David Rabie’s Tovala Had 3 Weeks of Cash Left. Now It’s a 9-Figure Company

How the founder bounced back after his Series B fell apart in February 2020.

BY ANNABEL BURBA, EDITORIAL ASSISTANT @ANNIEBURBA

Tovala co-founder and CEO David Rabie. Illustration: Inc; Photo: Tovala, Getty Images

For a period of about five hours in 2020, David Rabie says he felt “ready to give up” on Tovala, the Chicago-based food tech company he had founded five years prior.

It all started when Tovala—which sells smart ovens and ready-to-cook meal kits—failed to raise a Series B in early 2019. “We were not growing fast enough, we didn’t really have product-market fit, and our margins weren’t great,” he says. “Even though a lot of investors were very excited, and we got to the final [investment committee] with a bunch of people, no one ultimately wrote us a check.”

Left with no other option, Rabie, who had already raised $4 million in capital, went to his existing investor base and put together what he calls a “hodgepodge” bridge round. The deal bought Tovala about 10 more months. Participating investors, however, made it very clear that “the well was dry,” Rabie recalls. Their message: “If we can’t raise more money after this from new investors, the business is finished.”

Thankfully, Tovala began to hit its stride during the fall of 2019 due to tweaks in its marketing and pricing strategies, including the startup’s decision to bundle the smart oven’s price with the cost of a six-month meal kit subscription. “The business exploded,” Rabie says, tripling its revenue in just four months and improving margins by 20 percentage points year-over-year.

So the founder went into 2020 feeling confident that Tovala could land a significant Series B the second time around. He took his team on a road show across the country throughout January, meeting with several investors who provided the startup with term sheets within a few weeks. 

In the end, Tovala chose to go with a leading investor that Rabie describes as a “newer” fund that planned to contribute the majority of a $20 million round. They signed term sheets at the end of January and went through due diligence over the next month, planning to close the deal on February 28. But they weren’t out of the woods yet. A conflict of interest emerged on February 27, and the Series B fell apart.

“We had about three weeks of cash in the bank, and this was the first week that the stock market had collapsed because of the pandemic,” Rabie says. “So we were in a horrible position.”

After spending a few hours panicking, the founder pulled himself back together and called an emergency meeting with both his executive team and the company’s largest existing financial backer. Then, he started calling other investors.

The well, it turned out, had not run dry; over that weekend, Rabie raised another $2 million from members of Tovala’s cap table. It was enough, he says, to be able to tell his roughly 200 employees that their second attempt at a Series B had collapsed without inciting panic. He raised another $1.5 million from these backers over the next few weeks, then focused back on attracting new investors.

It was no easy task. Throughout March, Tovala went through two more false starts. During the first, an investor that had expressed interest during the startup’s January road show offered half of its previous valuation and gave Rabie’s team only eight hours to decide whether to take the deal. In the second, an investor gave Tovala a verbal offer, then backed out the next day after news broke of the increasing severity of the Covid-19 pandemic.

The startup finally landed a new lead investor, the food and agriculture-focused venture capital firm Finistere Ventures, at the end of March. It took another few months to fill out the round, according to Rabie, with the new $20 million Series B closing around Memorial Day.

“Now this is a story that gets told as part of company lore,” Rabie says. “It’s like, we got through that, and we came out stronger. We can do anything, basically.”

Once Tovala had raised that funding, it was able to fully take advantage of the growth it had been experiencing since the fall of 2019 and the natural boon the pandemic provided for meal subscription services. The startup, which became profitable in 2024, now makes nine figures in revenue annually and is growing about 20 percent year-over-year. Best of all, Rabie reports that Tovala hasn’t needed to raise any capital since 2022.

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