When Santiago Merea spoke at last year’s Smart Kitchen Summit, he was Chief Revenue Officer of Yummly. Less than a year later, he’s heading up his own baby food startup called Raised Real and just raised $5 million from frozen food and food delivery giant Schwan’s Company.
The Spoon was the first to cover Merea’s transition to his new startup, which delivers flash frozen raw ingredients for baby food. Before Raised Real, Merea was an early entrant into the smart kitchen market with Orange Chef, a company that created a connected scale and app called the Prep Pad. The company eventually got acquired by Yummly, but Merea retained the rights to the Prep Pad, which he eventually sold to Perfect Company.
When parents sign up for a Raised Real subscription, they get a mixing machine that steams and blends the ingredients into fresh baby food. A subscription, which Raised Real calls a ‘Membership,’ costs $95 and ships every two weeks. Each box includes ingredients for 20 meals, translating to $4.75 per meal.
The interest from Schwan’s came after Raised Real’s early success. According to Merea, the retention rate for customers is 80% after the initial box is shipped, and 90% after the second box is shipped, which translates to about a 72% retention rate after the first month. That is an impressively low churn compared with meal kit services such as Blue Apron, which retain only about half of their customers after the first month. That number drops to about a third of customers by month three.
Merea told The Spoon the company plans on using the $5 million to expand nationally. Today the company ships in five states in the western United States: California, Arizona, Oregon, Washington, and Nevada.
Schwan’s is an interesting investor. The company, founded in 1952, is the $3 billion frozen food and delivery conglomerate behind such brands as Red Baron pizza and Mrs. Smith’s frozen pies. The company has its own food delivery business, which dates back to the company’s beginning when founder Marvin Schwan started delivering ice cream to homes in rural Minnesota. Schwan’s eventually expanded into other food types like frozen fish and pizza, launching their own brands like Red Baron along the way.
According to Merea, Raised Real has two days to get its food packs into a customer’s hands once it packs the flash frozen ingredients with dry ice. While this gives them access to most of the continental United States, access to Schwan’s vast delivery infrastructure could still be critical in a national rollout. Access to Schwan’s cold chain delivery expertise could be important as well, since cold food delivery is, generally, one the trickiest and most expensive types of food distribution.
There’s no doubt that going from Yummly to starting his own baby food company with a partner like Schwan’s is a big shift in just a year, but Merea explains that the idea for Raised Real came to him not long after his twins were born almost three years ago.
“I couldn’t wait for them to start eating,” said Merea, “but when I went to the grocery store all of the food was processed. I realized that all of these companies are speaking to the previous generations of parents. The current generation of parents doesn’t want processed food. They want fresh and organic.”
Merea soon started experimenting with raw ingredients, mixing his own baby food at home. He wasn’t satisfied.
“The whole supply chain behind these ingredients still needed to be solved,” he explained.
He eventually started talking about the idea for a fresh baby food startup with his eventual cofounders, Michelle Davenport (a PhD in Nutrition and registered dietician), and Steve Kontz (whom Merea worked with at Orange Chef and Yummly) and, before long, Raised Real was born.
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