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.