Cleveland Kitchen's recent $19 million fundraise came with some surprises for co-founders Drew Anderson, his brother, Mac Anderson, and their brother-in-law, Luke Visnic.
For one, some investors that started out as likely prospects for the fresh-fermented food maker dropped out while others emerged by the time the year-long round ended.
In addition, the co-founders of the sauerkraut-, kimchi- and pickle-making company were acquiring Sonoma Brinery in Santa Clara, California — which would double their employee count — and building a state-of-the-art pickle facility in California while they were fundraising.
The brothers talked to the Cleveland Business Journal about the unexpected turns in their latest fundraising process.
This interview has been edited for clarity and brevity.
What was the biggest risk you took during the fundraising?
Drew Anderson, CEO: We decided that if we were going to get this acquisition and fundraising done, we had to start building our pickle plant months before both deals closed. It's not something that we'd probably do again.
Visnic, COO: Knowing that supply chains were compromised, we put a down payment on an equipment order six months before we needed the equipment. The order ended up bleeding into eight months. We expect the plant to be fully operational in 30 days.
What have been the past year's biggest challenge?
Mac Anderson, chief commercial officer: We have a small and lean management team, so the fundraising was a distraction and a pull on all of us. We were planning to grow and scale our operations at the same time we were focused on an equally large initiative of getting the capital deal done.
Drew Anderson: The fundraising definitely was a bit of a drag on the business.
Visnic: Pretty quickly, Drew spearheaded the fundraising effort. The majority of his time was spent wrangling all the personalities.
You became a "personality wrangler"?
Drew Anderson: Details, personalities ... just putting the pieces together. Luke and Mac stepped up and took over some of what my role was before, but then they were pulled away from their day-to-day work, so the distraction kind of cycled through the organization.
Don't investment professionals usually manage the fundraising process?
Drew Anderson: We didn't use an investment bank because we thought the deal was too small. If we ever do this again, we will bring in a pro — it's worth it for our executive team to be able to focus on our jobs.
Any other surprises?
Drew Anderson: We have always been friendly competitors with Sonoma Brinery. Early last year, we called Dave Ehreth [who founded Sonoma Brinery in his garage in 2004 after retiring from the telecommunications industry] and asked if he was interested in selling the company or some kind of partnership. So, we've been integrating with Dave's team for more than a year already. It's surprising how tight we already are with them.
