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Eating Ice Cream Is Much Better Than Investing In It

It’s hot out there. And as usual in the depths of summer, our thoughts turn to ice cream.

However, this job is supposed to be about covering startup funding, and not about scarfing pints of cookies ‘n cream. So instead, we’re channeling our cravings toward a look at the entrepreneurial and funding climate for frozen treats.

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As one might expect, it’s a huge addressable market. Globally, ice cream accounts for a roughly $70 billion a year industry. And while the bulk of spending goes to established, leading brands, upstarts also abound, vying to whip up concoctions with the newest flavors, lowest calorie counts, best nutritional profiles, or most decadent taste.

An analysis of funding data from Crunchbase and other sources shows a decent, if not overwhelming, amount of venture investment in the frozen concoction space. A sample list of 14 companies shows roughly $70 million raised in the past couple years. That includes funding for ice cream purveyors as well as other sweet frozen delicacies, including popsicles, slushy drinks and plant-based ice cream alternatives. See list below:

Where the biggest scoops of capital are going

Many of the sizable funding recipients fit into a few categories. These include healthier or lower-calorie ice creams, plant-based products and alcohol-infused frozen desserts.

In a category all its own is the most heavily venture-funded startup in the space: Figure8, creator of the Museum of Ice Cream, an entertainment and indulgence experience with a frozen treat theme. The company raised $40 million in Series A financing in pre-pandemic 2019, with further financing likely dependent on performance as in-person entertainment spending resumes.

Several other companies have also raised funding for ice cream boasting fewer calories, higher protein, or other nutritional qualities in vogue. This includes: Killer Creamery, a maker of keto diet-friendly ice cream; Lohilo, a low-carb, high-protein brand; and Nightfood, a maker of ice cream for evening consumption, including a pickle flavor marketed to pregnant women.

Nondairy options also abound in the startup sphere. This includes Sunscoop, maker of allergen-free, plant-based ice cream; Evive, a frozen smoothie cube upstart; and Wildgood, which uses olive oil as a signature ingredient.

We also found a couple of companies offering a sweet treat combined with a stiff drink, one in the form of popsicles, the other in the form of sorbet.

Hits and misses

While everyone likes eating ice cream, not everyone has historically enjoyed investing in it. It’s a sector that can produce big misses, along with big hits.

On the miss side, one standout is MooBella, a provider of ice cream vending machines capable of aerating, flavoring and freezing dozens of flavors of scoops fresh and on demand. After raising $52 million in funding from 2007 to 2010, per Crunchbase data, the company eventually shuttered.

On the hit side, the clear front runner is Halo Top, the most successful new U.S. ice cream brand launched in the past decade. Founded in 2012 by a Los Angeles lawyer, the low-calorie pint producer managed massive scaling without VCs, instead securing two seed rounds on the consumer brand fundraising platform CircleUp.

Acquired in 2019 by frozen-treat maker Wells Enterprises, Halo Top’s story proves that calories are a rare area where we see an inverse correlation between quantity and cost. That is, people will pay more for something that puts on fewer pounds. At close to 300 calories per pint, Halo Top’s product commands premium prices by swapping out some of the traditional sugar and cream for alternatives like air, egg whites and stevia extract.

In the final analysis, our takeaway is that perhaps the most fitting metaphor for ice cream startup investment is ice cream itself.

On a summer day, it’s pretty much the best substance in the universe. But execution is everything. If you don’t eat fast, it will soon be a melted mess.

Looking at funded startups in the frozen treat space, it’s likely the same trajectory applies, with investment outcomes ranging pretty broadly from delectable to soggy puddle.

Illustration: Dom Guzman

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