Focus on What Your Brand is Good at

Founder: Matt Schnarr, (along with his Co-Founders: Adam Deremo and Dan Tzotzis)

Hometown: Mississauga, Ontario

Education: Communications and Business, Laurier University

Start-Up: Awake Chocolate

What is Awake Chocolate?

Awake Chocolate is a combination of great tasting chocolate with a pick-me-up of coffee, without the bitter taste most caffeine sources have. As Matt put it, you can think of it as “Red bull meets Hershey.” It was started 4.5 years ago by the 3 Co-founders (above), who had all worked in large companies before one day deciding that they wanted to start a business. They brainstormed ideas to solve a problem and realised they could resolve the problem of bitter tasting caffeine products, which not everyone enjoys. Now, they are a team of about 12 and are looking at hiring.

What’s in a brand name?

At Awake Chocolate, Matt noted “we always believe the product should name what it is.” He gave 2 examples: vitamin water and 5-hr energy, which both communicate what the product is and what it does. That is why they chose Awake Chocolate as their brand name because it literally keeps you awake, and makes you more efficient to get more stuff done. Now their brand is becoming more than just chocolate with their recently launched chocolate bar line you can find in some stores. In expanding their brand, they continue to have 2 main focuses: the product needs to wake you up, and it needs to taste great.

What are the right funding decisions for your growth?

A big challenge for Awake Chocolate at the outset was raising money, especially before they had a company, and were raising money on a concept pre-revenue, in a category that never existed, with a brand name that never existed, and run by 3 guys that had never started a company…obviously pretty risky.

So, in the early days, Matt along with Adam and Dan, would have coffee with anybody that would have coffee with them. Matt noted some would say their company was not part of their investment strategy, or they had no money to invest in at the time, but sometimes it would turn out a friend or a connection would be able to help. Keep going until you find people that are willing to help you. Awake Chocolate has gone through a few rounds of funding, but Matt noted “we didn’t want to raise all the money at the beginning because raising it on a concept would be very cheap in terms of a company valuation.” They only raised what they needed at a given time, so every year they would raise a little more.

Recently, they have received several offers for large equity investment but are more likely to go in favour of debt to avoid further dilution at this time. Remember, when you are starting-out, if you can find no-strings-attached money through school competitions that is a great start, and as you grow, you have to consider what your plans are for the company in choosing to go with more equity investment, or to go with debt and the limitations that go along with that.  

What are some other challenges you will face other than finding capital?

The biggest challenge for Awake Chocolate has been with finding funding, but other issues include getting places to sell their product and keeping track of cash flow. Matt said “there’s a lot of thing you can spend money on, but if you don’t have the money then you can’t do it.” More recently, it has been making the smart decisions to get Awake Chocolate to the next level. Matt noted there are lots of choices to grow your business and you need to figure out which one is the best way that also manages dilution for current investors. A couple of decisions they have made, for example, include having 80% of their business in the US, even though they are from Canada, and through their launch of their chocolate bars campaign last January in various stores like Walgreens.

Get to know Matt a bit better!

If he wrote a book...Matt would call it Fixing a food problem. Any entrepreneur should fix a problem whether they are a dentist in an area that is under-served, or creating a food product that is cheaper or better quality or providing better service. Matt would write a story about how they have gone on this journey to solve a food problem at Awake Chocolate.

Inspirational Book…The book by the founders of Methods Soap. It essentially tells their story on how they created their brand. Matt noted “As an entrepreneur myself, creating a product, starting from scratch, it seemed similar and we reflect on that, it reassures you that they did this and we did too or they did this and they survived.”

Mentors…Lots! One person all the founders would call a mentor is David Chilton, the author of The Wealthy Barber and a previous dragon from Dragon’s den, who is an investor at Awake Chocolate, a great mentor and is always ready to provide advice to the Co-Founders.

Early Influences…Matt noted his Dad has been an entrepreneur the past 30 years, running a successful business in urban planning, who has been a major mentor and hard-wired him for entrepreneurship.

Favorite place traveled…Cinque Terre, Italy!! Great choice! He also likes to go to NYC, although he travels there regularly for work.

In their pursuit to start a business, it started with a lot of brainstorming. They decided to go with great tasting caffeinated chocolate for 2 reasons: first, they saw the major success of energy drinks and they had heard the complaints with taste and price. They knew there was still room for improvement. They noticed other trends like functional foods being launched like probiotics in yogurt and caffeine in soft drinks. Another trend they noticed was that big companies are not good at launching new products with a new brand. That means, a big company will likely not launch a competitive product; they would rather sit back, observe, and take time before they launch. In many cases, they will buy the brand. So with their small group, they knew it wouldn’t be as daunting as it seemed.

To get started, they reached out to family and friends for funding. Matt noted when family gives you say $100,000 and to go do your thing, you aren’t going to go and say “Oh, sorry, I changed my mind.” Eventually you reach a point of no return, to an extent. There is something you think you are going to do, becomes something you want to do, then something you have to do. So they kept working full-time and did this business on the side and decided that they would quit their day jobs once they started selling/making the product. Matt noted it eventually got to a point where they couldn’t go any further without quitting. They initially found distributors in Canada through some of their connections in the industry. In the US, Matt noted they were not nearly as familiar with this market, so they hired brokers to help them understand the market place, which sometimes worked and sometimes didn’t. He has stayed motivated through wanting to achieve success and to get their product to their target demographic, which does not come without hard work.

Matt has some great advice: it is beneficial to focus on things you are good at and what the brand is good at. Understand what the brand is not ready for yet. For Awake Chocolate, it is selling to university students and so it is more efficient to really market on university campuses. Start-up brands need to know what they are good at and focus on winning there. And make sure you have a good team! Have great co-founders, have great advisers, investors, and partners. Whether they are the first couple of hires, your team is very important—one of the biggest things.

Thanks Matt! If you would like to learn more about Awake Chocolate, please visit their website, and if you have any questions for me please reach-out to me through e-mail or social media.