Coverage: Vape company Juul raises $650 million

Juul, the popular purveyor of nicotine vaping products, is well on its way to closing a funding round that could top out at more than $1 billion as it has raised $650 million from investors.

Alex Wilhelm and Jason Rowley of Crunchbase had the news:

Juul’s financial performance over the past few years has been characterized by rapid growth. The company anticipates to mimic prior growth rates in 2018 while generating significant earnings before certain expenses (EBITDA).

From the filing, it is hard to tell who is putting fresh money into the company. The filing does indicate, however, that ten investors have invested in the round so far.

The form lists a number of non-executive directors, all of whom are prior investors in the company. Those individuals include:

• Nicolas Pritzker, a former chief executive of Hyatt Hotels and a venture capital investor who co-founded Tao Capital Partners, an investor in Juul.
• Riaz Valani, a general partner at Global Asset Capital, a Berlin-based private equity firm.
• Harold Handselsman, a Chicago-area lawyer and investor who served as a senior executive officer of the Hyatt Corporation and as general counsel of The Pritzker Organization, LLC, a private investment firm.

Back in 2007, James Monsees and Adam Bowen founded a company called Ploom, which was among the first to develop and market electronic nicotine vaporizers in the U.S. market.

Tim Bradshaw and Lindsay Fortado of The Financial Times reported that the company is now valued at $15 billion:

The equity fundraising, led by New York-based hedge fund and venture investor Tiger Global, values Juul at $15bn, according to people familiar with the deal.

The valuation for Juul, which spun out of its former parent Pax Labs to become an independent company just last year, is half the market capitalisation of 117-year-old tobacco group Imperial Brands, which owns Gauloises, Golden Virginia and Rizla.

Juul’s plans to raise a total of $1.25bn in new funding, first reported by Bloomberg and The Information, were confirmed in a Form D regulatory filing to the Securities and Exchange Commission this week. Juul declined to comment beyond the filing.

Directors named on the filing include San Francisco real estate billionaire Nicholas Pritzker, Riaz Valani of private equity firm Global Asset Capital and Kevin Burns, the former chief executive of yoghurt company Chobani who joined Juul as chief executive in December.

Erin Brodwin of Business Insider reported that Juul faces issues with its popularity among young smokers:

Juuls are especially popular among American teens, who post viral selfies and videos showing friends pulling drags from the discreet, USB-stick-like devices in class. Scientists and public health experts have sounded the alarm on the practice, known as “Juuling,”saying the e-cigs pose a major health concern to young people.

Chief among their worries is the Juul’s uniquely high concentration of addictive nicotine, which is more than double that of other leading e-cigs and may be especially problematic for young people whose brains are particularly susceptible to addiction.

The US Food and Drug Administration is currently looking into Juul’s marketing practices to determine whether the company previously advertised to young people, who cannot legally use the devices until age 18.