Why Apothékary, an Up-and-Coming Wellness Brand, Raised Debt Capital to Fuel Its Growth

Growing a wellness-focused business amid ever-expanding competition–in an industry worth $480 billion in the U.S. alone, according to McKinsey data–is no easy feat. 

But Shizu Okusa isn’t afraid of a challenge. 

The former Wall Streeter launched Lorton, Virginia-based Apothékary in 2018. The herbal medicine company recently closed an equity funding round, comprising $5 million in equity and $3 million in debt. That money will help the 50-person company grow its line of herbal remedies, which include wellness powders, tinctures, and teas. To date, the company has raised $13.5 million in equity and $4.25 million in debt.

“This marks our fifth year of business,” says Okusa, “and while we’re still just getting started, our volumes and profitability allow us to raise debt capital, or non-dilutive financing, to continue our growth.” She told Inc. exactly how non-dilutive financing works, why it was the smart decision for her company, how she approached her most recent fundraise and how Apothékary plans to use the capital to fuel its future growth.

Why it was time to fundraise

Okusa says her company is profitable, and has grown more than 50 percent year-over-year. “We recognize[d] the need to scale our operations to meet the needs of our rapidly growing customer base.” To do that, Okusa sought funding from mission-aligned investors, as well as debt capital–loans that don’t exchange capital for equity. “Entrepreneurs don’t consider debt enough, but with the right debt-to-equity ratio, this form of financing can be an exceptional tool to leverage your equity and return on equity.”

The fundraising strategy

While fundraising for her first company, the juice brand Jrink–which was acquired in 2019–Okusa learned the importance of “founder-funder” fit, she says: “I only accept investments from fully vetted individuals and funds in my network. Each investor goes through reference checks, and for funds, a due diligence questionnaire is submitted prior to investment.”

For this round, Okusa says that Apothékary spoke to roughly 100 investors and had about 23 new investors participate. New investors include Anne Mahlum, founder of [solidcore], Andy Dunn, founder of Bonobos, and Steve Weiss, founder of MuteSix; they joined previous investors, such as Strand Equity, Trousdale Ventures, and Venrex.

Apothékary also secured debt capital from Walden Mutual Bank in New Hampshire–a bank focused on “natural and farm-adjacent companies.”

What the capital will fund

Apothékary plans to use this capital for both inventory financing and omnichannel retail expansion. It has plans to invest further in its products, with two clinical studies in the works and five new SKUs expected to launch in the next 12 months. The company also has plans to open a “flagship experience” in New York City and develop an AI herbalist, Okusa says.