Ample Hills Bankruptcy and Recovery: What Happened and What's Next for a Beloved Brand

As a seed stage investor, I know the math. Half the companies I invest in won’t provide a financial return. Another forty percent or so will go sideways a bit, and the last ten percent will drive most of the gains for my investors.

Leveraging up a company with venture dollars in an attempt to grow to a national or world class brand can be a risky proposition. You wind up taking on added complexity, and you’ll be asked to do a bunch of things right that you’ve never done before, all at the same time.

Some losses sting more than others, even if each of them individually don’t represent a significant chunk of a larger portfolio that is doing well. Everyone who follows me knows the love I have for Ample Hills, their product and their wonderful and hardworking amployees.

Five years ago, I met and backed Brian and Jackie from Ample Hills as they were building one of the most beloved young food brands ever seen. Everything was going right for them—they had a burgeoning deal with Disney to not only get a space at Disney World, but also to license Mickey and Marvel for new ice cream flavors. Prime locations were beating down their door for expansion.

They were capacity constrained from a production standpoint, but it seemed like a good problem to have. They decided to raise venture capital money in order to build a factory, open new stores, and take advantage of their newfound fame to go into wholesale.

Along the way, each undertaking proved more complex than expected. Shop openings were delayed for reasons ranging from unexpected asbestos that needed to be removed to delays in the opening of buildings we were located in. We tried selling fun new square pints—memorable and meant for sharing, with two scoops under the lid—but the square pint filling machine never quite worked as intended, despite promises from the manufacturer.

Eventually, we got past these bumps—getting smarter about leases, more streamlined from a labor perspective in our shops, and more focused after spending lots of time on our Disney relationship and other new initiatives, the factory itself turned out to be a lot more overhead than the business was ready to handle. It was too big and too expensive to run given the size of our business and speed of our new shop openings.

The factory was eating cash faster than our customers were eating our ice cream—and they were eating a lot. Some investors bailed at the last minute because (we believe) they had experienced real estate losses elsewhere.

We couldn’t fix the factory situation in time and before we ran out of cash. Part of it was that we had gotten over our skis on valuation, making further investment unattractive to both new and existing investors. Some key existings who didn’t want to see their prior money get lost wouldn’t budge on a dilutive financing, despite the fact that they knew where we were headed. This is what happens when you deal with investors that aren’t professionals.

The answer, unfortunately, was to declare bankruptcy. It was a last resort that means that existing investors will get wiped out and some partners the company owes money to will not get paid, which is a devastating thing for the founders who have always been generous partners to the larger community around them.

That doesn’t mean Ample Hills is going away—we hope. It just means that it has begun the process of looking for a new owner and without the burden of an expensive factory. The business will be much simpler, focused on our strength—the growing revenues and customer loyalty at our shops, which are profitable when you subtract the costly overhead of a big factory.

Over the past year, I watched Brian, Jackie and their team put in the maximum effort through an incredibly difficult situation. One day, there will be a book on everything they went through—but for now, they’re focused on keeping the brand and product, still one of the most beloved in the food world, alive.

They’re in the process of talking to some buyers and open to speaking with others who share their vision of a national brand with local familiarity, friendliness, and a ton of human joy per square foot.

If you are a turnaround, bankruptcy or private equity investor and have questions about the sale process, you can e-mail me at charlie@brooklynbridge.vc.

I hope one day in the future when we get out of our homes to meet you all at a nearby Ample Hills, having put this difficult chapter a long way back in the rear view mirror.