Oats Overnight has closed on a $35 million Series B round of financing.
This latest infusion of capital for the Valley maker of packaged oats follows its first $20 million raise in March 2023 that was used to expand retail sales and build out an 86,000-square-foot production and fulfillment center at the Cotton Center in Phoenix, where the company has been based for the past two months. It also adds to a $2 million round of seed funding in 2021.
The latest round was led by New York-based Enlightened Hospitality Investments, which was co-founded by Daniel Meyer, the founder of New York-based Shake Shack.
Proceeds will be used to help continue the company's expansion in the retail channel and further develop its manufacturing and distribution footprint, said Brian Tate, founder and CEO of Oats Overnight.
Oats Overnight generated $100 million in revenue in 2023 and is on track to hit $160 million in 2024, Tate said. It has 350 full-time employees. Plans call for hiring hundreds more in the Phoenix area through 2025, with an urgent need for marketing, retail sales, finance and supply chain positions.
After talking to 30 potential investor groups, Tate said Oats Overnight ended up with multiple term sheet offers to lead the Series B round.
"We ended up choosing EHI," he said. "We haven't had this luxury in the past."
Several existing investors from the $20 million Series A round in 2023 also are part of this round, including Impatient Ventures, Singh Capital Partners, Morrison Seger Venture Capital Partners and BFG Partners. New to this round is Sonoma Brands Capital.
Oats Overnight makes 50 different flavors of its packaged oats, which consumers combine with milk in a plastic shaker that is prepped at night and ready for breakfast in the morning.
In a prepared statement, Meyer said he's proud to partner with Oats Overnight to join the mission to make nutrition both craveable and convenient.
"We are impressed by their innovative approach to product development and ability to commercialize product lines across digital and retail footprints," Meyer said.
Oats Overnight has Tempe warehouse, Ohio distribution center
Originally based in Tempe, the company moved its headquarters to Phoenix with the opening of its space at the Cotton Center and began production there about two months ago, Tate said.
The company also operates a 62,000-square-foot distribution facility in Ohio.
Its 18,000-square-foot warehouse in Tempe has three or four more years on its lease. For now, Tate plans to keep that warehouse until the lease expires. At that point, those operations will be consolidated to the Phoenix site.
A former professional poker player, Tate used his winnings to start the company in 2016. He created the first recipes while looking for a better way to fit a nutritional breakfast into his busy schedule, generating more than $9 million in revenue in 2019.
"So many customers — 30% — didn't eat breakfast before this new option," said Tate, who was a Phoenix Business Journal 40 Under 40 winner in 2021.
With more than 250,000 active subscribers, Oats Overnight taps into its customer base to test new flavors, Tate said.
"They help develop products," he said. "Our customers participate in the R&D process."
A year ago, Oats Overnight secured retail space at 200 Target stores across the country and now has shelf space within the entire chain, along with about 3,400 Walmart stores, Tate said.
