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healthy cereal

Magic Spoon Raises $5.5M Seed Round for Its Healthy Take on Sweet Cereal

Magic Spoon, a company that makes a healthy sugary-tasting cereal, has raised $5.5 million in seed funding, according to an article on Food Dive. The round was led by Lightspeed Venture Partners with additional participation from Joseph Zwillinger (Allbirds), Jeff Raider (Harry’s), and David Gilboa and Neil Blumenthal (Warby Parker).

The company plans to use the new funds to expand its business, make new hires, increase marketing efforts, and create new cereal flavors.

Magic Spoon is a non-GMO, gluten-free, grain-free, soy-free, and wheat-free cereal that’s keto-friendly and still tastes like a sweet cereal you’d find in a grocery store aisle. It also contains more protein and fewer calories than your typical box of Froot Loops. The company uses a natural substance called Allulose, which is found in some fruits, to get its sweetness. My colleague Chris Albrecht got his hands on some not long ago and gave all the cereals a rave review. The cereal also has to be ordered online and isn’t available in grocery stores yet, though Magic Spoon keeps selling out of inventory so clearly it doesn’t need to be widely available at big-box stores just yet.

Company founders Gabi Lewis and Greg Sewitz are no strangers to alternative ingredients. Prior to the Magic Spoon, the duo made cricket-based protein bars under company Exo, which they sold to Aspire Food Group in 2018.

Magic Spoon’s one catch is its price: it costs about $40 for four seven-ounce boxes. Lewis told Food Dive he “hasn’t heard much pushback on the price” as of yet. Part of that’s likely due to who Magic Spoon is currently targeting: health-conscious millennials who are used to buying groceries online and paying higher prices for trendy foods.

The company’s main competition comes from The Cereal School, who makes another version of “healthy” sweet cereal and sells it online. Unlike Magic Spoon, however, The Cereal School has made a conscious decision to remain bootstrapped as long as possible, a decision that’s led to some manufacturing issues in the past. The Cereal School’s product isn’t cheap either, at $50 for 24 single-serving bags.

Those price points may work now while the concept of cereal innovation is hot and early adopters are willing to pay. However, either company wants to expand and cater to the everyman at some point, they’ll need to find a way to bring that price point down without sacrificing the quality of the ingredients.

Launched on Instagram, The Cereal School Creates Low-Carb, Keto-Friendly “Sugar” Cereal

Buying breakfast cereal used to be pretty simple. Walk down the supermarket aisle and, if you’re a kid, grab the brightest colored box of the sweetest cereal you can find. If you’re an adult, well, you settle for the one with the most fiber.

But the cereal aisle is, pardon the cliché, in the midst of a disruption. Startups like The Cereal School are delivering sweet cereals for adults, without all the sugar, and, for now, without competing for your eyeballs in the cereal aisle.

The Cereal School makes low-carb, keto-friendly breakfast cereal. It comes in Cinnamon Bun or Fruity flavor, and has zero sugar, 1g total carbs, and 16g of protein per serving. By comparison, a serving of Froot Loops has 7g of sugar, 18g total carbs and 1g of protein. But you can’t find The Cereal School at the grocery store and it doesn’t come in a box; it’s only sold online through the company’s site in individual, single-serving bags.

The Cereal School was founded by Dylan Kaplan and Helen Guo, two Georgetown grads who decided the sugary cereal didn’t have to be so sugary and could be made in a way that even health-conscious adults could enjoy. The two turned their 450 sq. ft New York apartment into a lab, experimenting with different flavor profiles. They wound up settling on monkfruit as the sweetener in the cereal.

Kaplan and Guo launched The Cereal School on Instagram in August of 2018 with no marketing budget and promptly sold out of all their inventory in 72 hours. Right now the company is bootstrapped and Kaplan and Guo are its only employees, but during an interview with Kaplan last week, he told me he prefers this smaller approach. “We made a conscious decision to bootstrap as long as we can,” Kaplan said. “It’s forced us to be very scrappy and think about ways we could grow the business without some huge treasure chest.”

That scrappiness, however, can come with some bumps in the road. Kaplan said that the company’s smaller size forced them to go through some manufacturing growing pains at the beginning as they tried to keep up with demand. While Kaplan wouldn’t reveal specific sales numbers, he said those issues are now worked out and the product is no longer on backorder.

If the idea of a kids’ cereal for adults sounds familiar, then you’ve probably heard of Magic Spoon. Much like The Cereal School, Magic Spoon makes sweet cereal that is high in protein, keto-friendly, non-GMO, gluten-free, grain-free, soy-free, wheat-free and has nothing artificial.

During our call, I asked Kaplan about Magic Spoon and what it’s like being part of this new wave of healthy sugary cereals. “They are what I’d call a knock-off brand,” Kaplan said of Magic Spoon, though he thinks that after decades of having to choose between sugary and healthy, consumers will shift towards his company’s new kind of cereal and that there will be more than just The Cereal School and Magic Spoon offering it.

For what it’s worth, I’ve tried both and prefer Magic Spoon to The Cereal School. Magic Spoon uses Allulose for its sweetener and I found the taste and texture to be superior. What I do like about The Cereal School is the packaging. Since it comes in individual bags, there’s built-in portion control, and you could take it with you for some cereal on-the-go.

Neither option is cheap however. The Cereal School is $50 for 24 bags (528 grams total), and Magic Spoon is $40 for four boxes (792 grams total) .

Price doesn’t appear to be too much of a hindrance this early on, with both The Cereal School and Magic Spoon experiencing backorder issues. It looks like there’s a healthy market for healthier kids cereal for adults. Disruption never tasted so sweet.