- SnackMagic, a build-your-own gift box platform focusing largely on snacks, raised $15 million in Series A funding, led by Craft Ventures, the company said in a statement.
- The funding will help SnackMagic build warehouse capacity and logistics to allow it to offer more products. This year it plans to move beyond snacks into new product categories such as meal kits, alcoholic beverages, dessert treats and non-edible gifts.
- SnackMagic, which officially launched last May, has seen demand for its offerings surge as home-bound consumers look to snack more and try new things. The upstart turned profitable in December.
SnackMagic was founded by Stadium, a group lunch delivery service in New York City popular among businesses including Google and Major League Baseball before the coronavirus halted office work. Once the pandemic shut down the city and people started working from home, Stadium, which was growing double digits month over month, saw revenue fall "off a steep cliff," said Shaunak Amin, founder and CEO of SnackMagic.
With a platform already in place, Amin said the company quickly pivoted to support the exploding work-from-home trend and offer businesses a way to still be able to provide rewards to employees who were no longer in the office.
At the same time, as supermarkets focused early during the pandemic on increasing safety measures for employees and keeping shelves stocked with popular items, retailers had less time and shelf space to devote to newer products. This left smaller upstarts struggling to get their offerings on the market. E-commerce, however, provides an easier way for early-stage startups to quickly gain traction with an audience, regardless of the environment. With consumers snacking more and spending additional time shopping online, both trends have gained momentum during COVID-19, sites like SnackMagic are in the sweet spot of today's consumer trends.
In less than a year after it launched, SnackMagic's strategy has prompted investors to take notice. Craft Ventures is no stranger to technology, having invested in Airbnb, Facebook, Tesla and Twitter. SnackMagic, which turned profitable in December, is posting annual sales of $20 million when December's revenue is stretched out over an entire year. SnackMagic carries more than 800 SKUs from about 300 brands, and ships more than 50,000 boxes a month.
"I don't think any one company has actually really cornered this market. And with the innovation that's happening in this space, with so many new brands launching, so many different diet trends, I think this is a big market that's evolving very, very quickly," Amin told Food Dive last summer. "We'd like to own the space and be the Amazon for snacks and beverages."
Snacking has grown in popularity during the pandemic with 88% of adults saying they are snacking more or the same than they were before the outbreak, according to a study from Mondelez International. At the same time, 70% of millennials and 67% of those working from home prefer snacking over meals.
While SnackMagic, as its name implies, now focuses on food and beverage snacks, the plan to expand into product categories like alcoholic beverages, dessert treats and non-edible gifts like swag and gift baskets, will give consumers more reasons to come to the site and help the upstart brands it carries attract more attention. A shopper could buy a meal kit or an energy reishi and green tea adaptogen blend powder for themselves and alcohol or a gift basket for a friend.
The challenge for SnackMagic will be to keep its website as a home for young upstart brands, sprinkled perhaps with a smattering of items from big CPGs like sparkling water Topo Chico from Coca-Cola or Tate's Bake Shop from Mondelez, which have been sold there in the past. Otherwise it finds itself in even more direct competition with the Amazons and Walmarts of the world.
SnackMagic also offers consumers a sort of treasure hunt-type of atmosphere where what's sold is frequently updated. The variety and constant chance to experiment could prove especially enticing to shoppers who like to try new flavors, brands or latch onto new or existing trends.