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Milk Bar banks Series B funding for cult-favorite cookies

You don’t see too many James Beard Award winners raising venture capital. But then again, you don’t see too many restaurants capture the public imagination like Milk Bar.

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You don’t see too many James Beard Award winners raising venture capital. But then again, you don’t see too many restaurants capture the public imagination like Milk Bar, a growing chain of dessert and bakery shops beloved for its creative and colorful confections.

Founded nearly 11 years ago as an offshoot of Momofuku, another wildly popular network of eateries, Milk Bar has since expanded to 17 locations, including nine in New York. Created by pastry chef Christina Tosi, the chain has developed a cult-like following among the sweet-toothed who can’t get enough of its Compost Cookie, Cereal Milk Soft Serve and Crack Pie (now officially known as Milk Bar Pie).

The company’s growing reach and popularity are winning over investors as well as diners. Milk Bar has announced an unspecified amount of Series B funding from Sonoma Brands, about two years after reportedly raising more than $10 million in Series A capital from RSE Ventures. The company will use the new cash to expand in several different arenas, with plans to continue opening new locations, grow its ecommerce presence and eventually push its products into grocery stores.

Tosi has emerged as something of a celebrity pastry chef in recent years, winning James Beard awards in 2012 and 2015, publishing three cookbooks and starring in an episode of Netflix‘s “Chef’s Table.” Now 37, she began working at Momofuku in 2005, serving as the restaurant’s pastry expert for a time until branching out on her own in 2008.

Milk Bar’s newest backer, Sonoma Brands, is a California-based growth equity firm that focuses exclusively on consumer companies, with a particular eye for food and beverage startups. It was launched in 2016 by Jon Sebastiani, the creator of Krave Jerky, after Sebastiani sold Krave to Hershey the year prior. VMG Partners provided capital to Sonoma to help support its creation. Sonoma both incubates its own companies and invests in outside startups, with a portfolio that includes the Smashmallow snack brand and Guayaki, a maker of organic yerba mate.

A handful of other notable restaurant startups have raised venture capital in recent years. As it so happens, that includes Momofuku, the Asian-influenced chain led by David Chang from which Milk Bar spun out. In 2016, Momofuku raised funding from RSE Ventures, which was also Milk Bar’s earliest VC backer; RSE was co-founded by Stephen Ross, the billionaire whose support of President Donald Trump prompted a flurry of protests at SoulCycle locations across the US in August.

The two most well-funded dining upstarts of recent years are probably Sweetgreen, a popular dealer of salads and grain bowls, and Cava, which operates a chain of fast-casual Mediterranean restaurants. Sweetgreen announced $150 million in funding at a $1.6 billion valuation last month, less than a year after hauling in $200 million at a $1 billion valuation. Overall, Sweetgreen has collected some $500 million in VC. Cava, meanwhile, brought in $283.7 million last December at a $578.7 million valuation. Revolution, the VC investor led by former AOL chief executive Steve Case, is a backer of both companies.

Sweetgreen and Cava are pursuing much more aggressive growth than Milk Bar in terms of physical locations. But Sonoma Brands and its founder think the passion customers have for Milk Bar’s products will be what matters most. In an interview with Fortune, Sebastiani compared Milk Bar’s potential to Oreo: “There’s a magical love affair and affinity that consumers have with Milk Bar,” he said.

Featured image courtesy of Milk Bar

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    Written by Kevin Dowd

    Kevin Dowd wrote The Weekend Pitch newsletter for PitchBook, covering startups, buyouts and the rest of the private market.

    A native of the Pacific Northwest, he’s an alumnus of the University of Washington with a degree in creative writing and journalism. He enjoys books and basketball and, most especially, books about basketball. He feels uncomfortable writing about himself in the third person.

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