Australian sugar-free soft-drink company Nexba is in the final stages of completing a $6 million capital raise, locking in the first-ever Australian investment by LGBTQ-focused investor Gaingels.
The US- and British-based investment vehicle contributed $150,000 to the drink company’s Series A. Gaingels was established in 2015, named as a portmanteau of “gay angels” and “gaining from angels”, and has invested in prominent startups including Lime and Wag.
Gaingels invests only in companies with LGBTQ leadership, which openly gay co-founder of Nexba Troy Douglas tells SmartCompany is incredibly important to help break down barriers in the business world.
A study from LGBTQ non-profit StartOut in 2016 revealed 37% of gay startup founders had not come out to their investors, and 12% thought that coming out would hurt them.
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While Douglas says he’s had a very positive experience being an openly gay founder, he says much of his positive experience has been in the later years of Nexba’s operating, and notes there’s still much of the community who feel uncomfortable with coming out to investors and business partners.
“There’s an incredibly large percentage of the business community that does find it tough, either because of past experiences or because of the communities they’ve been brought up in,” he says.
“I’ve had a positive experience coming out, in part because people like Alan Joyce have led the way and shown people they should never be concerned about their sexual preference.”
With Gaingels being a US- and UK-based investment firm, the group’s expansion into Australia is a first. Douglas says Nexba was initially put in contact with the group through adviser and investor Paul Zahra, and found the investors keen to get into the Australian market.
“Having groups like Gaingels which exist to break down these barriers gives founders a lot more confidence in who they are, I think it’s a really positive avenue for investors and businesses,” he says.
“It needs to become a non-issue. No one in business should ever have to care about their sexual preference.”
In a statement, Gaingels co-founder Paul Grossinger said the investor was proud for Nexba to be its first Australian investment and was excited to see the business grow in Australia “and beyond”.
“Gaingels backs companies with LGBT leadership, such as Troy and Nexba, because we believe that diverse leadership correlates with stronger culture, better opportunities for more LGBT senior leadership at the company and, ultimately, stronger performance. We look forward to helping Nexba scale toward its ultimate potential,” Grossinger said.
Growth on the up
Last year, Nexba reported a 148% jump in revenue growth, and Douglas says the team is expecting to beat that growth rate in 2019, and that’s just in the Australian market.
The $6 million capital raise, which the team is approximately $500,000 away from closing, will be used as working capital, funnelled into supporting the company’s multiple new ranges such as sparkling water, probiotic water and kombucha.
It will also be used to help the company’s expansion into the UK, where Nexba is currently investing heavily in setting up in the market. Having a US-based investor will also give the company a foothold in the United States, says Douglas, if the company chooses to expand there.
Much of the $6 million round was backed by private investors, however, a chunk of it has been raised through equity crowdfunding platform VentureCrowd.
“Even my mother-in-law has invested,” laughs Douglas.
Having been self-funded before this, Douglas says taking on investment — or becoming “custodians of capital”, as he puts it — means there’s a bit more pressure on the team to deliver. However, he’s confident the company will continue to grow, innovate and expand.