Sports Beverage Brand O2 Pure Hydration Turns To Their Community To Drive Growth Through Crowdfunding
In 2020, O2, an Ohio-based company focused on perfecting a healthy sports drink alternative, won BevNet’s Best Marketing Campaign award for an initiative that put company profits back into gyms during the pandemic. The brand, started by CEO Dave Colina, is known in fitness circles for supporting gyms, trainers, and athletes as a community-first beverage brand. Now, Dave and his team are offering that same community (and others) the opportunity to own a piece of the brand through crowdfunding at SeedInvest, where regular investors can buy shares in O2. I sat down with Dave to learn more about how the brand has grown since the BevNet win and why they are turning to crowdfunding to fuel their next stage of growth.
Dave Knox: The last time we talked you were telling me about your Stay for May campaign, and how you and some like-minded brands generated $230,000 to give back to about 2,100 gyms to power through the pandemic. What’s new before we go into 2022?
Dave Colina: Yeah, we were coming off a truly record-breaking year, which was kind of remarkable because 2020 should have crushed us. We pivoted quickly, shifting from 80% of our revenue being tied up in the gym channel to growing a DTC business from low six figures to multiple millions, literally within a few months’ time, and we did it by doing the right thing for our gyms that were shut down by COVID.
Knox: It’s hard to imagine your business grew by giving money away during the pandemic. How do the numbers support the claim?
Colina: We actually saw our largest growth year ever, with over $5M in sales, 175% YoY growth and 721% increase in our DTC business with 5 times the customers. We had a 42% repeat purchase rate, 11:1 LTV:CAC, and we snagged a spot in the top 25% of the Inc. 5000 list with a three-year revenue growth rate of 407% – 2.8 times higher than the Inc. 5000 median for 2021. Considering the overall business climate, I think we killed it.
Knox: Those are impressive stats for any business during the pandemic. How have you leveraged the wins through 2021?
Colina: That’s a good question, because the world is still struggling through this thing, and businesses are still working hard to bounce back. Just because we saw a bit of daylight doesn’t mean everyone has suddenly gone back to normal. But, we did sign revenue-generating contracts with CrossFit and Life Time Fitness gyms in Q4 2021 to keep this momentum going. We’re already seeing success with our CrossFit partnership in their brand-new Affiliate Partner Network, and our Life Time launch is now underway.
Knox: Those are recognizable names to have associated with a CPG startup. So, with all this success in the last two years, why crowdfund with SeedInvest?
Colina: We’ve been in a growth phase for a while, but the pandemic caused some arrested development, and there’s no question a lot of startups faced the same challenges. We approached traditional food/beverage VC groups to help fuel the fire we’d started, and we were turned away. It surprised me at first, given the points we put on the board. “Too small” or “Come back and see us when you’re $10M” were common refrains. As you know, our values at O2 are Honesty, Humility, and Hustle, so I say this from a place of humility: we aren’t perfect, but we worked our tails off the last two years and the numbers speak for themselves. So after hearing rejection after rejection, I started to question what we had accomplished while at the same time questioning the audience and whether or not they understood what we were doing.
Knox: How do you deal with that as a CEO who’s responsible for a very close-knit team, and a core audience you see as your community?
Colina: It’s hard. That’s the truth. After a lot of soul searching, I concluded it wasn’t us – it was these particular investors. We’ve always been a grassroots brand that has grown through an approach that’s much different than throwing money at problems, mainly because we’ve never had much, and I think that’s foreign to a lot of traditional investors in our space. Most drink brands have high marketing and customer acquisition costs while battling for retail shelf space. We offer an alternative, with growth achieved through innovative marketing campaigns, proprietary partnership technology we’ve developed, and a presence in large gyms like Life Time and thousands of independent CrossFit, HIIT, and bootcamp gym locations.
Knox: Do you have an idea of the traditional VC archetype in the startup sports drink space?
Colina: I can’t speak for any one investor, but I do believe VCs in our space would much rather bet on a brand that has less upside but fewer meaningful competitors vs. a brand that has a tremendously high upside but is also taking on sugar-filled giants like Gatorade and PowerAde. Almost anyone I talk to who isn’t a professional investor gets what we’re doing and wants to support it, because everyone recognizes that sports drinks suck and haven’t evolved in 60 years – they’re due for a change. We’ve seen an enormous groundswell of support from our own community over the years, whether it’s a gym owner or an online subscriber, so over the summer I had a “no duh” moment where I realized we should be calling on them for investment, not a VC with a timid investment committee.
Knox: Can you describe the kind of person you hope wants to be a part of O2?
Colina: I’m glad you asked that. I think a lot of people in my position might say “anyone and everyone,” and we certainly do welcome anyone who’s interested, but we gravitate toward
people who aren’t afraid to challenge the status quo and want to be a part of something bigger than just a financial return. One lesson I learned is that any time we try and do things in a “traditional” way, we get burned, and any time we dare to be different, we succeed, so I don’t see why sources of investment would be any different. So now we’re inviting anyone into our community who has $500 or more to invest and wants to be a part of what we’re building and go on this journey with us. I love the idea of getting our fans and new customers of O2 into the fold, with skin in the game, and truly help us build this thing through word of mouth and other grassroots support. If you want to find out more, you can visit www.seedinvest.com/o2 for additional company and investment information.