Bhakti Chai Facts
P2Binvestor client since 2014
Category: Manufacturer, Natural Foods
Key culture ingredient: social and environmental sustainability
Defining proof: One of Colorado’s first certified B-Corporations
Bhakti Chai founder Brook Eddy started her business with less then $200, a recipe, a focus on social action, and a little help from her friends.
While many startups focus on acquiring investment from the get-go, Eddy concentrated on creating a great product, building a beautiful brand, and developing a fan base —one which was willing (and eager) to invest in her dream.
Her once-part-time venture now features a suite of products that are distributed in 45 states, and although Bhakti Chai doesn’t have the name recognition of competitors such as Honest Tea, she’s confident that growth will come.
One of five finalists for Entrepreneur Magazine’s 2014 Entrepreneur of the Year Awards (winners to be announced in December 2014), Eddy and her company have been recipients of numerous awards, a few of which include:
- Bhakti Chai’s Green Tea Tulsi Chai: Editors’ Pick for Best New Product (The Gourmet Retailer)
- Almond Blend Ready-To-Drink: 1st Place in the North American Tea Championship
- Top 100 Women-Owned Companies (ColoradoBiz Magazine)
- GOLD Sofi for “Best Hot Beverage” (National Association for the Specialty Food Trade)
- Editors’ Choice Award Best In Show Beverage (Natural Products Expo West)
- Full list here
Eddy started the company when her homemade chai recipe began to gain addiction with friends and family.
Recalling the richly spiced tea she experienced in India while on a trip researching a social justice movement, she experimented in recreating the flavors in her Boulder kitchen with fresh and Free-Trade ingredients. She home-brewed the spicy concoction and sold it in local coffee and tea shops, quickly gaining a following.
Her full-time job funded her family and Bhakti Chai grew organically. “I soon realized in order to grow, I had to seek investment.“
“My initial target was to raise funds to hire employees and purchase a delivery vehicle, then a full-time position for me, as well. I raised $30K over a year’s time from about 6 different people.”
“It was a chain effect,” she said. “After the first couple of years we attracted accredited investors, but we haven’t taken any private equity — everyone is an angel investor.”
A lot of people who came on early continued to invest, and with support, advice and encouragement from the close-knit Naturally Boulder community, Bhakti Chai has thrived.
Conscious approach to business
Bhakti Chai certified under Colorado’s B-Corp in 2012.
The Certified B Corporation is a certification conferred by the nonprofit B Lab. A benefit corporation is a legal status administered by the state.
While benefit corporations do not need to be certified, Certified B Corporations have been certified as having met a high standard of overall social and environmental performance.
According to Eddy, the B-Corp is “a great community that we’re proud to be a part of.
“Certification reinforces our commitment to Fair Trade, zero-waste manufacturing, charitable donations and paying employees well—all benefits that we were already offering,” she said. “Through this process (managed by B Lab), we’re certified for the way we help our community and our customers and also how we view our rate of return.”
The company’s metrics were continued commitment to Fair Trade and using non-GMO and organic ingredients, charitable impact on women and girls, and employees inspired to be a part of building a fun and socially conscious brand, she said.
Time to grow
“The toughest decisions for me have been around raising capital,” she said. “Every time I’ve gone to raise money I think about how much time it will take—time I could be spending on operations, sales, HR, marketing, production, innovation, networking, business development, or finance.”
She was lucky, she asserts.
“I found local angels who supported what we were doing,” Eddy said. “I used their investments as growth capital. The reaction I got was ‘Sure, we believe in that,’ and people really got on board with my vision.”
They wrote checks and so did their friends.
Now, Bhakti Chai has 55 investor members in their LLC. Investors came from natural foods and tech industries, local Colorado people who knew someone who knew someone—and fans of her products.
And success was a tonic. Some of the most significant issues Eddy then faced were around managing cash flow while continuing the company’s growth strategy. Eventually, cash was needed to fund fulfilling orders from Costco and Whole Foods, among others—growth and expansion in product lines and in distribution.
Capacity to scale. Access to flexible working capital to navigate growth. That’s what Bhakti Chai needed, and on the advice of one of her investor members, Eddy turned to P2Binvestor (P2Bi).
“If they were around seven years ago I wouldn’t have so many lines around my eyes,” she said.
“We now have more fluid strategy; cash flow is seamless, and we’re able to maintain momentum in sales and marketing because P2Bi is helping with funding for cash flow.”
And unlike other funders, she said, “They made working with us efficient.”
Before P2Bi, Bhakti Chai had to jump through nine months of hoops to the get funding they needed. In contrast, Eddy said P2Bi was quick to respond and dive into due diligence, which lasted only a few weeks.
“They use an entrepreneur’s lens and understand how fast businesses change.”
The future of Bhakti
As Bhakti Chai continues to grow its business through line extensions and ever-wider distribution, new partnerships will be needed, Eddy says.
“Ideally, we’ll build the company big enough and strong enough to attract a strategic partner for larger distribution. As a refrigerated product, we need a strategic partner to help. This could happen in one to five years,” she said.
“We’re just scratching surface,” she asserts. “Just at the beginning of a huge chai revolution.”
Advice for others
What advice does Eddy have for other young companies?
“It’s a fine balance between raising equity or debt, which was not an option for me at the beginning. Look to family members and more innovative funding companies like P2Binvestor.”