Raleigh-based Aseptia plans to announce Tuesday that it has raised $18 million in new funding to continue the expansion of its food-processing business in rural Montgomery County.
This is the company with the most upside of any startup I have seen come out of the Triangle area in the last 15 years, said Merrette Moore, managing partner of Raleigh investment firm Lookout Capital. That doesnt guarantee its success, but it has the most upside.
Lookout chipped in nearly $8 million, far and away its largest investment, for Aseptias latest round of funding. Among the other investors was Durham venture capital firm SJF Ventures, which added to its earlier investment in the business.
Privately held Aseptia, which operates as Wright Foods, uses patented technology invented by food scientists at N.C. State University to produce packaged foods, such as sauces and soups, that it says are better-tasting.
Aseptias latest round of funding actually totaled $28 million. However, the company previously disclosed receiving $10 million of that amount, which included SJFs earlier investment unveiled a year ago. Since its inception in 2006, Aseptia has raised a total of $38 million in three rounds of funding.
Aseptia opened a plant in the Montgomery County town of Troy, about 100 miles southwest of Raleigh, in 2012 and opened a warehouse and distribution center in nearby Biscoe in August. Those facilities combined encompass 160,000 square feet and employ 157 workers.
Were definitely going to be hiring more this year, said CEO and co-founder J. Michael Drozd. I cant really give you a number right now, but weve got a nice growth plan over the next five years.
Drozd said the company is on track to create 505 jobs within five years, which is what it committed to last year in exchange for state incentives. The company is eligible to receive a $1.5 million One North Carolina grant if it meets its hiring and investment targets.
Launching own brand
Aseptia doesnt disclose its revenue, but Drozd said the business is definitely growing a lot faster than we initially anticipated.
Moore said he was impressed with the roster of customers Aseptia has accumulated so far and was even more impressed after talking to some of them as part of the firms due diligence prior to investing.
They were the best customer calls Ive ever had, and ... Ive done a few of these things, Moore said.
Aseptia isnt disclosing who its customers are, but Drozd said they include well-known brands.
When you are a contract manufacturer, confidentiality is everything, he said.
However, the company has expanded beyond contract manufacturing for brand-name food companies.
That includes creating private-label brands for supermarket chains as well as gearing up to launch its own brand, Sano Valley.
Sano means healthy in Italian and Spanish, Drozd said.
The plan is for Sano Valley organic crushed tomatoes and organic broths chicken, beef and vegetable to appear on grocery store shelves late this year, Drozd said. The company is working on deals with national and regional chains to carry the brand.
Lawsuit still pending
Aseptias technology involves rapid heating and rapid cooling in order to quickly kill bacteria, which cause foods to spoil and make people sick, without ruining the flavor.
The technology and the process is truly revolutionary for the food processing and packaging industry, Moore said.
The technology has also embroiled Aseptia and Drozd in a lawsuit.
In November 2009 Drozd and Greg Hatem, a prominent Raleigh real estate developer and restaurateur, co-founded Empire Foods, a company that relies on the same technology.
But last year Empire Foods sued Aseptia and Drozd, claiming its plans to build a food-processing plant in Halifax County were thwarted because it was deceived about precisely what technology it licensed from Aseptia.
Aseptia and Drozd contend they are blameless for Empires problems and have asked the court to dismiss the lawsuit.
Moore said Lookout took a hard look at the lawsuit including talking to Hatem and the lawyers involved in the case and hiring a law firm to review the suit before deciding to push ahead with the investment.
We felt there would be a very favorable resolution to the lawsuit for Aseptia, he said.