Coca-Cola is leading a $15 million funding round in the trendy direct-to-consumer beverage startup behind Dirty Lemon
- The buzzy direct-to-consumer beverage startup behind Dirty Lemon has raised $15 million in seed funding.
- Coca-Cola led the funding round as the company looks towards new categories and strategies for growth.
- Dirty Lemon is rebranding as Iris Nova as the startup expands its portfolio and builds out its text-messaging-centric distribution platform.
The trendy direct-to-consumer beverage startup behind Dirty Lemon has raised a $15 million round of seed funding, with Coca-Cola leading the round with a multimillion-dollar investment.
On Thursday, the startup announced it was rebranding from Dirty Lemon to Iris Nova. The company raised $15 million to expand its portfolio of brands and build tech capabilities through its SMS-based distribution platform.
Coca-Cola Company's Venturing & Emerging Brands unit made a multimillion-dollar investment in the round, following Business Insider's report in October that the company was in talks with the startup. The round also includes venture firms such as GGV, Greycroft, CASSIUS, and Imaginary Ventures, as well as celebrities like Gary Vaynerchuk, Kate Hudson, Sophia Bush, Alex Rodriguez, and Scooter Braun.
Dirty Lemon, Iris Nova's first brand, has made headlines since its launch in 2015 for selling directly to consumers via text message. The brand's rapidly expanding variations, most of which are named for signature ingredients like matcha, charcoal, or ginseng, helped the company win over celebrities and social media influencers.
"When we launched the company three years ago, the idea was to really test out this idea of really connecting with consumers," CEO and founder Zak Normandin told Business Insider on Thursday.
At the time, Normandin says he was not sure that Dirty Lemon would be a feasible concept. However, he now says that Iris Nova can create beverage concepts from ideation to production in 30 days. The company is projecting growth of 250% in 2019.
In September, the company debuted The Drug Store, a store where shoppers abide by the honor system and pay via text message. Iris Nova plans to open three more locations of The Drug Store across the US in 2019.
A significant amount of the $15 million in funding will go towards building new brands, including Tres Limon, a nonalcoholic aperitif that will launch in the first quarter of 2019. $1 million from the funding round will be used to invest in early-stage beverage brands, offering the brands access to Iris Nova's SMS-centric distribution platform.
The Coca-Cola connection
Coca-Cola's investment in Iris Nova comes at a time when the beverage industry giant is looking towards new categories and strategies for growth.
In recent months, Coca-Cola has invested in sports brand BODYARMOR, purchased Australian kombucha maker Organic & Raw Trading Company, bought juice company Tropico, and invested in healthy beverage company Made Group. Coca-Cola also spent $5.1 billion to buy Costa, a coffee chain with almost 4,000 locations.
"As our company's Futurist group, we are investing in thought-pioneers like Zak and companies like Iris Nova that can help us tap into consumer trends to bring even more products to market faster through new technology and innovation like c-commerce," Scott Uzzell, the president of Coca-Cola's Venturing & Emerging Brands North America, said in a statement.
While the partnership is in its early days, it hints at future technologies and capabilities that Iris Nova could bring to Coca-Cola. For example, Coca-Cola products could be sold using Iris Nova's SMS technology or developed using data from The Drug Store.
The deal also reveals what Coca-Cola is still avoiding. In October, Normandin told Business Insider that the company was pulling its CBD-infused beverage.
Normandin insisted on Thursday that Iris Nova did not ditch the drink - which was the most popular in its portfolio - because of pressure from Coca-Cola or any one investor. Instead, he said that the company wanted to "button up" as the legal status of CBD beverages remains unclear.
"I don't want to be in a position where we have to rip something out of distribution or away from our customers," Normandin said.
In September, a Bloomberg News report that Coca-Cola was in discussions with Aurora Cannabis to develop beverages infused with CBD created a stir. Executives have since distanced themselves from rumors that Coca-Cola is considering cannabis investments "at this stage."