Case Study

How the Early-Stage Startup Waku Is Creating Investor Ambassadors and Scaling Growth with a COVID Pivot

Waku is a food and beverage brand of natural and ethically sourced ingredients from Ecuador. They’re aim is to help their customers around the world eat healthy and deliciously, while helping to improve the livelihoods of thousands of farmers in Ecuador.

Waku’s two founders are Juan Giraldo and Nico Estrella. As a retail-focused consumer beverage, Waku, like many startups, faced tremendous challenges as a result of the 2020 global pandemic. Waku went from just graduating from an accelerator and landing a regional retailer, to having to re-think their brand and distribution approach. However, maintaining an agile mindset, Juan and Nico were able to find new advantages to the market disruptions.

We talked with Juan Giraldo recently to discuss their approach to market in the COVID era, and about their new funding partnership with Republic, a private investor platform.

Tell us about where Waku was at the start of the 2019 early-stage accelerator? What were your goals going into the program?

When we joined MassChallenge, we had only one year in the market and our whole distribution strategy at that point was to solidify our regional presence in the New England region. The goal for MassChallenge was to work on our value proposition, messaging, and then work on a go-to-market strategy that would get us the regional retailers (i.e. the Market Baskets of the world). By the end of MassChallenge we hit one of those targets, launching with Market Basket in October 2019. We got the opportunity to go to the business segment of NECN to talk about our experience at MassChallenge, and during the talk we spotlighted Market Basket, who we’d been in talks with already. After, I sent Market Basket’s buyer the link on how we were promoting Market Basket on TV, which made our relationship even stronger. That’s just one example on how we were able to leverage the MassChallenge network to grow.

During your time at MassChallenge, which parts of the accelerator did Waku find the most advantageous?

One of the biggest was mentorship. Not only did we meet regularly with our main mentor who helped us identify our pitch and our value proposition in our messaging, but we also met with several others who have had experience in our industry and with companies in similar stages. These are mentors we leaned for specific questions on distribution or retails partnering, and we’re still in touch with many of them to this day.

I think the most wonderful component, however, was the network of entrepreneurs. We’re still very good friends with a dozen or so of them. We have a mastermind call every month where we share wins and struggles. We are all in the same industry, so there’s a lot of commonalities.

Like many startups, Waku had to do a pretty big pivot in 2020 with effects of the global pandemic. How did your team approach the difficulties the pandemic created for the retail industry? The changes in consumer behavior?

In addition to the mental health and isolation struggles that everyone was experiencing, our industry and supply chains got very disrupted. It was impossible to import, export things. It was kind of a mess. The way we sold our products changed overnight. We had developed a food service channel in the New England region, which, in one day, went to zero revenue. The retail channel also changed because consumers stopped going to supermarkets to explore new items; they just went on a mission to get things and get out.

For early-stage food and beverage brands, a lot of learnings come from the ability to do field marketing activations. Things like sharing samples, discussing the product either at a store or at events. We lost the ability to do that. So, we basically lost our distribution channels, and we lost the ability to activate the brand.

We had to make the hard decision of pulling back from food service and retail because we had no idea when things were going to get back to normal. In June 2020, we decided to focus on ecommerce, and it felt as if we had to launch the business from scratch again because we had to develop an entire distribution channel from nothing.

Very quickly, however, we started to see double digit growth month over month. We realized what we had developed was a very powerful new channel. It’s one that can scale, but also gives a feedback loop that we didn’t have before. Now we have immediate feedback and interactions with thousands of consumers all throughout the US which has helped us define new attributes of our brand that are important to our customers. Now we see this channel as a big advantage against bigger companies. We test very fast, iterate, and improve our product and our marketing messaging. Whenever we’re ready to go back to retail, we have a lot more confidence and a lot more data than before.

So you kind of took advantage of the changes in consumer behavior to focus on R&D phase?

Yes, it’s been somewhat of an R&D phase, but it’s also a scale up channel because ecommerce is so prevalent. In 2020, we made a 10-year leap in one year. Our sales have increased more than 9x since our first year.  It’s also a lab where we can test much more effectively. We’re going to start launching limited edition flavors every month, and strategies like that. When we go back to retail, we’ll have enough data to support new campaigns and decision making.

Going forward, how are you planning on prioritizing future initiatives? Say, 2022 – are you going to balance both ecommerce and retail or focus more on one?

I think the future of all consumer brands is omnichannel, so you need to be present everywhere. Customers will find you in different places on different occasions. Sometimes they might be scrolling down their social media and want to make a purchase, other times they’ll be shopping at a supermarket.

We will go back to retail very strategically. We’ve learned that, for consumer brands that are fighting shelf space against huge companies, it’s very important to have your product super optimized to win. Your pricing must be right, messaging must be right, packaging must be right.

Next summer, we’ll be focusing again on regional chains in the northeast, like Whole Foods and  Wegmans, to develop an omnichannel strategy. One thing we want to be careful about, however, is recognizing that the capabilities in a direct-to-consumer business and a retail-facing business are two different things. Quite literally two different teams, with different skills and capabilities. So funding wise, we need to be ready to fund that expansion and to go at retail with enough capital to actually succeed.

Waku recently partnered with Republic, private investment platform. Tell us more about your funding campaign with Republic and what you see as the future with them?

It’s interesting how innovation is becoming increasingly democratized — the access to private investing in the U.S. I think is wonderful. Before platforms like Republic, the possibility of investing in early-stage private companies was closed to only accredited investors. I think this democratization brings a lot of opportunities for founders, but also for investors and people around the world.

Republic has been launching more and more consumer brands in the platform and, when you think about, it makes so much sense because as a consumer brand it’s all about brand awareness and distribution.

So, what happens when you have 2000 investors that become your evangelists that are sharing about your product with everyone in their network? They are quite literally invested in your brand and in the success. We thought that it could be a great opportunity to create a splash and to have an army of brand ambassadors that are genuinely interested in talking about us and our products to their peers.

That was the number one reason. The number two reason was that both my co-founder and I are immigrant founders. We came from Ecuador and had experiences living abroad before and we figured this could be a great opportunity to allow these friends and family from other countries to have a chance to invest in us, give them that opportunity to get a piece of the success here in the United States.

From a funding standpoint, as we’re experiencing rapid growth, there’s a lot of plans ahead in terms of new product development, a brand refresh, new formulations, and new packaging. We’re planning the come back to retail which requires capital. We look at Republic also as a source of funding that will provide enough runway to get us to the next stage where we will be able to raise early-stage venture capital.

What would be your advice to early-stage startups that are in the retail space right now?

Pick the right distribution channel for your brand, especially when you have limited marketing dollars. After you finally get authorized in a retail chain, stay focused. Make sure your launch at that retail chain is a success and use this success story to continue to penetrate the channel you are targeting.

Also, get your product right – formulation, packaging, pricing, messaging – make sure your product is ready to compete on the shelf. If your product is not ready, go back to the drawing board, improve it, and only then start scaling.

And finally make sure you have the infrastructure/ resources to support the retailer.