Spacegoods shakes up functional beverage industry with mushroom-based powders

Mushrooms are having a moment. Whether it’s in the form of a functional beverage, using the mushroom root to make alternative protein, creating leather-like materials or just the mushroom itself, the fungi is gaining an audience.

Spacegoods is the latest startup to join this craze. The London-based wellness brand is tapping into functional mushrooms and nootropics to create a line of powder blends that it touts enhances energy, relaxation, mood and general well-being.

E-commerce entrepreneur Matthew Kelly launched the company in April 2022 after building a company called Neon Beach that he grew to £10 million but couldn’t withstand supply chain issues during the global pandemic. In the aftermath, Kelly told TechCrunch he was depressed and just not taking care of himself.

“I was depressed, gained weight and was drinking too much coffee,” Kelly said. “I started learning about functional mushrooms and trendy brands in America. A lot of people have similar issues with too much coffee and anxiety, so I wanted to stack a lot of those ingredients. And in the U.K., the brands all look the same on the shelf, so I wanted to stand out with something pink.”

Spacegoods’ flagship product, called “Rainbow Dust,” was created to be like coffee, but without the post-drink jitters and crashes. Rainbow Dust has 80 milligrams of caffeine and comes in flavors like chocolate, vanilla cinnamon and chocolate orange.

It also has an “Astro Dust” product formulated for relaxation and sleep. They are meant to be mixed with water, milk, a protein shake or added to evening tea.

Spacegoods founder Matthew Kelly. Image Credits: Spacegoods

The two formulations include plants and mushrooms, including ashwagandha and Cordyceps and Lion’s Mane mushrooms. Lion’s Mane, in particular, was shown to positively impact cognitive function and mood in young adults, according to a 2023 National Institutes of Health pilot study.

In the year since launching, Spacegoods has attracted more than 75,000 customers. The company is mainly direct-to-consumer, via its website and Amazon, and sells in the United Kingdom and European markets like the Netherlands and Germany. It is also in 400 brick-and-mortar stores in the U.K., including Holland & Barrett. Other retailers are in the works for this year, Kelly said.

Today, Spacegoods announced a £2.5 million ($3.1 million) seed round led by Five Seasons Ventures, with participation from Redrice Ventures, Slingshot Ventures and G-FUND. In total, the company has raised £3 million, which includes a pre-seed round from angel investors.

Kelly plans to invest the capital in hiring and accelerating growth. He forecasts that the company will be able to increase revenue by 3x what it did in 2023. Spacegoods is also launching additional powder flavors and a gummy product in the coming months.

In backing Spacegoods, Saskia Hoebée, principal at Five Seasons Ventures, said in a statement that the company is “a first mover in the novel category of mushroom-based energy and supplements.”

“The company operates at the crossroads of three trendy markets: supplements, functional drinks and coffee replacements, all in which high growth is expected in the coming years due to increased consumer demand for clean energy and broader wellness,” Hoebée said.