Add high-tech, healthy beverage dispensers to the list of trendy office perks.
About three years ago, Boston-based startup Bevi launched its tech-enabled take on the traditional water cooler by installing an initial batch of about a dozen of its machines at local offices. Since then, the company says around 1,000 of the Internet-connected beverage kiosks have been deployed in the offices of approximately 370 companies, including Apple, AT&T, Fidelity, GE, and Netflix.
Now, with the help of a fresh $16.5 million funding round, Bevi intends to expand its products to a lot more locations across the U.S. and elsewhere.
“I feel like we’re really just scratching the surface of the market,” says Sean Grundy, Bevi’s co-founder and CEO.
The Series B round was led by Trinity Ventures, which has backed beverage companies like Starbucks and Jamba Juice, as well as tech startups like 3D printing company Markforged. Earlier Bevi investors Horizons Ventures and Tamarisc also contributed to the latest funding round. Bevi says it previously raised $11 million.
Bevi’s machines have a touchscreen that lets thirsty users select still or sparkling water, with a choice of flavors like orange mango, coconut, or a combination of blueberry and cucumber. Inside the machine, a system of pumps and valves take tap water from a hose and funnel it through a choice of flavor mixes and carbonation processes. Meanwhile, sensors and software help Bevi track things like how much concentrate of each flavor is left, how many beverages are being consumed, and so on. That enables the company to proactively refill inventory and fix maintenance issues—and to better tailor options to each client, say if a company’s employees prefer more organic choices or unsweetened flavors.
“Bevi’s mission fits the modern-day office culture: healthy, active, fun, and environmentally minded,” says Greentown Labs CEO Emily Reichert in an e-mail message. (Bevi was previously housed in Greentown’s co-working space in Somerville, MA, and the organization is one of Bevi’s early customers.)
Grundy says he and his co-founders, Eliza Becton and Frank Lee, originally set out to develop a product that would help eliminate the use of plastic bottles. That environmental sustainability message seems to be resonating with customers, but, as Reichert notes, Bevi also aligns with workplace trends around health and wellness initiatives—its beverages have little to no sugar—as well as investments in office perks.
“We’re seeing a lot of offices around the country increasing their food and beverage budgets and their overall perks budget,” Grundy says. And that’s not just tech startups, he adds. Large, well-established companies are also “starting to think about how to use office perks as an investment in their people, an investment in employee well-being, [and] an investment in [employee] retention.”
About 90 percent of Bevi’s customers are located in Boston, New York, and San Francisco, the metro areas where the 48-person startup has offices. To expand its reach in a cost-effective way, Bevi has formed partnerships with distributors, such as Canteen, a Compass Group-owned company that sells vending machines, coffee and water dispensers, and more, Grundy says.
Those partnerships have enabled Bevi machines to spread to 20 states, from Idaho to Florida, Grundy says. In the typical arrangement, the partner sells the Bevi machine, delivers it, and handles maintenance and supply refills. The distributor keeps a “significant percentage” of the revenue and passes the rest to Bevi, Grundy says.
Bevi had sales of about $100,000 in 2015, and last year its revenue exceeded $1 million, Grundy says.
Some Bevi customers pay $299 per month for unlimited access to sparkling water and purified water, and then they pay additional fees based on how much of the flavored concentrates their office consumes. The other option is to pay a higher fixed monthly fee, usually around $500, based on factors like the number of employees in an office, Grundy says. With the flat fee option, Bevi usually locks in that price for an extended period, such as two years, he adds.
“CFOs tend to love it because then their budget line item is fixed,” Grundy says.
The new cash infusion is intended to fuel additional national and international expansion. Bevi recently had its first machine installed in Hong Kong, where Horizons Ventures is based. The company is eyeing sales in Canada next, Grundy says. The company is also starting to sell to new types of clients, including hotels, fitness centers, and schools.
Bevi is also introducing a second version of its product that will be less than half the size of its flagship machine, which is 61 inches tall and has a base that’s 22 inches long by 22 inches wide, Grundy says. The company has missed out on some sales because its first machine doesn’t fit in some offices, he says. The new beverage dispenser will fit on a counter top, which should make it more convenient and able to fit in most kitchens. That’s the ideal spot, in part because it’s close to the tap water lines, he adds.
“It allows us to compete with a much greater variety of water coolers out there,” Grundy says.
One of the takeaways from talking with Grundy is that Bevi has come a long way since its early days, when it went through the Techstars Boston accelerator and was working out of Greentown Labs. It has moved past the early-stage startup phase, and its challenges now are around sales, logistics, and growth. Indeed, Grundy says Bevi aims to simultaneously expand its business while pushing toward profitability.
“I hope we’re not being naïve, but we’re trying to do both at once,” he says. The goal is to turn a profit before the end of 2018, he says, but that’s easier said than done.
[Top photo of Bevi’s flagship smart water cooler at SnapApp’s office. Photo courtesy of Bevi.]