Vitosha Venture Partners invests between EUR 25,000 and EUR 1,000,000 in early-stage and growth-stage companies that are based in or related to Bulgaria. They work with resourceful founders and ideas that matter – and amongst those ideas are VGAN. Vitosha´s managing partner Max Gurvits wrote a blogpost about our partnership after meeting the VGAN team in Sofia this fall together with his colleague Marin Iliev:
A sweet Norwegian-Bulgarian story that’s conquering the world
By Max Gurvits
One of the most exciting things about venture capital is its ability to transform; not just entire industries or the way we use products and services in our everyday lives, but also in that it brings hockey-stick growth to sectors that not long ago wouldn’t have been considered venture-grade.
The venture business is all about this high growth, which we also like to call ‘scalability’. And a venture capital investment only makes sense if there is potential for a business to grow exponentially, not just marginally or linearly. To me, probably the most fascinating aspect of the past decade in VC is that ever-increasing computer power and ever-faster and wider available broadband internet, coupled with the proliferation of startup-building skills among ambitious people, have resulted in a spillover effect that saw millions of technologists, business developers, and marketers move to sectors previously considered traditional, applying the power of product development, online commerce, and data-driven marketing and user experience optimization to products that previously were not considered a venture startup topic.
One such story is the story of VGAN, one of the fastest growing companies in the Vitosha portfolio. It all started about three years ago when my Vitosha colleague Erik Anderson met Norwegian entrepreneur Thomas Kraft at a venture event in Stockholm.
When Thomas heard that Erik is a partner in a Bulgarian VC fund, his eyes lit up. He had been traveling around Europe looking for the best boutique chocolate factory to produce his latest creation; a premium 100% vegan chocolate bar that does not compromise on creaminess and taste. By that time, one of the best locations he had scouted was a small family-owned confectionery in a suburb of Sofia, Bulgaria, and so it seemed too good to be true to meet a Bulgarian VC all the way up in Sweden that he could pitch the project to.
Thomas is no stranger to the food and chocolate business. Having successfully turned around a small local dairy in the Norwegian countryside into one of the country’s biggest and most successful cheese producers, he then ventured into the confectionery business with several partners in Oslo, creating one of the top Nordic premium chocolate brands.
Quite ironically for a man who owes his success to the dairy business, some years into the chocolate venture, Thomas sensed that dairy-free is the most lucrative future direction for chocolate products. Encouraged by several big dairy-free success stories in the Nordics, especially the phenomenal rise of oat-milk products from Sweden, Thomas ventured out into designing a chocolate bar that would be dairy-free but without compromising on taste.
And thus VGAN was born. After first carefully designing the brand, Thomas started ordering any vegan chocolate that he could find for sale, analyzing the taste qualities and the sales numbers of each brand and variant. “There was a period when my family really started to hate me, as for almost a year we would practically only eat chocolate at home, having to try so many different ones”, jokes Thomas.
After distilling about twenty flavors he believed would be market hits, Thomas set out looking for production venues he could order the first test batches with. And that’s where, as he recounts the story while we tour the Sofia location, Bulgaria stood out. “Not only was the quality perfect, but Bulgaria is also an EU country, which Norway is not, and then I also found out you guys have a vibrant funding ecosystem”. And so the decision was quickly made, to incorporate the business in Bulgaria and build the company here with local talent from Sofia.
Now, more than a year since we invested in VGAN, Thomas is showing me and my colleagues, Alexandra and Marin, the pallets of boxes full of chocolate bars, stacked in a warehouse not far from Sofia airport, ready to be shipped to the US, VGAN’s launch market. After securing a deal with one of the top confectionery distributors in North America, VGAN bars are now available in over 400 Walmart locations, where an average of three bars per week per location are being sold, an unusually high volume for a market entrant in the premium segment.
As production ramps up first to a second location in Sofia, and then to a third site in the US, the distributor has increased the number of Walmarts where VGAN is sold to 2,300 starting next month, with plans to introduce the product in another major national retail chain early next year.
Thomas and his team have hustled day and night for almost two years to get to this point, and they’re not slowing down. “We’re about to launch our community platform, and we’re in talks with the production partners about a series of new products based on VGAN chocolates, like cookies and granola, to hit the stores of our US partners next year. Then, we’ll focus on direct-to-consumer for our loyal customer base, and start expanding to Europe and Asia.”
As Thomas explains, there are basically two ways to go about the food business: either you focus on creating the perfect product, or you focus on brand and distribution. You need both to succeed, but you can’t be the best in both, at least not at the same time. By first finding the best production partners, Thomas freed up his resources to keep brand, customers, and distribution as his main focus, and this strategy is clearly paying off.
I guess it takes all of Thomas’ two decades in the business and several successful food ventures to learn such entrepreneurial skills. At Vitosha, we’re thrilled about VGAN’s journey, which paves the way not only for a Made-in-Bulgaria premium product to become a global household name, but also validates an investment model, where venture-grade returns can be realized in something as far from software as chocolate bars. And that’s a truly sweet story we’re very proud of.