Some startups select to bootstrap from the starting, while others are forced to self-finance due to lack of investor interest or a business model that does not fit traditional VC. FarmboxRx decided to bootstrap because founder Ashley Tyrner didn’t like the advice she was receiving from potential sponsors.
Tyrner told TechCrunch’s Found podcast that when she went to raise money for FarmboxRx, a direct-to-consumer box company that at the time was tasked with solving food desert problems, she found that enterprise investors were interested if, and only if, when she agreed to steer her company towards the current hot trend.
“Every VC we talked to, everyone who was even remotely nice to us at the time, wanted us to become a meal kit,” Tyrner said. “That wasn’t our focus. We didn’t want to jump on the meal kit bandwagon. Now, looking back, I’m very glad I never raised any capital, and we still have not raised any. Most meal kits, you know, are slowly dying out.
Instead, the company took its existing boxed product-centric model and the supply chain it had built around that strategy and built a latest revenue stream from there.
When was it announced that health plans would give you the option to offer food as medicine in 2020, FarmboxRx took advantage. The company began working with health plans to offer its boxes as a preventive mechanism to allow health plan customers to use food as medicine. Tyrner said it was difficult at first to navigate the bureaucracy and compliance needed to work with government-sponsored health care providers like Medicare and Medicaid, but the company eventually broke through and now works with about 90 plans.
“It was a very, very difficult industry to break into,” Tyrner said. “I went to find a plan to work with us, but no plan wanted to work with us. But I discovered one in Pennsylvania, and I owe a lot of my profession to the head of product there, you know. She gave us a probability. And then we simply modified our plans. We actually work with, you know, the big five that we currently work with.
Since partnering with health plans, the boxes not only provide fresh produce to people with chronic conditions who can profit from the products themselves, but also include incentives and reminders for users to encourage them to take specific actions. These friendly reminders prompt users to complete tasks equivalent to a colonoscopy or eye exam to help them prevent health problems from getting worse.
Tyrner said the company has seen significant growth with this model, but there are still many health plans value working on. The company had been attracting interest from investors for years, and Tyrner remained committed to building the product according to her desires. Now Tyrner said the company is finally ready to leverage outside funding and reach the next level.
“So we’re in a really good position to be able to attract the right investors to the company who can really help us take the next level of growth,” Tyrner said. “You know, we are a growth stage company. Now we are no longer a startup, even in healthcare.”