Waterloo Grad Raises $8 Million to Cure North America’s Hangovers

A Canadian tech graduate is making it big by bringing a hugely successful international idea to North America.

The L.A.-based 82 Labs has announced a raise of $8 million with a total company valuation of $33 million. Sisun Lee is the founder and CEO of the company, and is himself a Canadian and technology graduate from the University of Waterloo. A large majority of the 82 Labs team are also Waterloo grads.

The funding round came from a slew of venture and angel investors, including Altos Ventures, Slow Ventures, R7 Partners, Thunder Road Capital and Strong Ventures. Canadian investors include Candice Faktor, Jordan Banks, Joshua Bloom, Daniel Habashi and Dale Hooper.

Despite the litany of tech VCs and angel investors, the work Lee and 82 Labs is doing might more closely resemble a mix of the food and beverage industry with a bit of biotechnology thrown in. His company is responsible for the Morning Recovery beverage, a replenishing drink most famously known for its ability to cure hangovers—and today, the company has officially unveiled it’s 2.0 version of their flagship product. The new funding will go towards more R&D as well as international expansion.

The story of how the first Morning Recovery launched is impressive. Lee visited South Korea and realized that a huge amount of the population went out on work nights and drank heavily—only to be fine the next morning, thanks to “hangover cures” that all had one similar ingredient: DHM, a compound made from the Japanese raisin tree (Hovenia dulcis).

Lee took that idea and brought it over to the U.S. and started the company in August 2017. Before he knew it, he had made $1 million in three months due to features on Product Hunt and a massive amount of customer recommendations. For more on that whole story, check out Lee’s tale here. But there was room to improve on that first idea.

“In many ways, version one was brute-forced,” says Lee. “It was an Indiegogo thing we were going to learn from, but because of the demand, we kept pumping it out. We were happy with it, but there were more economic and formulation improvements we could make.”

Some of those improvements meant no more glass bottles, which makes sense from the e-commerce side of things. In terms of formulation, version 2.0 will help with more than hangovers. Staffed doctors and researchers at 82 Labs looked past a simple hangover cure with the DHM extract and wanted to address other ways to improve the human body. Of course, a new version also meant a rebranding as well.

“One of the big things we learned was that hangovers can be tackled in two ways,” explains Lee. “How do we prevent the root causes of it, and also what are the cascading effects of alcohol consumption that we can remedy for. Our goal is not necessarily to cure and prevent hangovers—we want you to wake the next morning and feel your best.”

This new version of Morning Recovery will also be 82 Labs’ first international launch. The first version was meant to be domestic to the U.S. as the company did not want to continue to test abroad with their original product.

The market for a tangible hangover cure is massive. Over $170 billion worth of productivity is lost in the U.S. each year alone to hangovers, and 82 Labs believes the market could be worth up to $113 billion. Morning Recovery knows their audience as well—it is the maximum allowable size to be brought as a carry-on to a plane, and the product boasts a 40 per cent rate of repeat purchasing.

Lee’s time spent in tech roles at Facebook and Tesla helped him make 82 Labs successful, driven by the simple idea of creating a winning product and being accountable for success and failure. On top of that is finding out the most efficient way to build something and then test it.

“We’re always asking ourselves about what consumers want,” says Lee. “It’s not about what I want to build or what’s sexy, It’s just about proving my intuition and knowing exactly what people want, and out of everything they want, this product is the most important one.”

There are differences between tech and the food and beverage world too—of course. Lee has recognized branding is much more important in the consumer product good (CPG) world, as well as testing, compliance, and even flavour.

“In tech, we had a free world of ‘if you don’t know, just ship it and test it out,’” says Lee. “At Facebook, we’d make a random sample of 400,000 users in New Zealand or somewhere like that, test something absurd, find out what went wrong and right, change it and then ship it.”

“Imagine if we just changed our drink formulation then just shipped it? First off, that would be illegal. We have to do more optimization with less data in the CPG world.”

Version 2.0 of Morning Recovery is out today in the U.S. and should reach Canada by summer, as Health Canada is finishing up their approval process—right in time for patio season. Morning Recovery will not be the only thing 82 Labs releases as more replenishing drinks are coming down the pipeline soon.