Lil Bucks is raising a Crowd SAFE at a $4 million valuation with 20% discount. While many consumer packaged goods (CPG) brands rate poorly on price, Lil Bucks’ valuation is surprisingly reasonable based on the company’s strong traction and revenue potential for 2021 and beyond. Investors have an opportunity to get in early at a low value, with the potential for strong returns if Lil Bucks achieves an exit in coming years (as the company indicates it is orienting toward). Therefore, Lil Bucks’ price rating is its highest. 

The entire market for breakfast products is relatively small compared to other food and beverage categories. The global breakfast cereal market was valued at just $37 billion in 2016, with a modest projected CAGR of 4.3% over the next several years. It’s tricky to find market size estimates for plant-based breakfast products specifically, but that segment is undoubtedly quite niche (within an already narrow category). While plant-based foods are an emerging trend, the majority of consumers are still attached to their staple processed brands. 

Admittedly, Lil Bucks’ products straddle several industries. While many consumers associate granola-esque crunches and clusters with breakfast, Lil Bucks can also easily be considered a snack food. However, the global healthy snack foods market was valued at just over $23 billion in 2018, a niche category when compared to the market for mainstream snack foods (almost $440 billion). 

While Lil Bucks will benefit from growing consumer interest in healthy, plant-based foods, the actual segment of consumers paying a premium for these products is still quite small. Therefore, Lil Bucks’ market rating is quite low.

Lil Bucks was founded by Emily Griffith, a designer and digital marketer who has succeeded in creating a strong brand for the company. Griffith graduated from the Kelley School of Business at Indiana University with a B.S. in Marketing & International Business. She’s spent time in Australia, where her life was reportedly changed by an açaí bowl that contained buckwheat. Griffith returned to the U.S. and spent a couple of years as a marketing account executive, but was plotting to bring the sprouted buckwheat trend stateside. She founded Lil Bucks in 2017, singlehandedly developing the brand identity and learning all she could about CPG businesses with the help of The Hatchery, a food and beverage incubator in Chicago. 

Griffith is currently the sole member of the Lil Bucks team, though she plans to hire sales and operations staff with the proceeds from this raise. Griffith has built an admirable brand and is clearly a strong marketer. However, she lacks previous entrepreneurship experience and meaningful expertise in DTC and retail logistics. Therefore, the Lil Bucks team score is middle-of-the-road.

Obvious differentiation is often difficult for food and beverage brands. Unless they are truly paving the way in a brand-new category, consumers are likely to miss the central premise that distinguishes one package from another in the crowded supermarket shelves. Unfortunately, Lil Bucks faces this same challenge. While sprouted buckwheat is truly an innovative ingredient — and seems to genuinely offer significant benefits over traditional grains and granolas — Lil Bucks packages could be easily confused with any other natural-looking cereal or snack. For this reason, Lil Bucks’ differentiation rating is low.

In 2019, its first year of meaningful operations, the company generated $35,522 in revenue but posted a net loss of almost $47,000. 2020 was reportedly a year of growth for the business. Through November, Lil Bucks had generated $141,000 in sales (note that Lil Bucks’ raise is being conducted under expedited COVID-19 exceptions, so exact 2020 financials are not available). 

Beyond revenues and profits, Lil Bucks boasts several positive performance metrics. A redesign of the Lil Bucks e-commerce website boosted conversion from 1.7% to 2.24%, and 21% of customers return for another order. Lil Bucks products are sold at 73-84% retail margins (though these margins drive up retail price, which is spendy at almost $7 per bag).

There are several indications that Lil Bucks has strong potential to increase traction in coming months and years. However, latest financials aren’t available for review, and the company is still generating relatively low revenue after several years in business. Therefore, the company’s performance rating is just slightly above average. 

Lil Bucks is generating solid revenue. However, despite what seems to be a relatively large number of press mentions and a polished brand, the company hasn’t quite hit a huge growth spurt. It’s hard to point to a particular culprit. Perhaps retail prices — at almost $7 per bag — are too high, buckwheat isn’t on enough consumers’ radars, or the company is struggling to maintain a consistent supply chain (products are currently out of stock). For whatever reason, Lil Bucks doesn’t seem to have achieved convincing product-market fit yet. 

Not every company has to grow explosively, and Lil Bucks is undoubtedly a successful small business. But the company might be destined to remain just that: a small business that generates strong income for its founder, but won’t scale rapidly to provide investors with meaningful returns.

Founder Emily Griffith has done an admirable job developing a slick brand with a product that has the potential to become the next big thing in healthy foods. Griffith demonstrates a clear command of Lil Bucks’ key performance drivers in her thorough company overview on Republic. She has also clearly spent significant time learning the DTC foods business with the help of experienced advisors. All of this effort has been rewarded. Lil Bucks has forged retail partnerships with the likes of Whole Foods, and revenues increased by over 400% between 2019 and 2020 (though even 2020 revenues were relatively small). 

What’s more, Lil Bucks is clearly navigating toward a potential exit. While the company is likely too small currently to catch the attention of major players, the healthy grains and snacks space offers several success stories of small brands who grew steadily until achieving lucrative acquisitions (for example, RxBar sold to Kellogg for $600 million in just five years). Investors have the opportunity to acquire future equity in Lil Bucks at a very reasonable valuation and could reap returns if Lil Bucks’ growth trajectory continues.

Lil Bucks produces sprouted buckwheat crunches and clusters perfect for breakfast or snack time. These products are vegan, paleo, and gluten-free. They are well-positioned to capture increasing consumer interest in natural foods (particularly in the breakfast space, which could use some healthier options). Lil Bucks is well-branded, with strong margins and solid retail partnerships. The company has the potential to grow toward an acquisition by a major CPG conglomerate. 

On the other hand, Lil Bucks has been in business for several years but is still only generating roughly $150,000 in annual revenue. It does not appear to be an instant, smashing success. Consumers might not recognize the distinction between buckwheat crunches and traditional granola — and might be turned off by Lil Bucks’ high prices. Therefore, Lil Bucks has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.