How an artisanal ice cream maker grew their business year over year with funding from Slow Money investors.
by Christine Rico
In 2007, Blue Marble Ice Cream set a new standard in the ice cream industry. Jennie Dundas and her partner noticed a trend (first set by chefs, then adopted by the coffee industry) of using artisanal processes and the finest ingredients to create the best possible product while giving credit and exposure to the farms and producers behind their ingredients.
While that might not seem like a novel approach today, ten years ago, this practice was unheard of, and nobody in Brooklyn was even thinking about the quality and source of their ice cream ingredients.
Dundas says that,
“When we got started, most commercial ice creams were highly processed and packed with corn syrup. We set out to reclaim ice cream and bring it back to its basics by creating a product that was decidedly, deliciously elemental.”
So in 2007, Blue Marble Ice Cream opened its first shop in Boerum Hill, Brooklyn. Soon after, in response to tremendous customer demand, they opened a shop in nearby Prospect Heights. Then in 2010, Blue Marble launched their wholesale division, which produced food service-sized products as well as pints for retail outlets.
In 2014, they made the decision to focus on building a consumer-focused business with the pints, following the logic that,
“Selling pints into grocery stores and other retail gives us the opportunity to reach the most consumers, and make the most impact with the organic products that we offer” Dundas explained.
Blue Marble keeps growing year over year. They keep a relatively controlled overhead and make sure to stay in control of the brand and product. Even though there have been plenty of challenges along the way, owner Jennie Dundas is proud of what the business has achieved over the past decade.
How did you sustain your growth year over year?
We raised money step by step as we grew.
Financially, there were two pivotal moments. The first was transitioning from running scoop shops to also having a wholesale business, because the cash flow required is completely different. The scoop shops operate on a cash basis. We buy ingredients, make the product, sell it, and get paid shortly thereafter. There’s a very short cash cycle. But, with a wholesale business, you have to purchase inventory, ship orders and wait to get paid. That means you have to have more cash available in the business to keep meeting your customers’ orders. Managing inventory and accounts receivable in a wholesale business was a new ballgame for us.
The second was growing with new wholesale clients. Before we commit to a new account, we always stop and consider if we can afford the receivables and the added inventory, especially with high-volume clients. This helps us ensure financial security on our end and reliable supply for our clients.
We knew that, in order to really play the wholesale game and afford the increase in volume that comes from working with large wholesale customers, we needed to raise capital.
How did you choose the right investors?
First we raised $150,000 from friends and family. At that time, we had already established ourselves as business owners through the success of the scoop shops, but this early money was important to funding the addition of wholesale. Then we got two SBA loans totalling $550,000 to continue to build inventory, receiveables, purchases needed equipment and expand our summer markets division.
Next, we raised $450,000 from private investors, including several from Slow Money, to expand our working capital. Slow Money was our top choice because it preselects like-minded investors.
In total we raised just over $1 million, which is quite modest compared to what you really need to launch and grow a Consumer Packaged Goods company.
How did you prepare to pitch new investors?
Foodshed Investors of New York (affiliated with Slow Money NYC) held pitch sessions on set dates. This gave us very clear deadlines for communication; we also received a detailed list of due diligence items.
The investors were really organized, which made the process run smoothly. It also helped that our books were in order, we had a good understanding of our numbers, and we knew our objectives – assets that we highlighted in our pitch.
“It’s very important for folks raising money to understand the basics of accounting, bookkeeping and their numbers. It’s critical to know your objective – what you want, what’s your endgame: plan A, plan B, plan Z.”
What is your relationship like with your investors now?
I’m a risk taker (as an entrepreneur), but I’m also fiscally risk averse. Business owners are personally responsible for the financing they take on—the SBA loan required a personal guarantee—so I don’t ever want to take on more than the business can reasonably pay back. It’s’ a very competitive marketplace (ice cream and frozen treats). There are no guarantees, and I don’t want to take chances with other people’s money.
As a result, our growth has been gradual, but we’ve also gained the trust and confidence of every investor we work with. Several Friends & Family investors have reinvested as well as more friends, and Foodshed Investors of NY (“FINY”) members.
There’s very little pressure from the Slow Money group, and we communicate mostly via quarterly reports.
What has raising capital done for the business?
We’ve been able to sustainably grow year over year. It only took us 2.5 years to get to $1 million, but the hardest part is to get from 1m to 5 million. If you’re opening up new scoop shops, that’s one thing, they’ll make an automatic revenue, but growing in wholesale is a bit more incremental—it’s more about the relationships with the people you’re doing business with.
“We arrived at 10-year mark with a healthy business and healthy, popular brand. What we’re proud of is that we are consistently ranked in the Top 10, top 20, top 25 ice cream lists of numerous influential “foodie” magazines and websites.”
What have you learned through this process?
The best companies may not grow the fastest. Other investors give you heat to grow, and this may not let you be your best. We believe in staying true to our identity as a purpose-drive brand and that we should use this as a valuable differentiator for our business as we continue to grow.
For businesses that want to take a more incremental and sustainable approach to their growth, “the Slow Money opportunity is phenomenal. It’s not to be underestimated. Having access to capital that is patient has made a tremendous difference to us.”