4-30-09: Stanford: SSE makes $50,000 investment

Student startup gaining attention of investors

Stanford Student Enterprises (SSE) Ventures, an entrepreneurial funding source for students on campus, has just made its biggest investment in history — five times its previous record — despite the poor economic climate.

The venture fund invested $50,000 into Think Gum, which produces a mint-flavored chewing gum that combines various nutrients with caffeine. The gum is meant to enhance cognitive abilities and academic performance.

Matt Davidson, a first-year student in the School of Medicine, has 2.5 million pieces of chewing gum stacked along the walls of his parents’ 20-foot-by-20-foot basement in Los Angeles and explained that he came up with the concept of Think Gum as an undergraduate at UC-Berkeley.

“I heard a couple stories about how chewing gum could help memory, and I was taking a class called ‘Drugs and the Brain,’ where we learned about different aromas and how they help with concentration and memory,” Davidson said. “Being a student myself, I was taking a lot of tests and was really looking for any edge I could get. I began to chew peppermint gum, and I put rosemary in my gum.”

Chewing this makeshift form of Think Gum, Davidson noticed an improvement in his performance. After graduating Phi Beta Kappa with high honors, he decided that this was a marketable product that would appeal to numerous students.

Think Gum combines herbal stimulates including rosemary and gingko biloba with aromatherapy and antioxidants to increase energy and mental power. It also contains the equivalent of half a can of soda’s worth of caffeine.

The act of chewing gum in itself has also been shown by research to potentially enhance academic performance.

Baylor College of Medicine conducted a 2009 study in which 108 students ranging from 13 to 16 years of age were broken into two groups: one that had to chew gum during math class and one that had to refrain from gum chewing. Fourteen weeks later, the gum chewers had a three percent increase in standardized math scores and significantly higher final math grades than the other students. The results indicated that chewing gum may have a positive effect on academic performance. Researchers speculated that gum leads to a decreased level of stress, thus enhancing focus and concentration.

In particular, the effectiveness of Think Gum attracted SSE Ventures — as well as its ability to generate revenue.

“In 2008, they did $50,000 in sales,” said SSE CEO Matt McLaughlin. “The majority of that, something around $40,000, came in the last six months of 2008. So if you’re an investor and you’re putting in money, you’re like, wow, they actually already have some success. And there’s nothing better than putting money into a product that has already been successful.”

This money is a starting point that will be used to attract other investors and will assist in the marketing and manufacturing of the gum. SSE Ventures will also own a share of the company after legal documents have been signed.

Think Gum was created in late 2007 and began selling gum in 2008. Davidson experienced certain hurdles in the initial stages of product development, including raising money and the physical manufacturing of gum.

“I actually tried to make it myself at first and bought this kit where you microwave these gum pellets and you add stuff to it, and it turned out really terrible,” Davidson said. “It was really sticky and just didn’t work out.”

Since then, Davidson has found a place that manufactures the gum and has sold over a million pieces of gum both in the U.S. and internationally. Think Gum is currently sold in the United States, Canada and the U.K., and is the largest pharmaceutical distribution company in Botswana. It is also sold at Moonbean’s Coffee and other campus-wide vendors.

Davidson explained that the current economic climate has not affected sales of Think Gum because he views gum as an insulated product. Weighing in at two dollars a pack, he believes that it is not enough of an economic burden and is thus optimistic for company growth.

“In the future, the plan is to expand from just Think Gum to all sorts of functional candies,” Davidson said. “It would be chewing gum and mint that would help not just with thinking, but potentially with people’s digestion and helping them relax and even helping them lose weight or stay healthy.”

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