iCapsulate is a coffee pod business. It started in 1997 in Boulder, Colorado with a single warehouse. Over time it has grown to more than a dozen warehouses in total, in addition to retail locations in California, Illinois, Texas, New Mexico and Arizona. The iCapsulate website advertises a zero percent start up fee, with no minimum order size. On its business cards it claims to be "the world's largest producer of bottled water", and that it sells "no carbonated or diuretic beverages". These are the only details of the business that have not changed since it first began.
iCapsulate entered voluntary administration on 10 September, after the voluntary withdrawal of capital funding by one of its founders, Peter Draper, in August. The company had been due to receive a further $2.5 million in capital from Draper and partners but had not received it as of the date of this article. One of the largest suppliers of bottled mineral water in the world, Puranol, also owns iCapsulate. The company is also due to launch a new product this autumn.
The coffee pods deal iCapsulate coffe is currently valued at roughly two and a half million pounds. Although the valuation is subject to change, it is thought to be substantially under the price of the company's other assets, which are believed to total approximately eight and a half million pounds. A sale of this much value is seen as being in the best interests of all stakeholders, including iCapsulate itself and the suppliers of its coffee pods. iCapsulate is also due to make an initial public offering, possibly as early as January, which will raise its stock price and bring in much needed capital. If successful, it will have provided proof that it has a sustainable business model and could become a strong competitor to market leaders such as Starbucks, Procter and Gamble.
This sale of iCapsulate is part of what is termed a "breakout" for the company. iCapsulate has been around for some time but until now has only managed to enter into some limited international deals, primarily with the suppliers of coffee and other commodity products. A breakout deal, or series of breakout deals, is an important development for a company like iCapsulate, which has only recently started to aggressively market itself overseas. For a company like iCapsulate, which has only recently started trading, being able to break into a successful overseas deal can give it a major boost in terms of exposure and credibility. The potential for growth is also a major incentive for any buyer who is prepared to invest in iCapsulate.
The sale of iCapsulate by voluntary administration is likely to increase its exposure and credibility in Australia, given that it is one of the biggest coffee pod manufacturers outside of Australia. iCapsulate is also one of only a handful of companies in the world that are vertically integrated, meaning they make not only coffee but also other food and drinkable products. This combination gives it a distinct advantage over competitors, as it can provide consumers with a variety of options. By conducting business in this way, iCapsulate can also strengthen its financial foundation, as its profit margins are very high.
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iCapsulate managing partner, Dr John Laws, says that the sale of iCapsulate is proof that Australian universities can compete on a global scale, should they set up their own pods. "The sale of iCapsulate shows the strength of Australia's education system and our ability to be bold when setting up our own pod business in another country," he says. Dr Laws also believes that the university-pitched iCapsulate could help boost teaching opportunities for overseas students in Australia and overseas universities. In addition to hosting conferences and seminars to educate professionals from across the globe, iCapsulate has also established an academic advisory board to help guide the company in its future direction. The advisory board will oversee the company's implementation of its model and advise iCapsulate staff on issues that might arise in the future.