Here's how Toasted Oat got venture capital interested in granola
Many Columbus-based businesses have been successful and gone nationwide. Rarer are the ones that were founded on a grandmother’s recipe.
Erika Boll founded the Toasted Oat Bakehouse in 2013, a company selling gluten-free, GMO-free, soft and chewy granola. Since then, the family business hasn’t stopped growing. It’s planning new products, added a national sales partner to get the product into Whole Foods nationwide and has staked a claim on shelf space in Phoenix-based Sprouts Farmers Markets, which has 300 stores in 19 states (none in Ohio). In central Ohio, Toasted Oat is for sale at Whole Foods, Fresh Market, Lucky’s Market, Kroger, Giant Eagle Market District, Hills Market and Huffman’s Market.
The venues help Boll reach her target audience: consumers who, like her, are seeking healthy alternatives to beloved treats. “Our primary objective is to create products both affordable and meeting the needs of a non-GMO project, and some of our ingredients are organic,” Boll says.
The granola recipe comes from Boll’s grandmother, Margaret Kelley, who shared her passion for cooking with her granddaughter. “She always baked and shared with family and friends,” Boll says. “I grew up learning to bake from her, learning to enjoy the gift of baking for other people. It’s always been a hobby.”
But her grandmother’s recipe no longer worked for her. In 2007, Boll was diagnosed with Celiac disease and had to stop eating the granola she has been enjoying her entire life. That was when she began to tinker with the recipe. Before she knew it, a gluten-free version was born. Her whole family loved the new recipe, Boll says, and seeing an opportunity, she began to meet with buyers from local stores. About 10 flavors were taste-tested by retailers and others to identify the most original ones in a competitive market. Four of them were selected to be produced in small batches in a local—gluten-free certified— shared commercial kitchen.
When Boll went to meet people at the Whole Foods Market in Dublin in January 2013, she was taken by surprise when the buyer immediately asked her how fast they could have her products on the shelves.
“It was a kind of a light-bulb moment for me that there’s a demand for it out there,” Boll says. The grocer helped with marketing and packaging, while she had to set up a website for her company. The product was for sale at Whole Foods by July and the company established a Columbus production facility. Sales have gone well. In March 2017, production had to be outsourced to a Michigan site to keep up with demand, which had grown to about 40,000 units per month.
A major rebrand for the business launched in 2017. The packaging changed from a solid cylinder to a bag with a window so customers could see and connect with the product. Flavor names were reworded to better reflect their taste (“Apricot Cashew” became “Apricot Shortbread”).
The company ran on an undisclosed amount of personal funds for the first three years until New York-based AccelFoods, an early-stage venture fund, invested in it. (That amount is also not being disclosed). In attracting the investment, Boll’s networking strategy was to tell her story and then ask for financial support. Or, a simple taste test could do the trick. “You have to be continually aware of who’s around you and sharing your story,” Boll says.
Rev1 Ventures, which invests in technology startups, took the risk and invested in The Toasted Oat as well. “We were impressed by Erika, her passion for what she was doing, her story and how she developed her company,” says Ryan Helon, executive vice president of investments at Rev1.
Boll’s family also helped her on this journey: Her father, Tom Kelley, even became her CFO. “He’s the best person for the job… he was just a natural fit,” Boll says.
Other family members sometimes serve as consultants, but the whole company relies on Boll, her father, a finance and operations analyst and a fourth employee soon to be hired. FDM Sales provides a nationwide shared sales team of 22 people.
“We liked the brand but we were concerned about the [sales] category because granola has a lot of players in it. But we liked the product, we thought it had points of differentiation,” says Fred Neubauer, CEO of FDM Sales.
Tristan Relet-Werkmeister is an intern.
Business: Sells gluten-free and GMO-free soft and chewy granola through grocery stores
Annual revenue: About $1 million