Raising money during a global pandemic when budgets are tight and the economy is unstable is a tall order. But Sarah Frimpong believes her efforts to do so will nonetheless pay off.
Frimpong, the CEO of Wellfound Foods, has raised $220,000 of a $450,000 fundraising round to bankroll the expansion of her company's vending "smart fridges." The fridges sell the same prepared foods she makes for her wholesale business — which has taken a major hit during the pandemic.
Wholesale distribution of the company's grab-and-go-foods and snacks accounted for a majority of Wellfound Foods' business prior to the onset of the coronavirus crisis, with the D.C. company making daily deliveries to more than 50 locations, including 27 Peet's Coffee stores and five Philz Coffee locations in the region. That revenue hasn't been eliminated entirely since the pandemic caused many hospitality businesses to close their doors, Frimpong said, but Wellfound did lose a "significant portion" of its revenue. She declined to provide specific sales or revenue figures.
So she turned her attention to Wellfound's smart fridges, an idea born before the pandemic — but one that has become increasingly valuable during it. The company installed four of the kiosks starting in September 2019: at George Mason University, the Walter E. Washington Convention Center, MedStar Georgetown University Hospital and MedStar Franklin Square Medical Center in Baltimore. The latter two were useful in Covid-19's early days.
Wellfound prepares and distributes the food daily — everything from sandwiches, salads and grain bowls to fruits and boxes with various snacks — just as it did for wholesale clients, but now it's mainly stocking the fridges instead of supplying coffeeshops and other food and beverage businesses.
"Our kiosks are 24/7, they're unattended, they're in the cloud so we can manage them very tightly and so it just kind of made a lot of sense," Frimpong said in an interview. "We got super lucky. When Covid hit, we're looking at the model like, 'Thank God we did that back in September [2019],' because our wholesale business was the majority of what we did and was super hurt by Covid."
Frimpong has been having conversations to bring more smart fridges into the market, including at health care facilities, higher education institutions, offices and transportation hubs. Frimpong said they will have "several" fridges delivered in the next few weeks and will be ordering more shortly thereafter.
The latest raise will help fund those new kiosks. She declined to disclose how much each one costs or where they will go.
Frimpong started her business, then called Broodjes & Bier, in 2013 after working in business-to-business sales out of college. She knew she wanted to start her own company, ideally a fast-casual restaurant, but the financial barriers to entry were too high, she said. As a result, Frimpong joined a local kitchen incubator and started making grab-and-go food for local retailers — she initially focused on Dutch sandwiches — which ultimately snowballed into starting what would become Wellfound Foods.
"I realized that fresh, packaged, grab-and-go food was an area that was ripe for improvements in quality and flavor," Frimpong said. "I could make a greater impact, provide more value doing that versus my original fast-casual idea."
While the fridges are the main focus right now, Frimpong is still out looking for wholesale clients, and has brought on three more since August. But she said it will be difficult to determine when the company's other wholesale clients get enough foot traffic to support bringing Wellfound's food back into store.
She said this is the company's first time formally raising money, which is "teeing up the series A" fundraising round to come later.
"It's a tough environment, but we are finding people who the concept resonates with, who are able to see how this fits into the future of food service and kind of the direction everything is moving in," Frimpong said. "A lot of conversations we're having are, 'Maybe not right now but maybe in the future.' We want to grow pretty quickly, and we see this rolling out fast."
