Defending a $700 million fizzy water investment: A shareholder's perspective.

Today marks the beginning of the infamous "silly season" in venture capital, where investors and founders alike will drone on about incremental cash flow positivity and their timeline to adjusted EBITDA profitability. But amidst all this tedium, we’re reminded that at least some folks are having fun.

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Liquid Death: The Water Company That’s Making Waves

Take Liquid Death, for instance – a direct-to-consumer water company that just raised $70 million in a round valuing it at an impressive $700 million. According to Bloomberg, the company is on track to reach $130 million in revenue this year, up from $45 million last year. That’s the kind of growth investors crave.

So, what makes Liquid Death so special? For one, its valuation is reasonable considering its growth prospects. And while it may seem absurd to invest in a water company at such a high price tag, Liquid Death has some compelling factors working in its favor. Here are just a few:

Built-in Liquidity

Liquid Death comes with built-in liquidity, ensuring that investors won’t be left parched on the deal. This means that as soon as the company goes public or gets acquired, investors can cash out and reap their rewards.

Fizzy Water and Bubbles Galore

But Liquid Death is more than just a bougie water brand – it comes with built-in fun! Its fizzy water even comes with bubbles, something every investor loves to invest in. And let’s not forget the nearly infinite Total Addressable Market (TAM) that all humans must consume water to survive.

Gross Profit Per Can

A 12-pack of Liquid Death "tallboys" on Amazon will set you back $16 – more than a dollar per can! For comparison, beer can be cheaper and has ingredients and sports leagues to sponsor. This means lower COGS (Cost of Goods Sold) and more gross profit per can for Liquid Death.

Limited Moat

You could argue that Liquid Death has little moat protection, given its commodity-based product (water). But hey, have you seen those cans? Liquid Death is courting the frat bro who’s also into death metal – what genre of music is less beloved and commercially successful than death-themed heavy metal?

Growth Prospects

With $130 million in anticipated revenue this year, Liquid Death is worth 5.4x its top line today. That’s a bargain! If it can double again and hold onto its market position as a premium version of a base commodity, then go public – what could possibly go wrong?

Investor Interest

The fact that investors are willing to pour $70 million into Liquid Death at such a high valuation is testament to their enthusiasm for the company’s growth prospects.

Conclusion

So there you have it – Liquid Death is making waves in the venture capital world with its impressive growth prospects and reasonable valuation. Amidst all the tedium of the "silly season," it’s refreshing to see companies like Liquid Death that are pushing boundaries and defying expectations.

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