Business

Jul. 2, 2014 8:31 am

Venture for America invested $45K in this alum’s caffeinated tea business

Zest Tea is focused on nabbing tech companies as clients. This was the first year that Venture for America invested in its alumni companies. The organization plans to keep doing so.

Venture for America alum James Fayal runs Zest Tea, which bills itstzelf as an alternative to coffee.

(Photo by Alejandro Alvarez, for the Philadelphia Daily News)

Updated 7/2/14, at 1:44 p.m., to clarify language around Venture for America expecting a return on its investment.

James Fayal came to Philadelphia as part of a Venture for America fellowship. Now Fayal, 24, of Pennsport, is running his own ecommerce company from an office on Old City’s N3rd Street, with the help of a $45,000 investment from the organization that brought him to the city.

This year was the first time that Venture for America — which pairs college graduates with tech companies in U.S. cities in hopes of encouraging graduates to work in technology entrepreneurship — invested in alumni companies, and it plans to keep doing so, said Mike Tarullo, Venture for America’s VP of Corporate Development.

Wealth management firm UBS Americas donated $150,000 to Venture for America to help start a seed fund for companies founded by its fellows. UBS will support the fund again next year, Tarullo said.

This time, Venture for America invested in four companies, including Fayal’s caffeinated tea company Zest Tea and three companies in Detroit.

While Venture for America does hope for a return on its investment, Tarullo said that, given how rare exits are, it would be “naive to expect one with a portfolio of four seed investments.”

“A seed investor typically makes dozens of investments before truly ‘expecting’ a return,” he wrote in an email, adding that Venture for America hopes to make the seed fund sustainable.

Fayal, who was NextFab’s controller for the second year of his fellowship, said the $45,000 investment will help set the stage for a larger raise that he’s eyeing. Fayal also raised $10,000 through a crowdfunding campaign last year. For now, he’s focused on nabbing tech companies as clients. He’s already sold the coffee alternative to venture-backed startups like 2U, Swipely and Teespring, he said.

The company is exclusively ecommerce right now, but Fayal hopes to get on retail shelves by the end of the year.

Read more about Zest Tea in the Philadelphia Daily News -30-
Juliana Reyes

Juliana Reyes began as lead reporter at Technical.ly Philly in July 2012. Previously, she was a city services beat reporter for the Philadelphia Daily News, as part of a project called “It’s Our Money.” She is learning to drive, learning to bike (in the city) but is an expert at taking SEPTA. She grew up in North Jersey and Manila, Philippines but she left the tropics for Bryn Mawr College, where she majored in linguistics. She now lives in West Philly.

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  • Mike Krupit

    I am confused. “Venture for America doesn’t expect a return on the investment” vs. “We wouldn’t make these investments if we didn’t see a good possibility of a return.” Is it an investment or – as it sounds – a grant?

    • Juliana Reyes

      Hi Mike, I misinterpreted Mike Tarullo’s quote – it is in fact an investment and VFA *does* expect a return, but he meant that given the odds of startups that eventually exit, a portfolio as small as four companies probably won’t produce a return. I’m going to fix that in the story. Thanks!

      • Mike Krupit

        I did understand what you meant and what was said. Sorry, I guess I was being a bit flippant about investors not being sufficiently optimistic about the value of each of the investments. Even though we know the odds, I think we should want each and every investment to be a good one.

    • http://www.getzesttea.com James Fayal

      Mike, to piggy back on Juliana’s response. It is a very entrepreneur friendly investment. Venture for America would like a return, but they are not an investment firm (non-profit) and ROI is not the main driver of these investments.