Growing Chicago startup Black Buffalo recently raised $30 million of equity capital led by one name that’s become synonymous with Chicago business: The Pritzker Organization.
In the deal's announcement, The Pritzker Organization Managing Director Jason Prtizker praised the strategy and vision of the company that makes smokeless tobacco alternative products and said that it aligns perfectly with the organization’s goal to build best-in-class businesses over the long-term.
“Having the Pritzker name is actually far more than just the name,” Black Buffalo Chief Growth Officer Matt Hanson told the Chicago Business Journal. “They are a true world-class business builder.”
Hanson added that unlike a lot of fast money investors who may be looking to hop from one thing to the next, The Pritzker Organization dug deep into the business and made sure they understood its ins and outs before investing.
“Everybody knows the Pritzker clan ... but for us it was far more important to actually have Tom Pritzker and Jason Prtizker, who’s joining our board, as true partners,” he said.
Other backers included Listen Ventures, Watchfire Ventures, Vice Ventures and UTC Ventures.
Growing smokeless tobacco alternative
Black Buffalo started as an online sales company for those looking for an alternative to traditional smokeless tobacco. The product comes in both long-cut and pouch varieties and contains pharmaceutical-grade nicotine.
Hanson added that Black Buffalo's plant material uses a leaf from the cabbage family — instead of a tobacco leaf — yet still aims to give consumers the texture, taste and aroma they like of traditional dip.
Since 2020, Black Buffalo — which secured a nearly $10 million funding round that same year — has grown tenfold.
“Our first month of sales, which was like six years ago now, was something like $3,000, and we’ve grown hundreds of times over since that,” Hanson said. “What really accelerated our growth has been our entry into convenience stores.”
Black Buffalo’s “first big” convenient store win was in January 2022 with a chain out of Texas and New Mexico called Yesway.
The company is now in 800 stores across the country and expects to be in as many as 3,000 stores by Q1 2023. Hanson is also looking to double the company's head count over the next few months.
Black Buffalo has been virtual from "day one," though the company plans to set up a Chicago office while keeping its manufacturing facilities in North Carolina.
"We're working with a real estate brokerage firm to scope out an office, and for the first time ever Black Buffalo, which has always been headquartered in the city, will have a physical office in Chicago," Hanson said. "We love the West Loop. We love the old industrial corridor feel, and frankly I don't think we need a fancy office with the proverbial ping pong tables and cooler stocked with organic salads."
As for the Chicago retail market, Hanson said that it is largely consolidated by big companies like Speedway and 7-Eleven. Still, he’s partnered with several smaller chains that have more like 20 to 50 stores total.
"While we would love to be in every Chicago convenience store, it's more of a hand-to-hand combat to win individual stores as opposed to getting in one chain and distributing to all of their hundreds or thousands stores," Hanson said.
This story has been amended from its original version to reflect the scope of Black Buffalo's distribution.
