Charting the Investment Gap: Latinx-Founded Startups in ECF and VC

CHART OF THE WEEK 📈

This Chart of the Week examines the quantity of startup deals featuring at least one LatinX founder in the last 12 months and the corresponding percentage of investment allocated to these ventures.

• The latest data shows that LatinX-founded companies only received 1.5% of Venture Capital (VC) funding in Q3 of 2022, which is way too low, knowing that 19% of Americans identify as LatinX.

• LatinX-founded companies receive a more notable portion of online equity investments, with 3.43% of all Reg CF and Reg A+ equity investments allocated to them in the last 12 months.

• Although 19% of the US population is LatinX, only 4.11% of companies raising online have at least 1 LatinX founder.

Together with Republic

Join our investor-focused webinar Tuesday, March 26th at 1:30pm ET with Chuck Pettid, EVP of Republic, to learn about the opportunities within the Republic Investor Network. In this session, you'll learn about:

• Access to innovative startups and new investment cycles.

• The top sectors attracting venture capital right now

• The experts at Republic driving the deal flow in these sectors

• How to start investing with as little as $500.

• How Republic is leading the way in different asset classes, including tokenization.

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PITCH REVIEW 💸

Brief: Steeped Coffee has positioned itself as a unique player in the instant coffee space, offering specialty coffee brewed like tea in a single-serve bag. This innovative brewing method does not require machines, simplifying the process for consumers and reducing the environmental impact of traditional coffee pods. It’s raising $5M with a valuation cap of $38M and a minimum investment of $100.

Key People: Steeped Coffee is spearheaded by its founder and CEO, Josh Wilbur. Wilbur has spent seven years building the company. Wilbur is a serial entrepreneur. Before founding Steeped, he was on the founding team at PayStand, a digital payment processing solution. He also founded a surfboard company and a creative branding agency that was acquired by SocialGuides in 2010.

Interested in Steeped Coffee? Access the deal report HERE 🔓📈

Summary

Here's what we like: Steeped Coffee's innovative approach to coffee brewing, offering specialty coffee in a single-serve bag, presents a unique value proposition in the instant coffee segment. With no requirement for brewing machines, the company aligns well with the growing consumer demand for convenience, quality, and sustainability. 

The company has secured a strong presence in the market through licensing partnerships with over 400 brands, including Blk & Bold, Peace Coffee, Counter Culture Coffee, and La Cabra. Steeped Coffee has also garnered attention in the hospitality and corporate sectors, with customers including Hilton, Virgin Hotels, Amtrak, Industrious, and Waldorf Astoria. Moreover, Steeped Coffee's products have entered major national grocery chains such as Whole Foods, Albertsons, Kroger, and Safeway, indicating a robust distribution model that spans both B2B and B2C channels.

The company's environmental impact investing angle is also particularly compelling. Steeped Coffee's single-serve bags are both compostable and sustainable, positioning the company as a socially responsible choice in the eyes of eco-conscious consumers.

Here's what we don't: Steeped Coffee operates in an extremely competitive industry, going up against established giants in the instant coffee space such as Folgers, Nescafe, and Maxwell House, as well as omnipresent retail chains like Starbucks. These competitors have a robust market presence and deep pockets for marketing and product placement, which could overshadow Steeped Coffee's efforts to gain significant market share.

Additionally, the company has yet to achieve profitability and is likely relying on external capital to sustain operations. This is evidenced by the high net income loss for the most recent fiscal year-end, which, when coupled with the fact that the annual revenue growth was slightly negative, indicates massive financial vulnerabilities. The significant long-term debt on the company's Form C could also impact its financial flexibility. The company reported over $16 million in long-term debt for the most recent fiscal year.

ON THE POD 🎙️

Chris talks with Arthur Pierse, the founder of WeClimate, a groundbreaking climate equity crowdfunding platform. Arthur shares his vision of making climate tech investments accessible to a broader audience beyond venture capitalists and high-net-worth individuals. He delves into the expansive scope of climate technology, touching upon various sectors, from renewable energy to electric vehicles, and the challenges and opportunities within. The conversation also covers the significant role of government incentives in advancing green technologies and Arthur's strategic approach to growing WeClimate.

Listen to the full episode here

STAFF PICKS 🌶️

FuelRod

FuelRod offers a novel mobile charging service with a patented network of portable battery kiosks conveniently located in high-traffic areas like airports and theme parks. This service allows for easy swapping of depleted batteries (FuelRods) with charged ones, presenting an eco-friendly alternative to disposable chargers. With over $52 million in lifetime revenue, 11 patents, and more than 6 million swaps, FuelRod has established itself as a key player in the Global Portable Charger Market.

• Pre-Money Valuation: $48 million

• Minimum Investment: $398

Mercy Vintage (Debt)

Mercy Vintage, a sustainable clothing retailer in Oakland, California, specializes in buying, selling, and curating timeless fashion. The store fosters a community ethos based on recycling and storytelling through clothes. Karen Fort founded Mercy Vintage in December 2019, supporting local artists and encouraging individual style exploration.

• Interest Rate: 10.5%

• Minimum Investment: $10

Vestaboard

With a commitment to enhancing visual communication technology, Vestaboard specializes in innovative internet-connected split-flap displays suitable for diverse settings like homes, offices, and schools. Having sold over 10,000 units, Vestaboard boasts $10 million in 2023 sales with a 36% gross margin.

• Pre-Money Valuation: $39.6 million

• Minimum Investment: $511