In 2016, Maria Markusen was introduced to the co-founders of the Pacha Soap Co. by the company’s legal counsel as a potential board member. They hit it off well, and Maria joined the board that spring with the purpose of acting as an entrepreneur mentor and growth specialist to the founding couple. The company was generating millions in revenue annually at the time, primarily with Whole Foods Market. The company started to grow incrementally quicker with 2x revenues by 2018 and a company valuation which also doubled.
“During the years of growth, I spent my time on the ground with the executive team, leading leadership retreats, coaching individual executives and working directly with the cofounder on specific business challenges and strategies, and leading the budgeting process with the CFO in 2019. By the end of 2019, the company was generating $4x in revenue growth annually from 2016, and then COVID hit” Maria said.
Maria Markusen, President – Chief Executive Officer
In February of 2020, Maria received a call from the lead board member. “We hear you might be available for an interim leadership role? If that’s true, can you come help us with hand sanitizer? A national warehouse retailer issued a 92 semi-truck, multi-million-dollar order, and the team was struggling to get it out the door on time,” Maria recalls.
The cofounder was exhausted and needed a lifeline. “He called me and asked me to assist,” Maria noted. Within 30 days, the team figured how to clear FDA approval, find difficult components, negotiate with a national warehouse retailer on product labeling, contents, final product specs, packaging and delivery terms while still navigating the most challenging supply chain in 50+ years. Over the next 90 days, with an additional nod from the CEO and the Board, Maria became first interim President and then President of the firm.
Meanwhile, orders continued to come in at a rapid pace but without cash the company could not comply with suppliers requesting pre-payment for raw materials. The continued inability to turn respectable revenues into profits had investors wary of advancing additional funds.
“The company was close to turning away business from national company valuation, a national warehouse retailer, national home goods and apparel stores and regional and natural grocery chains. I assembled a committee of team experts, including a board member with an investor’s interest, to explore alternative funding sources and build a presentation that detailed the plan to adjust operations, control costs, and meet demand profitably. We extended an apology for past performance to all existing shareholders with an appeal for assistance and a personal guarantee of future success,” Maria said.
Maria encouraged the company to produce a message that they were going to provide local jobs and economic growth. This was enough to convince several town influencers to lend. She agreed to accept venture debt despite understanding the risk. Maria applied to the state and the city, and even persuaded the executive team to add personal contributions. In all, she spoke with 102 potential backers. Maria then finalized the first round using unusual instruments such as convertible notes from multiple sources.
Quickly, the team raised $12 million in additional equity and debt financing garnered, 67% from existing shareholders, by hiking profitability, enlarging production volume, and improving messaging about vision and reengineering. Efforts garnered the necessary cash from two sources: a portion from convertible notes, a portion from corporate lenders, and a venture note. Becoming a solid credit risk kept the business solvent and growing. In fact, the company purchased one of our major competitors, injecting capital from Bain Capital and a major retailer both just one year later.
“The company quickly doubled in size again, and obtained a new company valuation growing 6x from when I started my career at Pacha,” Maria said.
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