September 9, 2020

By Lynda Kiernan, Global AgInvesting Media

Boulder, Colorado-based Good Karma, the first dairy alternative company to make a flax-based milk alternative, announced it has secured a “significant new investment” from Valor Siren Ventures (VSV) – a fund established to act as an early-stage innovation engine for food and retail technology startups.

Existing investor 2x Consumer Products Growth Partners also participated in the round. 

Back in 2012, Good Karma saw a need for a milk alternative free of all major allergens, leading the company to create a flax-based dairy alternative that still delivered on taste, nutrition, and texture. In the years since, Good Karma has expanded its portfolio to include a range of flax milks, shelf-stable single serve dairy alternative drinks, and plant-based sour cream, dip, and yogurt.

Driven by a number of reasons, including concerns for the environment, allergen considerations, or efforts to live a healthier lifestyle, retail sales of plant-based foods reached $5 billion last year after seeing growth exceed 11.4 percent in 2018 – five-times that of total food sales. Drilling down, the Plant-Based Food Association stated that sales of plant-based milks grew by 5 percent over the past year, now accounting for 14 percent of the overall milk category, while cow milk sales are stagnant. 

This new investment will be used by Good Karma to accelerate distribution in both existing and new channels, to further innovate in a variety of plant-based food categories, to expand its brand-building, and to enhance its consumer awareness initiatives.

“We are delighted to welcome Good Karma into our Valor Siren Ventures portfolio as the brand has a demonstrated track record of delivering innovation in categories in need of inspiring plant-based options,” said Jonathan Shulkin, VSV fund manager and partner, Valor Equity Partners. “Good Karma embodies the exact type of opportunity we’re interested in as we look to bring our mission to life.”

Following multiple investments beginning in 2017, it was announced in July 2018 that Dean Foods, the largest processor and direct-to-store distributor of fresh milk and dairy products in the U.S., became the first majority stakeholder in Good Karma.

At the time, the investment was mutually beneficial – allowing Good Karma to expand its presence in conventional retail settings, while giving Dean Foods low-risk exposure to the emerging plant-based dairy market.

“Good Karma is a fast-growing brand that gets us back into the growing plant-based food and beverage category, making it an excellent addition to our portfolio,” said Ralph Scozzafava, CEO of Dean Foods, in July 2018.

“Our investment in Good Karma is just one example of how we are executing against one of the major pillars of our strategic plan, to build and buy strong brands.”

The acquisition of a majority of Good Karma occurred in the midst of a buying spree for Dean Foods, which also bought Friendly’s Ice Cream in 2016 for $155 million, and Uncle Matt’s organic juice in 2017. 

Despite these attempts to diversify and extend its reach, shifting consumer habits outpaced Dean Foods’ and the company ended up declaring bankruptcy in November 2019 after sales fell by 7 percent in H1 2019, profits fell by 14 percent, and the company’s stock fell by 80 percent for the year. 

As the situation unfolded, Good Karma stated that it presented the company with the opportunity to buy out Dean Foods, and refocus on its mission with the support of new investors.

“We’re on a mission to inspire goodness and provide plant-based options that are nutritious, surprisingly delicious and creamy, and free of allergens,” said Doug Radi, CEO, Good Karma.

“We could not have found a better partner than Valor Siren Ventures to help us bring more plant-based goodness to more places, and are honored to be among the mission-driven teams and brands in their portfolio.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.