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Grove Collaborative Lands SPAC Deal Backed by Sir Richard Branson

December 17, 2021 BeautyMatter
December 17, 2021
Grove

Grove Collaborative, an online shopping destination that targets conscious customers with clean household and beauty products, has entered into a definitive business combination agreement with Virgin Group Acquisition Corp. II, backed by Sir Richard Branson.

WHO: Launched in 2016 as a Certified B Corp, Grove Collaborative creates and curates high-performing, planet-first products across household cleaning, personal care, laundry, clean beauty, and pet, serving millions of households across the US. Every item Grove offers, from the brands they craft—Grove Co., Peach not Plastic, and Superbloom—along with third-party brands, have been thoroughly vetted against strict standards for clean ingredients, efficacy, sustainability, cruelty-free formulas, and ethical supply chain practices. The brand recently entered physical retail for the first time at Target stores nationwide. Grove is the first plastic-neutral retailer in the world and is committed to being 100% plastic free by 2025.

WHY: The deal will enable Grove Collaborative to accelerate its mission to transform the consumer products industry into a force for human and environmental good, and to make it easy for people to switch to healthier and more sustainable routines.

IN THEIR OWN WORDS: "In going public, we sought a partner that shares our passion for using business to answer the urgent environmental crisis, and that accelerates our vision to make consumer products a positive force in human and environmental health. In that spirit, we are thrilled to partner with mission-driven disruptors Sir Richard Branson and VGII as we embark on this next chapter. Together we will create new opportunities to revolutionize the CPG industry," said Stuart Landesberg, co-founder and CEO of Grove. "The CPG category is ripe for disruption. As an industry, we can, should, and must be able to offer products that are high performing and good for the planet. Grove can be a driving force for change, through our ongoing product innovation, retail partnerships and our ambitious goal to become 100% plastic free by 2025."

“I am inspired by Grove's vision to transform the availability and quality of planet-first products," said Sir Richard Branson, Virgin Group founder. "Grove is paving the way for people to have more access to healthy, sustainable goods for their homes and I am excited to see the company's impact on customers' health and wellbeing. There are huge growth opportunities ahead, and we are delighted to work alongside Stu and his team as Grove continues to disrupt the industry and make a positive difference to people and the planet.”

Evan Lovell, Chief Investment Officer of Virgin Group, said, "Grove has a distinctive opportunity to capitalize on a growing sustainable products market ripe for disruption. Virgin Group sought to partner with an exceptional consumer products company, and our mission and platform offered the perfect opportunity for two incredible teams to come together. We are thrilled to partner with Grove and their team and look forward to our collective future success as a publicly traded business."

DETAILS:

  • Grove Collaborative entered into a definitive business combination agreement with Virgin Group Acquisition Corp. II, backed by Sir Richard Branson.
  • The business has planned revenues of $385 million in 2021 with a gross margin of 50%. It expects to break even and grow to over $600 million in revenue with margins of 56% by 2024 through accelerated leadership in zero-plastic and zero-waste home and personal care innovation, retail expansion, and customer growth.
  • The transaction is expected to result in approximately $435 million in net proceeds, assuming no redemptions.
  • The transaction includes a fully committed, $87 million common-stock PIPE with contributions from an affiliate of the sponsor of VGII and new and existing Grove investors, including Lone Pine Capital, Sculptor Capital Management, General Atlantic, and Paul Polman.
  • 100% of Grove's existing shareholders will roll their equity into the combined company; Grove Collaborative co-founder and Chief Executive Officer Stuart Landesberg participated in the PIPE financing.
  • The transaction implies a combined company pro forma enterprise value of approximately $1.5 billion, and is expected to close in late Q1 or early Q2 2022 and, upon closing, the combined company will be listed on the NYSE under the new ticker symbol "GROV".

FUNDING ROUNDS:

  • In December 2020, Grove Collaborative raised $125 million at a $1.32 billion valuation.
  • Grove Collaborative closed a $150 million Series D fundraise and surpassed $1 billion valuation in September 2019. The round was co-led by Lone Pine Capital, General Atlantic, and Glynn Capital, with participation from Greenspring Associates as a new investor as well as from existing investors Norwest Venture Partners, Mayfield Fund, NextView Ventures, MHS Capital, and Heron Rock Capital.
  • In 2018, Grove generated $104 million in revenue and said it is on track to triple that figure in 2019.
  • In January of 2018, the start-up landed $35 million in Series C funding led by Norwest Venture Partners, which came on the heels of a $15 million Series B that quietly closed in March 2017 and was led by Mayfield VC.
  • In July 2016, the company closed a $6.7 million Series A round of funding.
  • Their $1.7 million seed round was funded in April by angels Erick Blachford, Jeff Clarke, Cary Rosenzweig, and John McAtee, according to CB Insights.
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