Hydration frontrunner PREPD seeks a further $2 million in Series A round after red-hot early sales growth
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Special Report: PREPD has had plenty of early success with its cutting-edge hydration-boosting formula. Now the SA-based company is getting ready to scale up.
The startup closed a $500,000 capital raise in June 2018, which helped fund its product launch last November.
The company is now seeking another $2 million in a Series A round to fund its expansion plans, after posting monthly sales growth in excess of 100 per cent.
PREPD is a range of hydration-boosting drinks that enhances the impact of sports drinks and water to help with performance and recovery.
The two-step system is the result of over 20 years of clinical research between Adelaide’s Flinders University, Yale University in the US and Christian Medical College in India.
Step 1 is PREPD Prime — taken 6-18 hours before strenuous exercise or competition, which prepares the body to hydrate more effectively. Step 2 is PREPD Recover, which is taken post-exercise to boost rehydration.
The unique PREPD formulations are patent pending in the United States, Europe, Australia and New Zealand under an exclusive, perpetual, worldwide IP licence.
The product is initially being pitched at the market for performance-driven athletes and consumers, from elite professional athletes to serious amateurs.
With its unique formula, PREPD is hoping to take a bite out of the multi-billion-dollar global sports nutrition market.
CEO David Vincent told Stockhead the research behind PREPD revealed limitations in the human body’s ability to absorb fluids — and it’s all to do with the large intestine.
“What makes PREPD different is a unique resistant starch, proven to enhance hydration in the gut, where we have a largely untapped potential to absorb up to five litres of fluid per day.
“After adapting the medical formulation into the two-step PREPD system for sports performance, we were able to show a benefit of up to 85 per cent better hydration compared with consuming leading sports drinks in a controlled trial with AFL players.”
Armed with such a promising set of data, Mr Vincent led a team in the development of a commercial product which could help boost athletic performance.
The team partnered with Sydney-based Steric Trading (the maker of Staminade) and completed its first capital raising last year.
“Our seed investors were predominantly high net worth individuals who brought valuable experience and connections within the sports and beverage industries,” Mr Vincent said.
“The goal was really to raise enough to launch and demonstrate market traction, before accelerating growth, which is what we’re looking to do with proceeds from our Series A round.”
The company recorded monthly sales growth of 134 per cent in January and expects that trend to continue.
“After launching PREPD in November last year, we are growing really quickly month on month,” Mr Vincent said.
“PREPD is a remarkable technology backed by evidence-based science and it simply works. This means we can stand behind our product knowing that around 90 per cent of people who try PREPD for the first time feel the hydration difference straight away.”
Now, the focus is on boosting awareness and growing distribution channels. As a result, the bulk of the next $2 million in funding will be allocated towards marketing strategies.
The company is expanding its reach in endurance sports such as cycling and triathlon and is also in use by elite sporting teams across multiple sports including cricket and Australian rules football.
On the marketing side, it has signed on as the Official Fluid Absorption Series Partner for IRONMAN Oceania.
PREPD is also launching a new range of powder-based products later this year.
The company plans to have PREPD in 250 speciality stores and gyms by the end of 2020, adding to the 25 stores they are currently in. They have plans for a soft launch in the US in mid-2020 before bringing on manufacturing and distribution partners in 2021 and also tackling the European market.
Mr Vincent said that with continued growth, PREPD could quickly become an attractive acquisition target for major players in the global beverage and sports nutrition industry.
“PREPD is a unique opportunity for potential acquirers as it has no direct competitor and is a complementary product to sports drinks. This means it represents incremental revenue, rather than cannibalising existing sales,” Mr Vincent said.
“While most differentiation in the beverage industry is premised on branding and distribution, PREPD has a significant competitive advantage with its patent pending formulations. After approval, it is likely the patents will still provide over 10 years of market protection to any potential acquirer within three to five years.”
For now, PREPD’s aim is to continue to execute on its three to five year growth strategy to establish its product in the Australian market before expanding into the US and Europe.
The company’s $2m Series A capital raise to accelerate the commercial rollout of PREPD is currently taking expressions of interest from potential investors until 5th April 2019.
The capital raise is being managed by Bridge Street Capital Partners.
To learn more about the PREPD capital raise and access their investment flyer, click here.