LittleOak seeks $10m from investors as it expands in the US

afr.com:

The LittleOak Company, a New Zealand goat milk infant formula hopeful backed by private equity fund Parc Capital, is in the market to raise $10 million to support an expansion in the United States.

Elke Pascoe, LittleOak’s founder, recently returned from the US where she was visiting with prospective investors to get clarity around the Food and Drug Administration process for a full entry to the second-biggest formula market in the world valued at about $US4.3 billion ($6.5 billion).

“We were overwhelmed by the level of interest in the US right now in infant formula,” Ms Pascoe told The Australian Financial Review.

LittleOak founder Elke Pascoe is seeking to raise $10 million from US investors. Peter Rae

She is looking to capitalise on the growing demand from US consumers seeking alternative clean green brands following a contamination scare at a plant in Michigan, and a subsequent shortage of formula. LittleOak is the first palm oil-free infant formula in the market, and the company uses cold-pressed flaxseed oil instead of less nutritious canola oil.

Larger rival goat formula player Bubs Australia was one of the first companies to gain special access from the government which allowed new brands into the formula market that has been dominated by a few players.

LittleOak is taking advice from Alice Wells, of Lempriere Wells, a consumer brand specialist raising offshore strategic capital for high-growth brands generating $1 million of EBITDA up to $60 million of EBITDA.

There are three possible early-stage US-based investors that have expressed interest in participating in LittleOak’s latest funding round. LittleOak generates 80 per cent of its online sales from North America, so Ms Pascoe is following consumers’ dollars.