The corporate ties that bind
Investment for ice cream start-up is double-edged
Bruce Ginsberg, president and CEO of MooBella LLC of Taunton, an innovative instant ice cream company, says his firm's investors - which include an investment firm founded by food and drink powerhouse Nestle - have been nothing but supportive.
Bruce Ginsberg, president and CEO of MooBella LLC of Taunton.
With stringsBut bringing on a big-time investor like Nestle can come at a cost, according to local experts. In the case of MooBella, it could mean conflicts of interest down the road as the small company seeks to branch out. If that growth runs counter - or competes with - ice cream products produced by Nestle, Ginsberg could have a real battle on his hands.
But MooBella's potential pitfalls aren't unique. While outside investment may seem like the way to jumpstart a company's growth, it comes with its own set of problems.
"There's a substantial risk you run when your investors don't share in your vision of the direction of the company," said Tom Sherwin, CEO of a Framingham-based consulting firm CEO Resources Inc.
Indeed, MooBella has already experienced its a share of frustration with corporate investors. In 1997, its partnership with food giant General Mills was terminated when the corporation wanted to go in a different direction with the ice cream startup than its founders envisioned.
Ginsberg - who joined the company in 2001 - downplays any potential conflict of interest from his corporate sponsors, which include the Nestle founded investment firm Inventages Venture Capital.
"Inventages' participation will not prohibit MooBella to also having simultaneous and mutually beneficial relationships with world class organizations like Nestle, Coca Cola, Pepsi Cola, Unilever and/or others," said Ginsberg.
At a recent Worcester Polytechnic Institute Venture Forum, Ginsberg presented MooBella's case to more than 120 area entrepreneurs and investors, including Sherwin.
Potential pitfalls
Jerry Schaufeld, an experienced early-stage angel investor and a teacher in entrepreneurship at WPI, said after hearing Ginsberg's case, that MooBella and its relationship with Nestle is a prickly one.
"It is possible he's already locked out some resources before he's even really started," Schaufeld said. "That potential is there."
MooBella currently employs 14, and plans to expand that number to approximately 35 in the next 12 to 18 months, Ginsberg said.
Richard O'Brien, founder of the WPI Venture Forum, said that Ginsberg's existing relationship with Nestle could put a damper on things if and when he tries to create further corporate partnerships with Nestle rivals such as Coca-Cola.
Schaufeld said that Ginsberg's balancing act between his worldwide company aspirations and his pre-existing investor relations may force him into different kinds of partnerships. Instead of partnering with Coke, for example, he may have to seek investment banking financing instead.
Ginsberg may run into further trouble with his product itself, warned McRae Banks, director of collaboration for entrepreneurship and innovation at WPI.
About the size of a soda machine, the MooBella invention produces ice cream in about 45 seconds with little noise and almost no indication of what is going on inside. A consumer's only interaction with the machine is through a touch-screen panel that prompts them to decide which flavors of ice cream and with what toppings they desire.
As it stands, the machine can only serve one customer at a time, and at 45 seconds per scoop, plus product selection time, lines get long in a hurry.
It remains to be seen how consumers in the U.S. will react to machine-produced ice cream, especially given the already dubious reputation of domestic vending machine food, Banks said.
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