Soylent Nutrition is joining public company Starco Brands as part of an acquisition that will keep the plant-based food technology company operating as a separate unit under its current CEO Demir Vangelov.
As part of the transaction, Vangelov told TechCrunch that he will join Starco’s board and is getting shares in the new company, while himself and Soylent’s shareholders will become the largest single voting block in Starco. Other financial details were not disclosed.
Bloomberg first reported last May that Soylent was exploring a possible sale, which isn’t unusual, but financially speaking, the company was doing well: Vangelov said Soylent was profitable and had been growing over the past few years, including nearly achieving its projected goal of $100 million in run rate for 2022. Getting to profitability, however, was a complicated journey.
Origins of a nutrition company
Founded in 2013 in San Francisco by Rob Rhinehart, Soylent is focused on what it calls “complete nutrition,” developing a line of shakes, powders and bars meant to provide a daily dose of vitamins, minerals, fats, carbohydrates and protein. Products are sold in 28,000 stores, like Walmart, Target and Publix, and adding Walgreens in 2021.
Over the past decade, the company, now based in Los Angeles, raised more than $133 million in venture-backed funding, attracting capital from firms including Google Ventures, Andreessen Horowitz and The Production Board.
Soylent has also had its fair share of growing pains. In 2016, the company made a voluntary recall on its bars after customers got sick. It later determined the cause was algae-based ingredients and reformulated its powder.
Despite that setback, the company went on to raise $50 million in 2017. Then later that year, Rhinehart stepped down as CEO, naming Bryan Crowley to that position, while Rhinehart stayed on as chairman.
Crowley at the helm lasted three years before Soylent would shake up its executive team again, this time putting Vangelov in the role of CEO and Rhinehart leaving. Vangelov joined the company in 2018 after previously serving in executive roles at Califia Foods and Oberto Foods.
“When I took over the company, we were losing money and not realizing growth,” Vangelov said. “On my to-do list when the board hired me was to think about the economics and fix the products to see if we could get back to growth.”
He set on a path to rebuilding Soylent’s economic infrastructure, including warehousing, shipping, the team and its partners. The company also redesigned its products to improve function and taste, he said.
With an improved product, came growth into different channels and with a different set of consumers, Vangelov said.
“Since then, we have been consistently rated as the No. 1 tasting protein shake out there in the marketplace, not just plant-based, but at any time,” he added. “Second, we were able to start investing back into the brand because we were profitable and didn’t require new investors to come in or to go and raise money constantly.”
This brings us to 2022, when Vangelov said he started thinking about how to infuse growth into Soylent and saw two options: raise money again or partner with someone who can help the company grow quickly. He and the board chose to partner with Starco Brands.
And just who is Starco Brands? The public company, part of The Starco Group, creates and acquires consumer products like household cleaning, automotive and personal care items. It was started in 2010, then going by the name of Insynergy Products.
Insynergy went public in 2012 and changed its name to Starco in 2017. It was in that same year that it came out with its line of Breathe aerosol cleaning products. In December 2021, the company teamed up with singer Cardi B to launch one of its more popular brands, Whipshots, a vodka-infused whipped cream.
During the past six months Starco has been busy on an acquisitions tear, first acquiring Art of Sport, the athlete-inspired personal care brand co-founded by Kobe Bryant, in September. Then in January, Starco acquired fragrance creator Skylar. Soylent is its third acquisition in that time frame.
Speaking about the Soylent acquisition, Sklar said in a written statement that “Soylent is one of those rare brands that successfully transitioned from Silicon Valley tech startup to mainstream with mass distribution, thanks to Demir and team’s operational execution and a global mission to improve human health and nutrition.”
Meanwhile, Vangelov said that Soylent’s 20-person team, which learned about the acquisition Monday, will stay with the company.
There are also some new products coming down the pipeline, but he could not disclose details at this time.
“It comes to a point in a company’s evolution where you need to move to the natural next stage, which is really taking a mature-ish business to the next level of its growth without having a different skill set,” he said. “Also, you need capital to do so. By partnering up with Starco Brands, we are essentially solving those two issues. They are the right marketers and people who we can work with to accelerate growth, and they also understand how to launch innovation.”
Update, April 7, 2023, 6:57 a.m. PST: When contacted about the deal, Starco confirmed that the acquisition was an all-share transaction valued at the time of the deal at $65 million.