Some startups choose to bootstrap from scratch, while others are forced to self-fund due to a lack of investment interest or a business model that doesn’t fit traditional VC. FarmboxRx decided to bootstrap because founder Ashley Tyrner didn’t like the advice she was getting from potential backers.
Tyrner told TechCrunch’s Found podcast that when she went out to raise money for FarmboxRx, a ready-to-eat product company meant to solve food deserts at the time, she found that venture capitalists were interested if, and only if, she agreed to turn the company to a hot trend of the moment.
“Every VC we talked to, any of them who were even remotely nice to us at the time wanted us to be a meal kit,” Tyrner said. “It wasn’t what we focused on. We didn’t want to jump on the meal kit. Now looking back, I’m very happy that we never raised capital and we still haven’t raised capital to date. Most of the meal kits are, you know, slowly dying.”
Instead, the company leaned on its existing production-box-focused model and the supply chain it built around that strategy and built a new revenue stream on top of it.
When it was was announced that health plans could offer food as medicine in 2020, FarmboxRx took advantage. The company began working with health plans to offer its boxes as a prevention mechanism to allow health plan customers to use food as medicine. Tyrner said it was difficult at first to overcome the red tape and compliance required to work with government-sponsored health care, such as Medicare and Medicaid, but eventually the company succeeded and now operates with about 90 plans .
“It’s been a very, very difficult industry to break into,” Tyrner said. “I went out to find a plan to work with us and no plan wanted to work with us. But I found one in Pennsylvania, and I owe the head of product there, you know, a lot of my career. He took a chance on us. And then we just morphed into other designs. We’re actually working with, you know, the big five that we’re working with now.”
Since they partner with health programs, the boxes not only provide fresh produce to people with chronic conditions who can benefit from the product itself, but also include nudges and reminders for users to motivate them to do things. These friendly reminders prompt users to do things like a colonoscopy or eye exam to help prevent their health problems from getting worse.
Tyrner said the company has seen strong growth through this model, but there are still many more health plans to work on. The company saw inbound interest from investors for years, while Tyrner remained committed to building the product the way she wanted. Now, Tyrner said the company is finally ready to take on outside money and take it to the next level.
“So we’re now very well positioned to be able to get the right investors in the company that can really help us in our next level of growth,” Tyrner said. “You know, we’re a growth stage company. Now we are no longer a startup, even on the healthcare side.”
