Hiring with Investment from KarpReilly

SANTA CRUZ >> For Orion Melehan and Aaron Hinde, the 40-something co-founders of healthy beverage startup LifeAID, year five may be their breakout year. The day after their FitAID brand drink sponsored the Crossfit Games after-party for 2,000 people, the pair is on their way to a “flavor house” in Los Angeles where they will finalize a blend for a daily beverage. This one will be called LifeAID. “It’s a diet cola replacement,” said Hinde, a chiropractor and the company’s formula expert. Check the FitAID label: 45 calories and 9 grams of sugar, lower than most carbonated drinks. You’ll find glutamine, glucosamine, CoQ10, turmeric, magnesium, vitamins C, D and E — ingredients athletes value.

Melehan pops in to mention the company’s two new blends, FocusAID to enhance workplace acuity and TravelAID to boost the immune system. Each recipe is slightly different; both are low in sugar and calories. Both debuted in March at Expo West in Anaheim, which is the largest trade show for the natural, organic and healthy products industry. The new products joined their first one, GolferAID to help golfers maintain energy, and FitAID, targeting athletes especially those at CrossFit, and PartyAID to feel good on your night out.

“After Expo West, we had a whole host of parties soliciting us, interesting in partnering with us and investing,” said Melehan. “We bootstrapped this from the beginning, we needed more money to scale.” Last week, they announced an investment from KarpReilly, a private equity firm in Greenwich, Connecticut. This will fund their plans to bring their products, which are at New Leaf Community Markets, Whole Foods and have authorizations at multiple Albertsons/Safeway divisions to independent grocers, convenience stores and mom-and-pop markets. They have signed an agreement with Elyxir Distributing, which serves Santa Cruz County, and last week pitched grocery giant Kroger.

Currently, LifeAID has 26 employees and is hiring in sales, customer service and logistics. Hinde expects that number to grow to 40 by year-end. The exact amount of the KarpReilly investment was not disclosed but Melehan said it’s in the “high seven figures.” Melehan ticked off several reasons why the East Coast firm was a fit. KarpReilly has taken 16 companies public. KarpReilly invested in The Habit, a burger chain ranked as best by Consumer Reports and based in Santa Barbara. Melehan was a regular while attending UC Santa Barbara.

KarpReilly was co-founded by Allan Karp, who graduated from UC Santa Cruz with a chemistry degree before going to MIT. Karp has joined LifeAID’s board. The investment allowed early shareholders to get some liquidity, “over 1,000 percent return,” Melehan said. Are the LifeAID founders considering going public? “That’s years down the road,” Melehan said. Hinde recalls how Santa Cruz juice startup Odwalla was acquired by Coca-Cola. “We don’t want to dilute our method and our brand,” he said. “We want to change people’s habits for the better.”

The Santa Cruz venture launched as consumers began to seek out healthier alternatives to soda. Among the newcomers: KeVita, based in Ventura, selling cocoanut organic probiotic drinks, and Spindrift, based in Massachusetts, which offers fruit seltzers, and Suja, based in San Diego, specializing in organic, non-GMO, cold-pressured juice and a new line of drinking vinegars. Carbonated soft drink sales sank to a 30-year low in 2015, Beverage Digest reported in March. That trend, Melehan said, was evident to KarpReilly, which saw soft drink sales declining 10 percent a year in their portfolio of restaurants.

Glenn Ely of Elyxir Distributing expects to have FitAID in his Watsonville warehouse by the end of next week. LifeAID BEVERAGE CO. What: Manufacturer of premium, healthy and convenient nutritional products for active people. Headquarters: Wrigley Building, 2833 Mission St., Santa Cruz. Founded: 2011. EEmployees: 26. Leadership: Co-founders Aaron Hinde, president, Orion Melehan, chairman. Information: Lifeaidbevco.com/ and 888-558-1113.