Premama Wellness, a Providence-based startup that sells supplements for maternity wellness, has attracted its first institutional investor since launching in 2011: District Ventures Capital, a Canadian venture capital fund hyper-focused on the food, beverage and health and wellness sectors.
The round closed at about $3.5 million, CEO and founder Dan Aziz told Rhode Island Inno. Premama cinched the financing in December, just in the nick of time before the coronavirus disrupted the startup funding environment.
"The capital is really meant to get us through the year," Aziz said. "Next year, we plan on doing another round in the $5 to $7 million range [bringing in one to two new institutional investors], and that should be enough to bring us to profitability and hopefully exit."
Premama will, however, make at least three new hires: a copywriter, a graphic designer and a chief content officer.
Joining Premama's board as part of the transaction is Arlene Dickinson, managing partner at District Ventures Capital and CEO of Venture Communications. Dickinson's marketing firm will take over in-house marketing for Premama going forward.
Premama Wellness markets its supplements as a "four-stage system for complete pregnancy care." Stage 1 products are designed to assist people who want to prepare their bodies for pregnancy, while Stage 2 products are aimed at those who are actively trying to conceive. Supplements marked as Stage 3 are prenatal vitamins and drink mixes, and Stage 4 includes postnatal vitamins as well as lactation support supplements.
"What really makes us different is our hyperfocus on pre- and postnatal and maternity wellness," Aziz said. "That allows us to innovate. Pretty much every product we sell, we're first in market with it."
The U.S. Food and Drug Administration regulates Premama products as dietary supplements. The agency considers dietary supplements to be foods rather than drugs, meaning that they do not undergo the same rigorous review process that drugs do; the agency simply requires companies to label such products as dietary supplements.
Premama's scientific advisory board includes physicians from Harvard Medical School, Columbia University and Brown University.
The last 12 months have marked a pivot in business strategy for Premama. Prior to May 2018, the startup was largely operating as a B2B firm, selling its products through major retailers as well as on Amazon. Premama made a switch to direct-to-consumer sales one year ago. Its website is now its No. 1 sales driver, Aziz said, although the company still works with a handful of select retailers: Target, Sprouts and Vitamin Shoppe.
With scores of consumers now ordering more products online to avoid going to stores in person, the coronavirus pandemic also marks a bit of a trial-by-fire period for Premama's D2C model. So far, the results are promising. Aziz said that sales on Premama's website jumped 80 percent from March to April, then 40 percent from April to May.
Aziz hopes to get his startup to $30 million in annual revenue to attract the attention of potential buyers within the next three years. His ideal exit strategy is to be acquired by a large parent company. District Ventures Capital's investment should provide Premama with some of that runway.
"To have an institutional investor involved gives me, as a founder, that slight pause of relaxation, that I don't always have to go chasing capital," Aziz said. "It makes me excited to know that on that next round, if we keep performing as we're performing, it won't be as much of a challenge to get new capital in, even though we're not solely reliant on existing investors."
