Whims Delights: $300K Asset-Backed Line for a Better-for-You Chocolate Brand

Nathan: Could you ever guess there’s a multi-million dollar brand being built out of this house? Not any brand. Chocolate. Jesse: We seeded the business day one with about 200,000 of our own capital. Nathan: Where did you get this money from? Leanne: This was our life savings. Jesse: It was our life savings. Nathan: What do you think the total revenue is that you can do in 2026? Jesse: 5 million. Leanne: We’re doing about 100,000 peanut butter cups in a shift. Nathan: If their idea for growing next year plus my capital could equal big returns, I’ll invest on the spot. Jesse: We need working capital. We actually have distribution opportunities that we can’t afford to build inventory for that we are pushing down the street. Nathan: If I did a $300,000 line of credit, I’d want collateral coverage. If you don’t pay it back, we’re taking all your inventory. How much inventory are you guys sitting on at any given moment? Nathan: I met the founders Jesse and Leanne actually at Parker and Scott because Parker and Scott stocked their chocolate. Hey Jesse. Good to see you again, man. Tell us the origin story here of Whims. When did you guys launch the business? Leanne: It really started probably six years ago. It was never really a thought, hey, we’re going to create a chocolate brand, but it came as a result of a need for us personally. I went through a health journey. I ended up with an autoimmune disease. My hair started falling out. I was told I’d have to be on lifelong medication. So we went through the route of lifestyle. We cut out sugar, gluten, dairy from our diets and miraculously, in 3–4 months, our symptoms completely disappeared, which presented a new problem. Leanne: We love candy. We love chocolate specifically. And we found that a lot of the things in the grocery stores, even though they were better for you, were still full of sugar, sugar alcohols, things we couldn’t consume. So we launched originally with our peanut butter cup. It’s got only 1 gram of sugar, gluten-free, dairy-free, and we don’t use any sugar alcohols or palm oil. Nathan: How did you come up with the recipe? Leanne: Neither of us has a culinary background. We started messing around with some recipes in our kitchen and had our first version of a peanut butter cup. It was super healthy and it tasted terrible. Jesse: One day we went to pick up our daughter from school and Leanne’s like, go home, get those peanut butter cups, we’ll hand them out. So I was nervously handing these out — they tasted like poop. I handed one to a woman who took one bite, stared off into space smacking her lips for what seemed like a half hour, and then delivered a 10-minute dialogue on what was wrong with it. She turned out to be a classically trained pastry chef who worked in food manufacturing. I got her number, met for coffee the next day, hired her, and she today is our head of product. She came up with a chocolate recipe and a peanut filling recipe. Jesse: There was a chocolate manufacturing facility in Vancouver who actually did our first production run. It was a fourth-generation Swiss chocolatier. Nathan: How big was the first run? Jesse: I think we did about 25,000 peanut butter cups. Nathan: That feels like a massive risk. Had you guys personally eaten one yourselves? Leanne: We’ve done lots of tests on our different variations. Jesse: We sample everything before it goes for production. Jesse: This is our hotel SKU. It sits in the hotel mini-bars. Hotels like the Beverly Wilshire, the Beverly Hills Hotel. Nathan: What does that retail for in the mini-bar? Jesse: It depends. The most expensive is like 18 bucks. Cheapest is 14. Nathan: What will you sell them to the hotel for? Jesse: This unit sells for about $3.25. Nathan: What was the dollar figure that you guys had to put up before you sold any units into hotels just to get the run done? Jesse: $200,000 on day one. Nathan: Were you guys already wealthy? Leanne: This was our life savings. We had two properties in Vancouver, one we were living in and one we were renting — a townhome — and we sold that. Nathan: If the business failed, are you out of money? Jesse: This was it. Leanne: Yes. You can’t have a plan B. If you want to take the island, you have to burn the boats. Nathan: What year was your first year of sales? Jesse: 2022. Nathan: How much revenue did you do that first year? Jesse: Just over 300K. Jesse: Day one it was, find five stores 5 miles from our house to meet our first 100 customers. Then 50 stores, 50 miles, first thousand customers. By the end of year 1 we’re in about 280 points of distribution nationally. Nathan: What was total sales in 2024? Jesse: 2024 was just shy of 800. Nathan: How did you go from 300K in 2022 to 800K in 2024? Jesse: About 800 retail doors, 40-odd hotels, and our first toe in the door into working with a regional distributor. Nathan: Still just one product at the end of 2024? Jesse: No — we launched the caramel cookie bar and the peanut nougat bar. For retailers, they want to have a brand block. Jesse: We’ve got the individual wrap, the bag — the individual wraps for $3.99, the bag for $5.99. Wholesale is about a third of that. We are traditionally about 20 to 30% higher SRP than the established players. Nathan: Why? Jesse: It takes a lot of courage to say I’m new and I’m going to charge more. Your retail price should terrify you to put out there. We manufacture all of our components from scratch. We don’t use any artificial ingredients — old-world confectionary methods. The easy part is getting on shelf. The hard part is getting consumers to take you off shelf — velocity. With our premium price, we’re delivering a higher dollar profit to stores. They’re making more money on our product than the competitor’s pouch at $7.99. Nathan: What is your gross margin today? Jesse: Today we’re at about 58%. Nathan: Where do you do the production today? Jesse: We have multiple third-party manufacturing partners. One in Chicago, one in California, one in Utah. Nathan: That feels inefficient. Why not get it all in one spot? Jesse: I would love that, Finn. These two products are made on one particular piece of equipment. These two have nougat that is cooked and whipped and caramel that’s cooked, slabbed, cut, enrobed, and packaged. We’re moving into a partner in Utah that’s going to give us unlimited scale. Nathan: What’s been your best month so far? Jesse: It was just under 200,000 in July. Whenever you activate a new retailer, they do what’s called a load-in. After the load-in, they’re doing replenishment. That was our load-in where we launched nationally into Google’s corporate campuses. Nathan: What will 2025 be all in? Jesse: We’ve done 1.6 million up until the end of November 2025. Nathan: How have you funded this? Jesse: 200,000 of our own money. After that we started raising. We’re raising 2 million on a 7 million pre-money valuation. Nathan: That’s a little over a 3x multiple. Standard for CPG? Jesse: Very. Jesse: Most CPG brands have to raise significant early capital. You guys didn’t. Nathan: We think of it like raise a bit of capital, put it to work, build the business, continue to raise capital. Jesse: We have a ton of new distribution in the pipeline coming online in Q1. About 4 months ago we signed up with a sales agency — a 250-person national sales team with relationships in natural grocery retailers across the country. Nathan: If I want to cut a check, should I be thinking about the round you have open or a different deal? Jesse: We need working capital. There are conventional bank term loans we don’t qualify for at our size. Then there are ABL-type products — asset-backed lines of credit. They get a $500K ABL — collateral is inventory. But they want weekly repayment schedules. So if I take that capital and now I go buy inventory, manufacture, get it to my warehouse, sell it, receive cash back — I’ve already paid back a third of the ABL. Any opportunity to make money on that ABL gets diminished in the first 5–6 weeks. Nathan: What would the perfect ABL look like? Jesse: If I had a magic wand, we’d find a partner who would start with us small, let us build trust over a long period of time, and grow the facility over time. The more debt we can leverage for working capital, the less of our business we need to sell on equity. Nathan: This is why I launched Founderpath back in 2020. I sold too much equity at my first software company. There was a 2x liquidation preference for investors. I was 21. I didn’t know what I was doing. So at Founderpath, every deal we’ve done with a software company has been debt — no equity, no warrants. $250 million later and 550 founders later, let’s take the same idea and apply it to CPG. Jesse: We would start drawing down day one to fund our upcoming productions. We actually have distribution opportunities we can’t afford to build inventory for that we are pushing down the street. Capital is constraining our ability to grow. Nathan: So if I did a working capital line of credit for $300,000, we could leave that open at 11–13% interest. If that goes well, we expand it to a million or two million. Or we can do equity later for marketing experiments. Leanne: That’s what we’ve been waiting for. Nathan: If I did a $300,000 line of credit, I’d want collateral coverage above the 300K. If we want 1x coverage, it’s $300K of inventory. If we want 2x, it’s $600K. How much inventory are you guys sitting on at any given moment? Jesse: You could say 4 months worth of inventory on hand. Nathan: So 1.5x would cover that. Jesse: Yeah. Nathan: Here’s my offer. I’ll offer a $300,000 credit line that you can start pulling as aggressively or unaggressively as you want on day one to fuel inventory purchases. Whatever you have drawn, you’d pay a 12% interest rate. You control that — if you pay back, there’s no interest because the money is not outstanding. So you’re only paying interest on the money that is outstanding. And I’ll continue to scale that credit line as long as I always have a collateral package equal to 1.5x. So if you grow into next year and you’re sitting on a million dollars of inventory, I’m happy to go up to 500K or 600K of credit line as long as the coverage ratio stays the same. Nathan: Jesse, Leanne — do we have a deal? Jesse: We have a deal. Leanne: Yeah, let’s do it. Nathan: All right, let’s get to work. Jesse: Let’s get to work. I’m excited. Nathan: Amazing. Thank you so much. You guys built a great product. Nathan: If you guys liked that deal, remember, new episodes drop every Wednesday. 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