Wild Planet Foods, a provider of sustainably caught wild seafood, grew from $2 million in revenue in 2008 to $20 million in 2010 and $60 million today—without compromising on its mission. How’d the company do it?
At a recent re:think event at New Resource Bank, Wild Planet CEO Terry Hunt described his company’s winning combination of a savvy business strategy plus well-chosen equity investment and intelligently managed debt. He outlined four business-building essentials: developing a case for why an investment in your company makes sense, hiring the right team, executing against strategic plans and securing funding.
Show that your business is a viable venture
Developing a case for investment involves articulating your company’s mission and then assessing whether that mission can support a robust business venture. Is there an opportunity in the market? Do you have a product that consumers actually want?
Wild Planet’s mission is to provide the finest-tasting sustainably caught seafood while supporting conservation of wild marine ecosystems. The company’s case for investment: it saw a $30–$100 million market for relatively affordable sustainable canned tuna. In 2008, the premium segment of the $3 billion packaged tuna market consisted of companies with less than $5 million in revenue, selling tuna for $6 to $8 per can—three times the price of big-brand products. Wild Planet made the case that it could grow and thrive selling premium tuna in the $3 to $4 range.
Hire the best people you can afford
The company mapped out a strategic plan and looked for the best people to execute it. Founder Bill Carvalho is an expert on the worldwide sourcing of sustainable seafood and Hunt brought to the table contacts and experience from 30 years of developing natural food companies. Together, they recruited a top-notch sales team and a seasoned CFO.
“Over-hire when it comes to the CFO,” Hunt advised. “He or she needs to be as strong a CFO as your funders will require when your company has a more complex financial structure.”
Follow through on your plan
Wild Planet’s team needed to prove to current and potential investors that they could deliver on their strategic plan. They lowered supply-chain costs 30 percent by moving production overseas—a controversial move, Hunt acknowledged, but he pointed out that the expansion created more than 20 good-paying U.S. jobs in operations, sales and marketing.
Wild Planet also focused on gaining a foothold in many distribution channels and building consumer demand through low-cost sample tastings at marathons, green festivals and Earth Day events.
Find the right investment partners
Hunt stressed that funding should be at the front of the executive team’s minds through every stage of growth. “Funding is an ongoing process,” he said, adding that before approaching funders, entrepreneurs need a detailed five-year financial forecast that includes product margins, triggers for cash flow problems, variable vs. fixed expenses and major capital expenditures.
It’s also crucial to have the right debt and equity partners. Hunt suggested looking beyond Wall Street and big banks to organizations that work in your area. “They’ll understand you, and you’ll be mission-related for them,” Hunt said. Wild Planet went to Sea Change, a private equity firm supporting sustainably sourced seafood; White Road Investments, which funds only ventures with an organic or sustainable mission; and New Resource, which considered the company’s mission and was able to look beyond initial cash flow to see the value six months ahead. New Resource in turn introduced Wild Planet to RSF Social Finance, which also provided financing.
Hunt also advised looking for creative ways to solve funding challenges, rather than defaulting to standard paths. “Instead of taking on more equity investors,” he said, “we had investors who could provide shareholder loans as a bridge to funding from bank loans. Shareholder loans come at a high rate of interest, but for a growing company, few things are more expensive in the long run than issuing equity.”
Hunt’s four-pronged approach paid off. Wild Planet is now the number one natural seafood brand in the grocery industry.