Rescale—a Boston-based startup led by ex-Trader Joe’s exec Julia Megson—is winding down operations less than a year after raising a $2.3 million seed round to fund a platform addressing a major pain point for CPG brands: sourcing, negotiating, and managing external manufacturing partnerships.
The round, led by Baukunst, was designed to help Megson (CEO) and cofounder Matthew Kaliara (CTO) further build out an online platform to help <$100 million revenue brands find co-manufacturers and manage the ongoing relationship.
Rescale’s dashboard was designed to help brands bring new products to market more quickly by streamlining manufacturer matching, contracting, and management, added Megson, who previously spent four years at Trader Joe’s in supply chain management.
‘There was no product-market fit that overlapped with a sustainable business model’
While Rescale “helped dozens of food brands find, negotiate, and scale with manufacturing partners” with revenues “peaking at $250k ARR,” the team “found clarity through the grit of it all” after its third pivot, said Megson in a substack post explaining that Rescale had “failed.”
She added: “We had systematically tested every white space within our hypothesis, and there was no product-market fit that overlapped with a sustainable business model. In other words, our TAM [total addressable market] was structurally smaller than we had originally thought.”
This left the option to pivot to an adjacent space or wind down operations and return its remaining capital, she said.
As ReScale’s runway was “dwindling,” she noted, “pulling off an entirely fresh pivot with half of what we expected to need to start a business in this space would be very tough.”
Ultimately, she said, “We didn’t have the same compelling founder-market fit if we moved into banking products. We could try to hire out the complementary leadership, but doing so within the runway we had would be extremely difficult without having laid any groundwork.”
‘Competition had nothing to do with our failure’
While Keychain, an AI-powered CPG co-manufacturer search and discovery platform has gained significant traction and funding over the past couple of years, Megson said that “Competition had nothing to do with our failure.”
In the end, she claimed, “It was simply a disproven hypothesis and a failure to find product-market fit for a VC-backable business model in this problem space.”
She added: “In B2B, founder-market fit is a superpower. Trust it. I have deep experience in the co-manufacturing and food/bev CPG manufacturing space; it’s one of the reasons it felt right to start Rescale in the first place.
“Early on, I didn’t allow this experience to inform our product – we were tangled up in business model viability instead of building a truly lovable product first, and this led us to build for a slightly different customer than the one we knew deeply.”
Finally, she said, “Fully remote early-stage startups are really, really hard to get right. In fact, I’m not sure it can be done. I was (and still am) a huge believer in hybrid work for early-stage startups. I also believe in remote work at later stage companies with a strong intentional culture meant to foster a dispersed team.
“When you’re in the earliest days of building, however, there’s no time to build intentional culture. Everyone needs to be laser focused on product-market fit, and that alignment is stifled by fully remote structure.”
AgFunderNews has reached out to Megson for further comment.
Further reading:
Exclusive: ReScale emerges from stealth with $2.3m to address ‘biggest pain point’ for small brands
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