Keto-friendly cereal Magic Spoon raises $5.5m in seed funding

By Elaine Watson contact

- Last updated on GMT

Magic Spoon co-founder Gabi Lewis: "$10 is more than you’d usually pay for a box of cereal, and we were nervous before the launch, but we’re seeing very little pushback on price."
Magic Spoon co-founder Gabi Lewis: "$10 is more than you’d usually pay for a box of cereal, and we were nervous before the launch, but we’re seeing very little pushback on price."

Related tags: Magic Spoon, keto, Cereal

Direct to consumer cereal brand Magic Spoon has raised $5.5m in a seed funding round led by Lightspeed Venture Partners as it seeks to take its keto-friendly wares to a wider audience.

Other backers include Collaborative Fund, Wild Ventures, DGNL Ventures, Joey Zwillinger (co-founder of Allbirds), Jeff Raider (co-founder of Harry's), Dave Gilboa & Neil Blumenthal (co-founders of Warby Parker), Moiz Ali (founder of Native), Michael and Daniel Broukhim (co-founders of FabFitFun), Questlove, Rick Rubin (music producer), Kevin Rose (founder of Digg and host of The Kevin Rose Show) and Peter Attia (founder of Attia Medical).

Founded by Gabi Lewis and Greg Sewitz, who created the EXO edible insect brand, sales of Magic Spoon have “continued to grow far beyond expectations​” since its launch in April, said Lewis, who is targeting consumers he claims grew up enjoying sugary cereals but have phased them out in favor of smoothies, Greek yogurt or protein bars amid concerns over nutrition.

Magic Spoon​​​ (strapline: ‘Childlike cereal for grownups’​​) offers these consumers a route back into the market with a grain-free option that tastes as good as Froot Loops, Frosted Flakes or Cocoa Puffs but has a fraction of the net carbs (3g vs 21g, 24g and 23g respectively) and 6-12 times the protein (12g vs 2g, 1g, and 1g respectively), he told FoodNavigator-USA in July.

magic spoon cereals

"With new capital to support our growth, Magic Spoon will scale operations, develop new flavors, and invest in growing the team."

Greg Sewitz, co-founder, Magic Spoon

"Magic Spoon’s healthy ingredients, delicious taste and great design have driven growth and customer loyalty. The cereal category is one that has been ripe for innovation and we are excited to partner with Gabi and Greg to help redefine the cereal experience.”

Merci Victoria Grace, partner, Lightspeed Venture Partners

Have your cake and eat it too?​

Put another way, Magic Spoon offers cereal fans a chance to have their cake and eat it too with a product that delivers a sweet taste, fun and whimsy that shoppers are looking for, without the carbs, and with a hefty serving of protein, he explained.

“Right now there are the bright colorful playful sugary fun cereals, and then there's the healthier more natural ones, although many are still high carb, but they're not as tasty and not as much fun. We're saying you don't have to make any sacrifices. ​​

"But we're not limiting ourselves to any particular niche such as keto or gluten-free or low carb, Magic Spoon is just a healthy cereal that tastes amazing."​​

magic spoon
Available exclusively via the Magic Spoon website, the cereals retail at $10 a box, (with a four-box minimum order). Monthly subscribers receive a 10% discount and free shipping, says co-founder Gabi Lewis, who notes that cereals are better suited to an online subscription model than most foods, because they are shelf-stable, light to ship with a reasonably long (12-month) shelf life, and consumed habitually.

The formulation: Protein isolates, coconut oil, tapioca flour, chicory root fiber, allulose, monk fruit, stevia​

Available in four flavors (Fruity, Cinnamon, Cocoa, and Frosted) Magic Spoon is a blend of milk and whey protein isolates, coconut oil, tapioca flour, and chicory root fiber, sweetened with allulose, stevia and monk fruit.

While this isn’t exactly consistent with consumer demand for less processed, more ‘natural’ foods delivering inherent nutrition, it delivers what many shoppers are looking for from a macronutrient perspective in a category that most consumers accept is by definition pretty ‘processed,’ argued Lewis.

“It's more processed than eggs, but most cereal is somewhat processed, and consumers understand that.”​​

While many consumers are not yet familiar with allulose​​​ (a rare sugar that’s found naturally in figs and raisins but is produced commercially via the enzymatic conversion of fructose from corn), perceptions are generally positive, given that it tastes great, but contains virtually no calories, and has no impact on blood sugar, claimed Lewis.

Bricks and mortar?

Magic Spoon has already attracted significant interest from bricks and mortar retailers, but has enough demand from online customers to keep it busy for the time being, he said.

"We’ve already been approached by a number of reputable retailers excited to bring something fresh to the cereal aisle, but we're struggling to keep up with demand right now. Plus s​elling online - at least to begin with - allows us to be pretty flexible, survey our customers, and gather feedback on flavors."​​

magic-spoon
Ingredients, Magic Spoon (fruity): Protein blend (milk protein isolate, whey protein isolate), coconut oil, tapioca flour, sweetener blend (allulose, stevia, monk fruit), chicory root fiber, natural flavors, salt, vegetable juice

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