Organic baby-food startup Caer Inc., which does business as Yumi, announced a $4.1 million seed round last week, taking money from a mix of angel investors and venture capital outfits.
The Hollywood company delivers its high-end baby food direct to customers’ doorsteps. A six-meal package runs $50 – $8.33 a meal – with offerings that include ingredients such as dragon fruit, wheat germ oil and white yam.
Yumi was co-founded by President Evelyn Rusli and Chief Executive Angela Sutherland, who left jobs at the Wall Street Journal and downtown private equity firm SierraConstellation Partners, respectively, to focus on the venture full time in 2015. Rusli said the pair was inspired by their own experience looking for healthy options for their kids.
“When we looked at what was available and on grocery store shelves and online we were really disappointed,” Rusli said. “We realized how broken the market was.”
And that market is big.
The global baby-food industry grew to $55 billion in 2015 from $37 billion in 2010, according to figures from Statista. U.S. consumers are buying more baby food from smaller companies such as Plum and Stonyfield Farm Inc., which produce higher-end organic meals. A Goldman Sachs Group Inc. study from 2015 reported this trend is partially driven by millennials starting families.
The millennial parent demographic is an important part of Yumi’s growth strategy, according to Rusli, who said she and Sutherland spent the last two years testing their baby food on a small group of subjects around Los Angeles. They found that millennial parents are much more concerned with what they are feeding their children.
“What millennials want to eat – and what they want their kids to eat – is really interesting,” Rusli said. “They are very conscious about what they are putting into their bodies. They want fresh and organic … contrast that with what big food companies are doing and there’s a huge gap.”
Yumi’s next challenge is to roll out its distribution network. The company’s products are available to customers across California as of last week and Rusli said there are plans to expand into Nevada and Arizona soon, with a national expansion to follow.
The logistics of delivering fresh baby food is challenging, but she said the subscription model – similar to meal-kit delivery services such as Blue Apron – makes it more viable.
“Unlike Sprig or Munchery, we’re a subscription service and we know what the volume is going to be every week,” she said. “There’s less waste than other on-demand models out there.”
Yumi is also different than some other high-end baby-food delivery services, such as Thistle, which provides raw ingredients that parents must process themselves. Yumi’s meals are premade, which Rusli said saves parents time.
“When we were talking to parents a lot of them didn’t want to spend time pureeing a sweet potato,” she said. “They wanted meals to show up and be ready so they can spend more time playing with their kids or just taking time for themselves.”
