The Pitch: "We prepare meals for schoolchildren, as well as for summer camps and events. All our menu options are healthy, all natural, and made fresh each day. Customers place orders through our website, and we have the lunches delivered through partnerships with food suppliers and delivery companies. Most of our customers are parents with kids in private school, although this fall we will begin serving charter schools, which will place orders for all students. Right now, we are in four metro areas and plan to expand to two more by year's end. Our goal is to enter traditional public schools, which will allow us to gain more customers quickly. We are also in discussions to license our ordering system and considering a branded food product line. We are seeking investment for technology, marketing, and inventory."
Owner and CEO: Monica Tomasso
Location: Falls Church, Virginia
Employees: Six part time
Founded: October 2005
2008 revenue: $360,000
2009 projected revenue: $1.2 million to $1.5 million
2009 projected revenue by market segment: 51 percent charter schools; 49 percent all other segments
Projected gross profit margin: 10 percent to 15 percent for charter schools; 27 percent for all other segments
Projected net profit margin: 7 percent
Schools and camps served: 110
Funding sought: $1 million
The Investors Weigh In
KEEP COSTS LOW
Health e-Lunch Kids hits an unmet need in the market -- providing healthy, convenient lunches for kids -- and it is projecting strong revenue growth. But the margins for public and charter schools are too low for those channels to be sustainable. At the same time, the company needs them in order to scale. It needs to find a way to lower costs. Perhaps food manufacturers that want to promote healthy products to parents could donate overstock. The company should also seek alternative sources of revenue, such as selling ads on lunch boxes.
FRAN SEEGULL, managing director, Funk Ventures, Santa Monica, California
AVOID PUBLIC SCHOOLS
I'm impressed with the concept, and Tomasso has made great progress with market penetration and product development by bootstrapping. This is not for institutional investors, but it may be of interest to socially conscious angel investors. I would be hesitant to push into public schools. She will have to deal with price caps and bureaucracy, and the price pressure and slow payment cycles could upset the company's operations. I would consider branching out into more alternative markets, such as youth sports teams and afterschool groups.
JOHN MAY, managing partner, New Vantage Group, Vienna, Virginia
FOCUS ON LICENSING
There is a growing awareness of the importance of good food in schools, so this is a timely opportunity. But what gives Health e-Lunch Kids an advantage over other food-service companies? Licensing the ordering system is interesting, and it's scalable. Adding features such as nutrition and sourcing information would help make the platform unique. For now, the company should focus on one geographical area while exploring licensing in other areas. Once the company has proved it can grow while maintaining its margins, it can raise capital to expand.
WILLIAM ROSENZWEIG, managing director, Physic Ventures San Francisco