The newly launched second fund at Sonoma Brands, which made Guayaki its first investment, will seek to invest between $5 to $12 million in companies with roughly $1 to $15 million in revenue.
Sonoma Brands Raises $60M Fund, Spins Off Smash (Nosh).
Roughly two years ago, Krave Jerky founder Jon Sebastiani declared his plan to transform Sonoma, Calif. into a CPG mecca with the launch of investment and incubation group Sonoma Brands. Today, with the announcement of a new fund and new capital invested in his snack brand Smashmallow, Sebastiani looks to be well on his way to fulfilling this goal.
“It definitely is a momentous event for us given that we set our sights to get here from the outset of [our first fund] and knew that we had a overall strategy and thesis after we ended with Krave to try to do something unique and different,” Sebastiani told NOSH.
In total, Sebastiani properties have raised $65 million. Sonoma Brand’s second fund raised $60 million. Incubated brand Smashmallow raised $10 million, half of which is from investment group Velocity Made Good (VMG) and the other half of which was invested from Sonoma Brand’s own fund. With this raise, Smashmallow will now spin off into its own entity with newly appointed CEO David Lacy joining the company to lead the charge.
The two connected events will yield a shift of Sonoma Brand’s priorities. In its first fund, Sonoma invested a minority stake in global snack food brand Dang Foods and launched both Smashmallow as well as drinkable soup brand Zupa Noma. With the new fund, the company will scale back incubating its own concepts — although it will launch a new refrigerated snack brand at this year’s Expo West — and instead “embrace outside investments more materially,” Sebastiani said.
The Sonoma Brands fund will seek to invest between $5 to $12 million in companies with roughly $1 to $15 million in revenue. However, Sebastiani said, Sonoma Brands won’t shy away from pursuing smaller investments, down to $1 million, or to co-invest in brands with up to $30 million in revenue. For the latter, the fund may turn to the limited partners who are invested in Sonoma Brands itself.
The capital will be deployed over the next 18 to 36 months and the portfolio will likely have roughly seven active investments at any one time.