Ready-to-drink beverage startups are taking advantage of an uptick in venture funding in their sector following a downturn in deals during the worst of the pandemic last year.
Three Spirit, a London-based nonalcoholic cocktail alternative company, is among the latest examples of startups filling up on fresh capital. It raised a $3 million seed round in July to expand growth to the U.S. Its sales more than quadrupled from February to March following a viral TikTok video featuring one of the company’s products.
The seed round was led by CircleUp Growth Partners, the early-stage consumer investment fund of the tech company CircleUp Network Inc. The investment was made out of a $125 million fund raised in 2017.
“I think we’re seeing a ton of innovation in the beverage sector right now,” Karen Howland, a managing director at the fund, said. “[White Claw Hard Seltzer] led the way as far as ready-to-drink, convenient cocktails. Then we saw an absolute surge of additional brands going after that, recognizing that convenience is a real purchase criteria for that consumer.”
According to PitchBook Data Inc., last year marked the first decline in five years in the value of venture-capital deals in the global water and nonalcoholic beverages sector, which includes tea, coffee and nonalcoholic beverages.