From Startup to Stock Exchange. Tale of an angel investment.

The idea of launching a new brand of water is a pretty crazy notion. I’ve heard a lot of entrepreneurs pitch startup ideas in the past. Rarely did I hear them in the CPG space. 

*****

I dropped my fork.

The clang of the collision with the plate absorbed by the murmur of the crowded diner.

“You’re going to do what?” my mouth agape with half chewed lunch.

“I’m going to sell water.” Nicholas smiled. 

I looked through his eyes to see if there was any flinching. Any signs of a joke or, to put it kindly, delusional thinking. 

Nope, he’s serious.

It was early spring of 2015. 

Just six months prior to this, I had sold my solar energy startup. I was still a mixed-bag of emotions, dealing with the emotional aftershock of the sale and the hectic process of the integration of my startup into the behemoth of an acquirer. 

Knowing that my mind was still in a daze, close friends of mine who’ve also gone through the exit process warned me that life would change after an exit. “Let this new stage settle” they advised. “Don’t make any rash decisions for a year.”   

Is angel investing a rash decision?

One upside of selling my company was that I had more time for coffee talks to catch up with old friends. At this particular coffee talk, Nicholas explained his vision for a new business. 

He told me that his inspiration came while he attended Burning Man.

Burning Man. Right. I thought to myself. I imagined his epiphany arriving while dancing around a large bonfire, the sounds of pumping electronic music in the background. 

But that was a false assumption. That isn’t how it happened. Instead, his moment of insight occurred at the end of the festival when he was packing up to leave.  

That’s when he saw the mounds of plastic water bottles -a piling collection that sustained 70,000 revelers over a nine day period- collected together to be transported away, to a destination where they would take half a millennia to decompose.   

“There had to be a better way,” he said.

He explained that he was going to launch a new premium water brand, one wrapped in eco-friendly packaging. It would be his own personal war against plastic, filling a white space in the bottled water category. 

The target demographic would be 20 - 40 year olds who care about wellness and healthy living. A set of consumers who appreciated aesthetics and believed that brands are a reflection of their values.   

The water source would be an artisanal spring underneath land his family had owned for generations. Tests showed that the water was naturally alkaline and rich in minerals, a desired feature in drinking water. 

“I’m going to package the water in tetra pak and sell it through Whole Foods. And I already have the name. Flow Water.” Nicholas looked at me as the waiter dropped the bill on our table. “Do you want to invest?”

*****

At that time, I was new to angel investing. (note: I don’t like the term “angel investing” but will go with it since it’s generally understood.)

Although I had a background in the VC industry, the difference between investing as an individual versus investing as part of a professional group became quickly apparent. 

It was no longer my full-time job to analyze industries and to do diligence on deals. Instead, I was doing this investing thing off the side of my desk, assembling my thought process during scattered moments, amongst the radical changes happening in the new chapter of my life. 

I no longer had a group of people with whom I could bounce ideas and think through the range of outcomes and the potential risks. 

Capping it off, this investment would be using my personal capital. Capital I had just gained after years of suffering as an entrepreneur. 

Unlike a VC fund which has a mandate to direct capital -mostly other peoples’ capital- towards high potential start-up opportunities, I had not yet mentally formed a strategy nor appetite for making high-risk, illiquid investments.  

Is this something that I want to do, now?

As I thought about the opportunity, my natural VC instinct kicked in. That meant a flood of questions began to run through my mind:

• What the heck does a growing CPG start-up look like and how much money would he need to build the company? 
• Is this the person who could build this?
• Wasn’t the drinking water category saturated? How could Flow differentiate itself?
• What would the unit economics look like? What do the operations of water production and distribution look like? What if something went wrong with the water supply? What if regulations changed... what if, what if, what if?

Each question posed an area of uncertainty. Uncertainty, that I didn’t have the time to research to dispel. And uncertainty is scary. 

To stop myself from sinking into the quicksand of uncertainty, I took a deep breath and pulled back to look at the big picture. Dr. Edward de Bono has written about an approach to analysis called “The Six Thinking Hats.” The premise is to look at an issue wearing different hats of thinking. Attack an issue using intuition, using available facts and data, determining the potential benefits, the risks and the alternative options. 

Following that methodology, I put aside my hat of negativity and donned my Yellow Hat of positivity. I thought about the possibilities if things went well.  

During the course of building my solar business, we engaged thousands of homeowners in conversations about the environment and personal finance. That gave me insight into the changing attitudes of consumers towards environmentalism, and an emerging enlightenment towards the impact that their lifestyles were having on this planet. I had begun to observe a wave of consumer interest in brands that spoke to a conscious, healthier planet and lifestyle. 

What if this new brand, one that stood for wellness, could be extended into other areas? Could they make the leap from a single product into additional food and beverage categories? Stretching even further, could they move the brand and their loyal customers into related areas like fitness and health?

Let’s take that a step further. By making a recyclable package option available on the shelves of stores instead of the incumbent plastic bottle, could a consumer take a conscious moment to make a better choice? And could that one little decision be the spark that catalyzed the behaviour to make other sustainable choices in life? 

Carrie Bradshaw’s voice popped in my head, posing a rhetorical question voiced over real time text typed out on a 2000’s era laptop screen: was there a shot to see the Butterfly Effect in action? 

Ultimately, my conviction rested on believing in Nicholas, the entrepreneur. There wasn’t much else for me to go by. I was asked to invest in a dream. An idea that was semi-researched, with a catchy name. 

But I had the benefit of personally knowing Nicholas for over twenty years. A pool of data to draw from, to give some -any- kind of predictive capability towards his chance for success. 

First, Nicholas was a serial founder. He had been in the trenches several times and was the rare sort that can assemble something out of nothing. 

His early successes in the music and service industry showed me that he had a knack for being in tune with consumers’ tastes. He founded a series of tech startups that had a common pattern of addressing consumers’ lifestyles. 

But beneath his buttoned up shirt, the superpower he reveals is the possession of raw energy. The ability to set a vision and to make things happen by energizing others. A rainmaker. 

Have you seen the scene from Boiler Room, where Ben Affleck confidently paces in front of a table of wannabe stock traders, waving his hand in the air, changing the wills of people with his sheer energy? 

“Move around,” his character says. “Motion creates emotion.”

Take that fictional character and flip that bundle of negative energy into one of positivity. That’s Nicholas.    

That’s the person I was going to believe in.

*****

After deciding to make the investment and the arduous mental gymnastics that went along with the decision making process, the physical act of making the investment itself was anti-climatic. 

An email came over via Docusign asking to accept a digital signature of my name. There wasn’t any satisfying final pen stroke as I signed my name majestically, like one would see in a movie scene. 

Just hit the enter button. Wire money. Less money in my bank account.

Then nothing.

No instant gratification. No new automobile. No exotic vacation destination. 

What I received was the abstract idea that I owned an illiquid small piece of a company. No true markers of the value. I couldn’t trade the shares in and out on a stock market. I had to sit on my hands and believe that they could create something of value. I had bought a small piece of a dream.

Go forth and build!

*****

One annoying aspect of angel investing that can arise is when startups don't provide any information to investors about what they are doing. Radio silence creates uncertainty and is usually a symbol that things aren’t going well. 

This was not the case with Flow. 

Right from the beginning, the company was disciplined in providing regular updates to investors. And the evolution of the company from launch has been remarkable to follow. 

The first year was the introduction of the Flow brand to the Canadian Market. Launching at Whole Foods and Longo’s, consumers got their first glimpse of this new brand. The second year saw them expand nationally and enter the US market. In the third, they opened their own production facility in Aurora, Ontario and began selling via ecommerce. By the fourth year, they had extended their product SKUs by launching a line of award winning organic flavoured waters. The fifth year saw them expanding their US presence with the build-out of a second production facility and a foray into the overseas market. That was capped off with the launch of a new line of collagen-infused water.  

As a signal of their commitment to social and environmental business practices and transparency, Flow has registered and operates as a Certified B Corporation. They are measured regularly and score well in the areas of governance, the treatment of employees, their involvement with communities and on their environmental practices. And Flow customers have avoided over 71,000 kg of new plastic waste from entering the environment. That material is about the weight of the Space Shuttle Endeavour. Or replacing roughly eight million plastic water bottles. Wow!

*****

And here we are, six years after that lunch at a diner in Toronto. Flow Water will soon be listed on the TSX stock exchange. 

I had a ringside seat to see what started as an idea grow into a product that has been in the hands of Prince Harry, supported by Shawn Mendes and even featured in a Black Eyed Peas music video. And soon, Flow will be publicly traded on Canada’s largest stock exchange. I couldn’t be more proud to watch this new Canadian brand grow!

Congratulations to Nicholas Reichenbach, Tammy Eckenswiller, Joe Jackman, Mike Bajurny, Matthew Hoar, Martin Villeneuve and the hundreds of colleagues, investors and supporters for making this happen. 

By being on the Toronto Stock Exchange, you will be entering a new chapter of your journey. And the adventure will continue.

Please don’t listen to the advice I was given when my life changed. 

Don’t let the dust settle and don’t do nothing for a year. 

Go forth and build!