Health-Ade, a Los Angeles-based maker of the popular fermented tea drink kombucha, has raised more than $7 million in venture funding from CAVU Venture Partners, Fortune has learned. The four year-old company currently has products in over 3,000 stores in 42 states, including in over half of the Whole Foods regions, and plans to use a lot of the new cash to build a new manufacturing facility in Torrance, California.
But Health-Ade was never really supposed to be a company. Its three co-founders ―wife and husband team Daina and Justin Trout (CEO and COO, respectively) and Daina's best friend Vanessa Dew (sales) ― originally were brainstorming other business ideas and sipping on kombucha that Daina brewed.
"As we kept trying to figure out what we wanted to do, someone suggested it might be fun to sell some of the kombucha at a local farmers market," Daina Trout explains. "We didn't think it was going to be some grand company, but within the first hour we sold out and soon we realized that there was a real desire for a better-tasting and healthier kombucha."
Trout had a background in nutrition, including a masters degree in probiotics. But none of the trio had any beverage business experience, so they soon raised seed funding from First Beverage Group while still brewing and bottling kombucha out of her home. The FBG investment helped them build two small manufacturing facilities, hire 40 employees and expand their reach.
But the group never actually reached out to CAVU Venture Partners, a relatively new firm that was founded by former beverage execs to invest in the consumer packaged goods space. Instead, CAVU partner Rohan Oza, a former Coca-Cola (rsh) executive who went on to help build Vitaminwater, had come across Health-Ade kombucha on his own.
"I like to explore products that not only taste amazing, but which I think Americans across the country will start embracing as a replacement for soda," Oza explains. "I happened to speak over the summer to a friend of mine, Jason Camillos, who works at First Beverage Group, and he mentioned their involvement with Health-Ade. I said to let me know if an opportunity were to come up and, lo and behold, he connected me with Daina and Justin and Vanessa a few months later."
Financing the new brewery will be important, Oza adds, because Health-Ade currently is unable to make enough kombucha to satisfy demand. He estimates that the company could be selling five times more product, if only it could brew it.
"I am fortunate enough to have a very valuable relationship with our initial investors, First Beverage Group," Daina Trout explains. "So, it was very important to me that I look beyond just the money with this round and connect with another partner that would bring way more than just cash to Health-Ade. From the start it was clear that CAVU was just that."