. Most iced coffee is cold-brewed. I can tell you that Black Medicine is an altogether different and (in my opinion) superior product.
My partner Andy and I conducted a blind taste test with 11 friends, and Black Medicine won 7-4 against Starbucks. Notably, the Starbucks coffee had far more sugar in it. Black Medicine is a delicious and unique product.
Black Medicine is truly like no other coffee I’ve tried. The company’s unique hot-brewed, nitrogen-injected process prevents oxidation and brings out complex flavors from a hand-picked blend of coffee beans. I tasted hints of cherry and other fruits, and founder/CEO Chris Cooper confirmed that this is a frequent comment.
BMIC’s products are also low-sugar or sugar-free, which is the direction that today’s consumers are moving. It’s a healthy, delicious and invigorating drink.
If you’re interested in trying Black Medicine’s coffee yourself, you can request a free sample from CircleUp.com. You’ll need to register for an account, then go to BMIC’s profile page here and click on “Free Sample” on the left side of the page.
Manufacturing Progress Made
When we recommended Black Medicine last year, it was in the process of transitioning from an aluminum bottle to lower costs.
I’m happy to report the process went smoothly. The new canning line is fully operational in the company’s Oakland, California, facility. With this new production line, Black Medicine is capable of producing at least four times its current sales volume.
BMIC is now selling its iced coffee cans for $2.99 retail, versus $3.99 for the old aluminum bottle. Its margins are now significantly higher due to lower production cost, and overall revenue is increasing due to the lower price point.
Here’s a picture of the updated product lineup:
It’s a beautifully designed product, and just one of the reasons we think Black Medicine can make it big.
The old bottling line has been reconfigured to produce coffee concentrate. Here’s what this new product offering looks like:
Each highly concentrated 10-ounce bottle makes eight servings of coffee and retails for $8.99. Coffee concentrate is a relatively new development in the consumer coffee world, but several other companies have had great success with it. The cost to set up this additional product line was minimal, and it brings significant upside.
You can order a case of six 10-ounce bottles of BMIC concentrate online for $54.
Projected Revenue and Plans for 2017
Black Medicine continues to grow at a rapid pace. In 2016, revenue increased 74% over 2015.
Here’s a chart showing net sales since the company launched in 2014. (Keep in mind that iced coffee is highly seasonal.)
Black Medicine continues to expand its footprint and is now available in more than 800 locations. Customers include Safeway, Whole Foods and Bristol Farms.
CEO Chris Cooper has deep experience in the coffee industry. He has demonstrated the ability to sustain fast growth while simultaneously evolving his product. We’re confident in BMIC’s ability to continue its rapid growth trajectory.
Currently, BMIC is only available on the West Coast. However, with the money raised from this round of funding, it plans to kick-start sales in the Eastern U.S.
Black Medicine is well-positioned in a fast-growing market (ready to drink coffee). The company’s branding is excellent, and it’s building a loyal customer base wherever the product is sold.
Down the road, Black Medicine could make an attractive acquisition target for large food companies such as Pepsi or Coca-Cola, which are seeking to diversify out of high-sugar colas, sports drinks and juices.
To learn more about Black Medicine Iced Coffee, visit BlackMedicine.com.
The Deal
Since we invested last May, BMIC’s valuation has increased roughly 20%, from $2.3 million to $2.9 million. It’s still reasonably priced, yet it’s shown impressive progress.
Valuation: $2,947,702 (pre-money)
Share price: $.007
Raising: Up to $800,000
Raised so far: $260,000
Minimum investment: $10,000
How to Invest
This opportunity is available on CircleUp.com, one of the largest and most active online private investment sites in the world. (For more information on CircleUp, see this Wall Street Journal article.)
You’ll need to register for an account on CircleUp to complete this investment. It shouldn’t take more than five minutes to do so.
Now simply follow the instructions provided by CircleUp and create an account.
Once you’re registered and logged in at CircleUp.com, click on this link to go to Black Medicine’s investment page.
https://circleup.com/c/black-medicine-iced-coffee/
In the upper-right-hand corner, you’ll see a large orange “INVEST” button. Click that, and enter the amount you wish to invest. The minimum for this deal is $10,000.
You will then be guided through the rest of the investment process, and you’ll be able to transfer funds securely online.
How You Can Help
If you’re a fan of iced coffee (like me), you can now order Black Medicine online.
And if you live on the West Coast, particularly the Bay Area, tell your local grocer that you want them to stock BMIC, and point them to BlackMedicine.com.
You can see if stores near you sell Black Medicine by using the store locator here.
Risks
This is an early-stage investment, and like all similar opportunities, there is a risk that the company won’t succeed. It could fail to grow fast enough, or it could simply run out of capital. Black Medicine has thus far demonstrated the ability to raise capital from investors and grow its business, but understand that this is a high-risk, high-reward investment opportunity.
That said, we believe Black Medicine presents an excellent risk-reward ratio at this low valuation.
Good investing,
Adam
Startup Investor Portfolio
