Meet the Innovators: Sugarfina
For our Meet the Innovator series, StartEngine’s Strategic Advisor Kevin O’Leary (aka “Mr. Wonderful”), regularly sits down with companies running Reg A+ campaigns on StartEngine. In the resulting videos, Mr. Wonderful brings his world-renowned business savvy to speak to founders about their brands and their experience with raising money on the StartEngine platform.
The latest installment saw Mr. Wonderful chatting with Scott LaPorta, CEO of Sugarfina, the boutique luxury candy brand. Scott and Mr. Wonderful talked about how equity crowdfunding fits into Sugarfina’s ambitious growth plan for the coming months.
You can watch their conversation, or read the recap below.
Candy for Adults
People know Sugarfina as the “Tiffany’s of candy,” as Scott puts it to Mr. Wonderful. Typically, candy brands like M&Ms and Sour Patch Kids market themselves to children as end-users, and few confection brands speak directly to adult consumers. Sugarfina fills this gap in the market by working with artisanal candymakers from around the world and bringing carefully crafted products to consumers in their innovative, sophisticated packaging.
In fact, as Mr. Wonderful noted, quality branded packaging is one of the key things that sets Sugarfina apart. Their signature Candy Cubes and Bento Boxes are protected by 45 patents and trademarks. “When you actually present it the way you do, you build a brand around packaging,” says Mr. Wonderful.
During the pandemic, instead of stalling their growth, Sugarfina hired workers and put out new products, such as their tea-focused line and cookie-inspired collection. They’re not slowing down now, with plans to release a new product every month this year.
Mr. Wonderful also pointed out that the move to e-commerce that’s currently occurring in America due to the COVID-19 pandemic might actually help businesses like Sugarfina, because of the greater margins in the direct-to-consumer online model. Scott agreed, saying that “the margins on our digital business are 2x what they are working through other [commerce platforms], and we love talking to our consumer directly.”
E-commerce makes up around 40% of Sugarfina’s revenues, Scott shared, whereas when he and his three partners bought the business at the end of 2019, digital sales only made up 15%. By the end of this year, Sugarfina expects that 50% of their total revenue will come from their online business.
“We see tons of growth opportunities, both domestically and internationally,” said Scott. Sugarfina is currently focused on growing their business via the e-commerce platforms that they’re on, such as Rakuten Japan and their Amazon storefront.
Sugarfina is also planning to open a centralized distribution center in Las Vegas in April, which will allow the brand to add incremental distribution, Scott explained. The brand hopes that this new step will increase their distribution capacity by six to eight fold over the next few months.
As Mr. Wonderful points out, the center will also allow Sugarfina to get their products in the hands of the consumer faster, which is crucial in the gifting business, when consumers expect to have the ability to “instantly” gift products. Scott noted that Sugarfina has also brought on a new and experienced Operations Manager to oversee the new distribution center and further ensure that their response times will be cut down.
Long-term Investor Relationships
Crowdfunding through a Regulation A+ campaign on StartEngine is crucial to this next stage of growth. “We’d like to bring this opportunity to our brand fans, our consumers,” Scott said. “They helped us build this brand over the last several years. Why not let them participate in the StartEngine crowdfunding opportunity, versus venture capital or early stage private equity?”
Mr. Wonderful said that he was intrigued by how big brands like Sugarfina are interested in raising money on the StartEngine platform, even as Scott points out that they could have proceeded growing their company using internal revenue money. “I’m going to make the assumption,” Mr. Wonderful said, “that there’s something magical about having a brand inside someone’s head for a product and service … and then all of the sudden making them partners for the long run, in the equity of the business. That’s what I find so unique about equity crowdfunding.”
Scott agreed with Mr. Wonderful that equity crowdfunding offers a unique longevity in stakeholder relationships. “We didn’t want to take on capital that was friendly at first, and then once they saw a great opportunity to exit, make a strong return, it was ‘hit the doors’ right away,” Scott said. “We want to continue to build brand equity for our followers and investors. We intend to be long-term owners of this business.”
Sugarfina is poised for its next stage of growth and expansion in the coming months, after a strong year in face of the pandemic. Mr. Wonderful was impressed by their potential for growth ahead of their next Reg A+ raise on StartEngine, saying, “At the risk of being corny, I have to say, it’s a very sweet deal.”
To learn more about Sugarfina and invest, click here.
This testimonial may not be representative of the experience of other customers. This testimonial is no guarantee of future performance or success. Kevin O’Leary is a paid spokesperson for StartEngine. View the details here: https://www.startengine.com/17b
Sugarfina is conducting a Reg A+ offering made available here through StartEngine Primary, LLC.
This investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment.