Venture Capitalists Love this Gluten-Free Baking Mix Company
Featured on Crain’s Chicago Business
This past June, Katlin Smith tied for first place at the 2014 University of Chicago Booth New Venture Challenge for student-created businesses. The 26-year-old CEO took home a $30,000 prize to put toward Simple Mills, her growing line of gluten-free-flour baking mixes. Then, in July, Ms. Smith closed on a first round of seed money from Hyde Park Angels, the Chicago-based private investment group known mostly for funding tech startups. A Charlotte, North Carolina-based angel investment group is a smaller investor.
Ms. Smith declines to say how much backing she received but says the much-needed infusion will help the company increase distribution, invest in brand marketing and add staff. The company has five employees.
What was it about her pitch that won over investors? “The product is trend-right and is blowing off the shelves at Whole Foods,” says Dave Marshall, co-chair of the consumer products group at Hyde Park Angels and CEO of Altura Group, a consulting firm with offices in Chicago and Deerfield. “Katlin has huge momentum behind her. She’s passionate about what she’s doing and has executed the business almost flawlessly,” he says. “At the end of the day, it comes down to an entrepreneur we believe in.”
The North Carolina native, who spent one year as an MBA student at Booth and now works full time on the business, started her career as a strategy and operations consultant at Deloitte Consulting LLP in Atlanta. When she couldn’t find any prepared mixes made from healthy ingredients that tasted good, she began experimenting in her own kitchen with grain-free almond flour mixes that are low in sugar.
She started her company with $70,000 from personal savings plus more from family members. And while she declines to disclose revenue, she says business is growing by about 50 percent every month since the products launched in July. So far, Simple Mills mixes—there are five varieties, including chocolate chip cookies and focaccia bread—are on the shelves in 250 stores including 90 Whole Foods stores in the South and Pacific Northwest. That number is expected to grow to 400 stores by year-end.
There is a downside to venture capital, and that’s sharing the management of your company. “Organization building is the hardest part,” Mr. Marshall says. “At some point, the founder is not always the right person to run the business. With all our investments, there needs to be a good exit opportunity. If we can get the company to the $30 million mark, we believe it will attract attention from a large food manufacturer.”