Good morning, Broadsheet readers! Lina Khan's antitrust efforts hit a roadblock, Taylor Swift proves to be too big for Ticketmaster—again, and the infant formula shortage led a startup to make a major acquisition. Have a wonderful Wednesday.
- Joining forces. Over the past two years, the infant formula startup Bobbie has grown to reach $100 million in revenue, feed 300,000 babies, and serve more than 5% of the non-WIC U.S. formula market.
The company, which sells a $26 European-style formula direct-to-consumer in the U.S. and at retailers including Target, was rocked by last year's formula shortage. Cofounder and CEO Laura Modi says she started thinking about what Bobbie could do to strengthen its position in the marketplace—not just for its own sake, but for the sake of parents who found they couldn't depend only on the biggest players in the industry, like Mead Johnson and Abbott.
Bobbie is now acquiring Nature's One, a 26-year-old formula brand, Fortune is the first to report. The startup raised a $70 million Series C round, led by PowerPlant Partners, to be able to close the acquisition. (The companies declined to disclose the exact size of the acquisition.) Bobbie has now raised $142 million in total funding.
Founded by Jay Highman, Nature's One has been around for two decades longer than its new owner as a seller of toddler formula and recently began preparing to offer infant formula. (Bobbie was founded in 2018, went through an FDA recall in 2019, and relaunched its product in 2021.) Nature's One also has another advantage: its own Ohio manufacturing plant. (Bobbie relies on Perrigo as its manufacturer.) "Bobbie has captured the hearts and minds of the next generation of parents. Nature's One has the operational prowess to get manufacturing up and running," says Modi. "And frankly, you need both to win."
Manufacturing is especially important after last year's formula shortage. Halted production at one Abbott plant in Michigan started a chain of events that stripped store shelves of formula for weeks. "This industry is not resilient," says Modi. "We're relying on too few manufacturers to make too few products. The only way to ensure we don't go through another shortage is to have redundancy and resiliency."
The 70 employees at Nature's One will join Bobbie's team of 106; Highman will stay on as executive director of the brand. He and Modi both founded their brands after personal experiences feeding their children; Modi had trouble breastfeeding and Highman's son had cystic fibrosis and specific nutritional needs as a result. Bobbie's messaging appealed to Highman as he considered selling his company. The startup resonates with ingredient-conscious millennial parents and has attempted to combat stigmas around formula through efforts like a recent Target campaign about "combo feeding."
With this acquisition, Modi believes Bobbie can grow to serve 15% of the non-WIC market. She's not setting her sights higher than that number because of her experience during the shortage. "The industry desperately needs to be diversified. It needs more competition," Modi says. "There's a certain size you should be getting to, and then you should be celebrating everyone else who's taking slices of it too."
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
The Broadsheet is Fortune's newsletter for and about the world's most powerful women. Subscribe here.
