Manufacturing platform Keychain completed a $15 million Series A round of fundraising, which values the startup at just over $250 million, according to a source close to the company.
Early stage venture capital firm BoxGroup led the round with a $10 million investment. Existing venture capital investors Lightspeed Venture Partners and SV Angel participated as well. Keychain also raised money from companies that use the platform, including packaged food giant General Mills and the dairy manufacturer Schreiber Foods. This investment comes on the heels of a $2.5 million investment from Hershey in October.
“We're adding people to our cap table that we know, that we trust, that can add enormous value, that see the potential for building a category defining company,” Keychain CEO and cofounder Oisin Hanrahan told Fortune in an exclusive interview announcing the raise.
The Series A money, which comes after an initial seed investment last year, brings Keychain’s total funding to $33 million. The deals with investors closed "within the last month," according to Hanrahan.
Keychain is an online platform that connects food and beverage consumer packaged goods (CPG) companies with manufacturers that can make their products. CPG brands and retailers that have their own private-label brands can use the platform to search for manufacturers that have the capabilities to make specific products. For example, a retailer that wants to launch a store brand organic granola bar or a beverage company that wants to produce a new flavor of sparkling water.
“The core thesis was simple. It was, we're going to build a new operating system for manufacturing,” Hanrahan said. “We're going to build a new way for brands and retailers to work with manufacturers to make product.”
General Mills decided to invest in Keychain because of its own experience using the platform, which shortened the timelines for manufacturing certain products, General Mills chief supply chain officer Paul Gallagher said.
"This tool will facilitate efficiencies in how brands identify and connect to potential co-manufacturers, from weeks or months to minutes—and that’s incredibly important as consumer demands evolve," Gallagher said. "We’re investing in Keychain because of the efficiencies it can enable for us, its significant potential impact on the future of food, and their approach to collaboration.”
Based in New York, Keychain currently has over 20,000 brands and retailers on the platform and facilitates $500 million worth of projects each month, the company said in a press release.
It was cofounded in August 2023 by Hanrahan, Umang Dua, and Jordan Weitz. Hanrahan and Dua were previously cofounders of Handy, an online platform for homeservices like cleaning and handyman work. Hanrahan and Dua sold Handy to ANGI Homeservices, the parent company of Angie’s List, for about $164 million in October 2018. Hanrahan served as CEO of Angi from 2021 to 2023.
Keychain expects to use most of the money to hire personnel on its growing partnership and customer success teams to handle the increasing number of manufacturers on the platform, according to Hanrahan. The additional capital will also be used to improve the data assets Keychain has on brands, retailers, and manufacturers and on improving the platform itself, he added.
A capital raise in 2024 wasn’t initially in Keychain’s plans, as Hanrahan and team had expected to raise money again only in 2025. Keychain took a seed investment of $18 million right out of the gate in 2023. The company hadn’t deployed much of that capital yet, and expected it to last until 2026, according to Hanrahan.
Keychain ultimately decided to take additional money when investors kept approaching the company wanting to invest, Hanrahan said.
In its Series A Keychain raised less than it did during its seed round, because the company didn’t “really need the money,” Hanrahan said. He says Keychain still left “many multiples” worth of money on the table to avoid giving up too much equity.
Hanrahan’s experience at Handy informed his decision to be judicious in how much money he took. “We don't need to take more money just to take more money, just to write a bigger story,” he said. “I'm sure if we were first time founders this would have been a larger round.”
When Handy sold to Anti, Hanrahan's share of the company was worth about $4 million, according to 2018 SEC filings. The majority of the sale price went to Handy’s investors. The total value of the Angi transaction for the Handy cofounders was higher than the value of the shares quoted in the SEC filing, according to a person close to the deal. The total value for Hanrahan and Dua was in excess of $30 million, they said.
“End to end, the last one was 11 years—a long time,” Hanrahan said, referring to Handy. “If you're going to do something for 11 years all over again, you're going to be highly dilution sensitive the second time. So making sure that you only take on capital where appropriate was on our minds.”
Hanrahan said he decided to prioritize maintaining a large ownership stake after advice from his wife Orla, who is a partner at EY. She told him, “‘Look, you're only going to get a certain number of 10 year blocks in your life that you're going to go and work on something,” referencing the amount of time he had spent working on Handy. “So you need to be compensated and rewarded for that, and you need to feel a high degree of ownership.”
Keychain’s growth plans include breaking into new categories, geographies, and expanding into different parts of the supply chain, Hanrahan said. New categories other than food and beverage manufacturing could include pet supplies, beauty products, or food supplements.
Hanrahan declined to say exactly which new geographies Keychain was targeting for expansion but said there were some obvious candidates that export lots of food and beverage products to the U.S. like Mexico, Canada, Italy, France, and other European countries. Keychain has already seen interest from export development agencies in some of those countries, Hanrahan added.
Investors found the possibility of international expansion appealing. “What we’ve come to appreciate in the last few months is the incredibly important role Keychain will play in shaping global CPG trade, and the import and export of food, materials, and packaging,” said BoxGroup managing partner David Tisch. “From sovereign funds, to commodity exchanges, to certification agencies, they all have a clear, strategic reason to want a relationship with Keychain.”
Keychain also has plans to go deeper across the supply chain in addition to adding in different types of products, Hanrahan said.
“It's a pretty interlinked supply chain if you think about it,” Hanrahan said. “A brand or a retailer is a customer of a manufacturer, that same manufacturer who's on our platform is a customer of a packaging company, which is a customer of a raw materials company.”
Update, Nov. 19 2024: This article includes an updated quote from General Mills chief supply chain officer Paul Gallagher and added context about Handy's sale to Angi.
