Maine Biz • June 16, 2014 (Full Article)
By Lori Valigra
Alden Blease already graduated from the school of hard knocks by the time he enrolled in this year’s Top Gun program for entrepreneurs. The co-founder of R.e.d.d. LLC, a Brunswick start-up that makes healthy convenience foods, says he planned to start manufacturing a year ago, but was delayed because a food wrapper tainted the company’s superfood energy bar, ruining the batch so he could not fulfill orders.
“We were set to launch last year, but we had a major packaging issue,” says Blease. “I recovered about $3,000, but that wasn’t enough to restart. We had customers waiting. They’re still waiting.” R.e.d.d. was scheduled to start its first major production run since the incident the first week of June, just in time for Portland’s Old Port Festival Weekend.
One thing he and co-owner Reed Allen learned at the Top Gun Entrepreneurship Acceleration program is to mitigate risk whenever possible. “Last year with the production run we didn’t plan our finances to withstand critical mistakes,” Blease explains. “We should have had twice the amount [of money] of the production run.”
Blease and Allen are among the graduates representing 20 companies that completed Top Gun this year. In early June, 12 companies presented elevator pitches, which summarized their market and strategy and often included requests for funding or additional guidance, at an event at the University of Southern Maine. Each received feedback from panelists including Gena Canning, managing partner of Pine Street Trading; Taja Dockendorf, owner and brand strategist at Pulp+Wire; Luke Livingston, founder of Baxter Brewing; Robert Martin, president of Maine Technology Institute; and Chris Pasko, senior managing director/global head of technology advisory for Blackstone Advisory Partners.
Top Gun, run in Portland and Bangor by the Maine Center for Entrepreneurial Development, and considering a new midcoast location for next year, aims to accelerate entrepreneurial development in the state using training, mentoring and community connections. So far, more than 170 companies have finished the five-month program, which involves classroom time and access to mentors who already have successful businesses, like GWI founder and CEO Fletcher Kittredge.
“We wanted to network and learn about what we may have been missing and to have access to improve what could potentially kill us,” Allen says.
“We wanted to be connected, meet new people and learn about our death threats as we scale,” adds Blease. “Growing too fast can suck your cash flow.” He added that improving his company’s elevator pitch, for example by adding personal background details, is one of the most valuable skills he learned at Top Gun.
Filling a need
For Blease, the health bars grew out of necessity. As a biological engineering student at the University of Maine, Orono, he ran out of money for his meal plan after the first few weeks of classes. He went to a local health food store and hit the bulk food section, filling bags with grains, coconut, oat bran, raisins, maca and agave syrup, then went back to the dorm and mixed it together. “It was pretty good,” says Blease, an avid runner, who stuffed a basketball-sized wad of his newfound food into a pillow case and carried it around campus for meals.
He turned to healthy foods because his grandfather had intestinal cancer and couldn’t eat, and Blease associated the health problem with not eating well.
Because the bulk mix lasted only a week, Blease was able to refine its taste every time he returned to the health food store. Soon, other athletes around campus asked to taste Blease’s concoction, and he eventually started selling it to them under the brand “Rawgasms.” He constantly refined the product’s taste and composition, and became friends with Allen, who worked at a food market and was a health-conscious eater as well. They ended up talking and forming the company, which became an LLC this year.
Rawgasms brownies grew in popularity, and two large stores offered up big orders. But they also wanted the brand name changed. After a trip to Boulder, Colorado, to think, Blease returned and decided to pull Rawgasms off the shelves — a process that took two years — and start anew with the R.e.d.d. brand and the goal of mass-production.
Everything, from ingredients to naming and packaging, was thought through carefully. The color red attracts the eye and stimulates appetite, says Allen, who also is health conscious after losing a kidney at age 13. So he and Blease named the company R.e.d.d., with the extra “d.” The company also devised a box that retailers can open from the bottom and let the bars drop down vertically, or open from the side and lay on their shelves horizontally. Blease says the box is unique and he wants to patent it, but doesn’t have enough money now to do so.
The duo realize they are up against many other nutrition or health bars at grocers like Whole Foods. In their Top Gun presentation in June, they estimated the market for food bars in the United States will grow to $8 billion by 2016, up from $6 billion in 2012. The market for convenience and snack foods is more than $30 billion, and organic foods top $31 billion.
But they say their bar differs from the competition in that it combines a protein bar with 10 grams of pea protein; an energy shot made of yerba mate, maca and cacao; and a multivitamin with 19 vitamins and minerals. The product, which looks and tastes like a brownie coated in quinoa crisps, is flash pasteurized. It has 250 calories.
They also have hit other key points for the health-conscious: the bars don’t use genetically modified organisms, are allergen free, high fiber, low glycemic and use Fair Trade chocolate. In the Top Gun pitch, Blaise noted that a similar mix of ingredients would be $2.45 for coffee, $2.75 for an energy shot, $2.14 for a protein bar and $1 for a multi vitamin, which adds up to $8.34. A R.e.d.d. Bar has those ingredients for a $2.49 suggested retail price.
The bar is being sold in 11 Maine retail outlets, including Whole Foods in Portland, and is being distributed by Pine State Trading Co. The company has an office at Brunswick Landing within space occupied by his mother, who runs a call center.
R.e.d.d. has $20,000 in investment from friends and family, and has applied for a $10,000 microloan from CEI that is now undergoing due-diligence.
Dave Anderson, managing director of Supply Chain Ventures, in commenting on Blease’s elevator pitch at the Top Gun event, advised Blease to consider how he’ll take on competition like energy drinks Red Bull and Monster, which have massive marketing budgets. “This is a business where you win with marketing,” Anderson told Blease. He also advised the entrepreneur to consider selling through wholesalers or as part of another product to boost distribution.
Like Blease and Allen, Kat Taylor went to Top Gun to network and work the kinks out of her company’s business strategy. The director of business development at year-old GenoTyping Center of America in Bangor, which offers testing for genetic traits in laboratory mice, says her goal in going to Top Gun was to get more knowledge for running and staging a startup.
She had already attended Top Gun Prep, an eight-week, online course that teaches the fundamentals of entrepreneurship, where she says she felt free to ask questions about what she didn’t know and question what she did know to find a deficit. “It’s really good at helping you ground your company and measure your targets,” she says. Taylor and co-founders Todd Dehm and Carrie LeDuc are former and current employees of The Jackson Laboratory in Bar Harbor.
The experience with Top Gun Prep encouraged her to apply for the Top Gun program in Bangor. And like Blease, she found that learning the art of the elevator pitch was invaluable. “Especially for science geeks,” she says. “We live in a world of life sciences, so we speak in scientific jargon.”
She especially found Kris Burton, UMaine’s director of technology commercialization, helpful in understanding the differentiators of her company and how to emphasize them, for example, how to present the company’s value proposition on its website.
“We do replicate testing on every sample that other companies don’t do to any degree, and we hadn’t mentioned that on the website,” Taylor says.
Mentor John Burns, fund manager at the Maine Venture Fund, also helped her understand what makes a company investable.
Reflecting on how things at her company would have been different had she not attended Top Gun, she says, “I think our stumbling block was marketing.” Mentors and teachers helped her understand how to better position the company and how to actively engage their customers, the scientific community. She also learned about time management, and how to keep the company functioning better and progressing.
During the program, Taylor says she met with 10-12 mentors. “It’s having accessibility to that knowledge base and [having it] pertain to your company,” she says. “Otherwise, it would have taken years to get there.”
GTCA is seeking $225,000 in funding to ramp up its marketing and build brand awareness, she says.
Taylor also will apply the knowledge gained to the second company she co-founded, RockStep Solutions, a laboratory software company in the Bar Harbor area.
She describes Top Gun as a safe haven where she could ask all kinds of questions and learn faster than she could on her own. “It speeds up the timeline,” she says.
To Joel Alex, founder of Blue Ox Malthouse, Top Gun was about getting up to speed in business. “I identified an opportunity [making malt in Maine for local brewers] as a missed opportunity,” he says. “I was a technical consultant on rural economic development issues. Not everyone has the skills to make an idea work.”
Like Taylor, he first took the online Top Gun Prep classes, and then entered Top Gun. “I wanted to make sure I was giving my business and idea every chance to succeed by building an entrepreneurial experience and learning to avoid common pitfalls,” Alex says.
With Blue Ox, Alex hopes to reverse a trend of Maine exporting its grain crops and instead use them for the local craft brew industry. For example, much of the exports go to Canada for animal feed.
“There are 53 licensed brewing operations in the state,” he says. That is up from 36 two years ago. But to date, those brewers have been buying their malt from out of state, about 80 million pounds of it. Water, malt, hops and yeast are needed to make beer.
Alex says Maine could fill that need. Maine is the largest barley producing state in the Northeast, and is a large producer of the small grains like wheat, rye and oats, that are used to make malt.
“There are about 40,000 acres of small grains grown in Maine,” he adds, quoting figures from the University of Maine Cooperative Extension.
And those grain crops, if used for brewing operations rather than exported for feed, could help farmers in Aroostook County, the largest source of such grains in New England, have a high-value rotation crop for their potatoes.
While his Belfast-based company still is in the early stages, nine brewers are beta testing his malt. Alex says he needs about $609,000 to set up a commercially viable pilot plant. Some of that money already is committed. He currently is seeking a mid-sized space, about 7,500 square feet, and is looking from Portland to the midcoast and inland to Waterville and Skowhegan, but hasn’t yet selected a location.
His plan drew praise from Luke Livingston, the founder of Baxter Brewing Co. and the panelist tapped to give Alex feedback.
“To close the loop in the state is a tremendous opportunity,” Livingston told Alex regarding keeping the grains in Maine rather than shipping them outside the state and importing malt. “I look forward to working with you.”
Alex says the experts at Top Gun helped with his choosing a new site for his malthouse. “There’s a powerful network of experience and knowledge to have access to,” he says. “The network is helping me think through what to take into account.” He’s been advised to look at locations to get the company running through the next two years rather than places he’d like to be in 20 years.
He adds that he’s been selected to host an Innovate for Maine Fellow this summer, which he says is a direct benefit of being part of Top Gun.
Jay Lombard, founder of Finest Kind Tea in Portland, came to Maine from Brooklyn, New York, to tap the local creative food and beverage community. He used several Maine resources for entrepreneurs, including SCORE mentors and Top Gun Prep, for his tea concentrate product.
“Everyone has advice for you, but Top Gun Prep is a good way to filter the noise,” he says. He adds that the program helped him figure out his weaknesses and was a good opportunity for self-examination.
He then signed up for Top Gun to broaden his access to resources and to be mentored. His company makes an all-natural liquid tea concentrate that he says takes up less space on trucks and store shelves. It can be mixed with water and other liquids and be served iced, hot, as soda or as a cocktail. The product is being sold by Whole Foods, West Elm Market, Stonewall Kitchen and Williams Sonoma.
At Top Gun, he sought advice about marketing. “And I moved ahead more quickly,” he says. His mentors included Hannah Wolken, director of market development at Unum.
His next step is to seek $75,000 for working capital and a partner with experience in marketing and sales in the beverage industry or with consumer packaged goods.
He adds that since he’s the only person in his company, “It’s very isolating,” he says. “Now I have a network of other entrepreneurs. They get it. It’s lifelong partnerships and friendships.”