$30 million NatureBox fundraise demonstrates investors’ confidence in DTC subscription models

By Elizabeth Crawford contact

- Last updated on GMT

NatureBox fundraise shows investor confidence DTC subscription model

Related tags: Subscription business model

A multi-million dollar investment in the online snack delivery start-up NatureBox Inc. suggests the firm’s direct-to-consumer subscription model has long-term viability, according to market research analysts and investors.

NatureBox​, which helped pioneer the now burgeoning subscription model when it launched in January 2012, announced May 5 that it successfully raised $30 million in Series C fundraising led by Global Founders Capital. This follows closely another $18 million Series B fundraising round for the firm in April 2014, and brings its total funding to nearly $60 million. 

The quick succession of the fundraising rounds and the substantial outlay indicates that investors are becoming more confident that the online subscription model “has staying power,”​ said Jared Koerten, a senior analyst at Euromonitor.

Indeed, one of the new investors, Annie’s President John Foraker, said he was excited to invest in NatureBox during the Series C round because the direct-to-consumer model gives the firm access to consumer data that can “drive real-time product innovation,”​ which can help the company grow further, according to the announcement.

Koerten added that the online subscription model also is promising because it taps into several major long-term growth drivers, including consumers’ increasing demand for convenience with home delivery, desire for personalization through the ability to customize deliveries, requirement for affordability and desire for an easy avenue for discovering new or niche products that they can’t buy elsewhere.

“People are tired of investing significant time and energy into driving to the store and buying the same products day after day,” ​Koerten said. Ordering from an online subscription service alleviates that burden and limitation, he said.

In addition, he said, consumers are becoming more comfortable ordering food online for delivery, which also will contribute to the model’s longevity.

As a result, the model “is catching on, not just in snacks and foods, but across the board”​ for products including clothing, makeup and baby care items, he said, noting direct competitors to NatureBox in the food space that have embraced the subscription model include Love With Food​, Mouth, nibblr​ and Graze​.

What sets NatureBox apart

Compared to subscription services for other goods, NatureBox is particularly well suited for growth because it focuses specifically on healthy, natural snacks, which are hugely popular. It also was founded on the idea of providing portion controlled amounts, which according to The Hartman Group​, is one reason why consumers subscribe to snack delivery services. 

Not all subscription model food companies will “explode”​ the way that NatureBox has, but they will continue to carve out a niche in the market by providing a service conventional retail and large CPGs do not, said Koerten.

While conventional snack makers’ and retailers’ sales are not yet threatened by subscription services, large firms are taking note of the model’s success and responding by offering convenient delivery options and more innovative products or limited-time flavors, he added.

NatureBox’s shopping list

Now that NatureBox is firmly established in the snack sector, it plans to use some of the funds from the most recent raise to expand its direct-to-consumer model to new categories, channels, markets and eating occasions, according to the announcement.

For example, the startup already has expanded its subscription service into Canada, and through a partnership with American Airlines it offers its snacks on select flights, the firm said.

“Some of the biggest opportunities”​ for NatureBox and other subscription food services are in larger, urban centers where city-dwellers who often do not have cars are actively seeking alternatives to carrying large amounts of groceries home on public transportation, said Koerten. 

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