Adam Epstein

🌟Innovative VC Firm Overcomes Exits Drought with Secondary Sales🌟 ⛵Navigating a challenging landscape where exits are scarce, Santa Barbara Venture Partners (SBVP) has pioneered a novel approach to sustain its growth and attract investors for its second fund: secondary sales. Instead of waiting for traditional exits like IPOs or acquisitions, SBVP opted to sell shares of its portfolio companies, demonstrating its ability to generate returns for investors and stand out in a competitive market. 🎤According to Dan Engel, founder and managing partner of SBVP, these secondary transactions have been a game-changer, sparking investor interest and bolstering the firm's credibility. By leveraging its recent successes, including a lucrative stake in sports-betting company DraftKings Inc.' acquisition of digital lottery app Jackpocket, SBVP seized the opportunity to return profits to its limited partners (LPs) and pave the way for its second fund. 💡Engel highlighted the challenges faced by young VC firms in raising subsequent funds, particularly amid a downturn in exit activity and heightened investor scrutiny. With traditional exit routes becoming increasingly elusive, the pressure is on for firms to demonstrate tangible returns and establish a track record of success. ✨"For us, secondary sales have been a game-changer. They've helped us return profits to our LPs and attract investors for our second fund," said Dan Engel. 💰For SBVP, the decision to pursue secondary sales was driven by the need to provide liquidity to LPs and validate its investment thesis in the eyes of prospective investors. By strategically offloading portions of its holdings in high-performing portfolio companies like Bark Technologies and Rad AI, SBVP not only generated substantial returns but also bolstered investor confidence in its ability to deliver results. ⚠Despite the complexities and potential stigma associated with early share sales, Engel emphasized the importance of prioritizing investor returns and seizing opportunities to unlock value for stakeholders. With a focus on profitability and transparency, SBVP remains committed to its mission of delivering sustainable growth and maximizing returns for its LPs. 🔍 "Returning profits to our investors is our top priority. By strategically selling shares, we're proving our commitment to delivering results and driving value for our stakeholders," added Engel. As SBVP continues to explore secondary transactions and expand its investor base, the firm stands as a testament to innovation and resilience in the face of market challenges. 🚀 ✅ Looking to raise capital for your #fund and increase the international pool of your LP #investors?   🤝 Need warm #LP introductions?   📝 Selling #secondaries to increase liquidity?   🧐 Looking for co-investments?   ▶ G+QUANT's link for inquiries and fund decks: https://lnkd.in/gjC_EuTE #VCInnovation #SecondarySalesSuccess #InvestorReturns #ValueCreation 

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Advice for consumer brands raising later stage rounds: Valuation may be more about your investor’s target return and view of exit value than revenue / ebitda multiples Remember that in CPG there are few exits over $500m Knowing this, most private investors want to underwrite $200-500m exits and don’t want to earn less than 2x That means raising at $150m pre-money in most categories will be very hard Set your expectations right before you go out to raise, you don’t want a busted process Often the solution is insiders who want to increase ownership / exposure if even if means <2x on last money in

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Darden Restaurants recently reported its quarterly results, showcasing resilience amidst a challenging environment. While Olive Garden faced a decline in same-store sales for the second consecutive quarter, Darden's overall performance remained steady, with earnings per share surpassing expectations at $2.65 and revenue reaching $2.96 billion. Looking forward to fiscal 2025, Darden projects a promising outlook with expected earnings per share between $9.40 and $9.60 and anticipated net sales of $11.8 billion to $11.9 billion. The company's LongHorn Steakhouse segment notably reported a 4% increase in same-store sales, underscoring Darden's effective management and operational strength. With plans to invest $550 million to $600 million in capital expenditures, Darden is poised to enhance its offerings and maintain its competitive edge in the market. Read More Here: https://lnkd.in/eFgDC97p #hospitality #restaurants #technology #innovation Branded Hospitality Ventures Angelo Fama Jr. John Espy Dave George Daryl L. Cunningham Lisa McDowell Robert Anderson Ali Charri

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To all #founders and #entrepreneurs out there, our intro meetings are conversational and easy going. Feel free to message me to setup a call. Learn what Pioneera Ventures can do for you!

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The real issue isn't the asset class itself, but rather selecting the right VC. Unlike other asset classes, the return dispersion in VC is immense. VCs that adopt a gambling approach often drag down the median returns. In contrast, those with a structured and disciplined investment thesis can significantly reduce exposure to losing companies while enhancing their upside potential by investing the right amount at the right valuation. Achieving favorable returns in VC requires a programmatic approach: 1. Great manager selection and access: Identifying and gaining access to top-tier managers is crucial. 2. Consistency across cycles: Long-term commitment and consistency in deployments across various market cycles are key. This doesn’t mean investing the same amount each year, but maintaining a relatively stable investment pace where the VC is able to invest for value not just a trend follower. Many LPs tend to commit more capital during peak periods (e.g., 2019-2021) and scale back during tougher times. This natural psychological behavior often results in suboptimal outcomes. Peak periods can lead to behavioral changes and the inclusion of 'tourist' investors, ultimately affecting valuations and returns. It's all about dollar-based risk-adjusted returns. Selecting the right VC with a disciplined investment approach can make all the difference. Consistent, strategic investments, rather than reactionary ones, are essential for capturing the best returns over the long term. Thoughts?

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Are #VC exits in standstill and what does it mean for the #CPG companies? Just a handful of large VC-backed companies have gone public since Q1 2022, exiting at only $70bn cumulative worth. i) less than the value recorded in any quarter in the record-breaking 2021 ii) staggering 90.5% decline from 2021’s record highs of $750bn iii) and more importantly the first time the figure has dipped below $100bn since 2016 What does it mean for CPGs? 1. Strategic Acquisitions: As VC-backed companies struggle to justify their high valuations or demonstrate the necessary fundamentals for IPOs, they may get forced to sell at lower price point to a strategic acquirer, and #FMCG players are well-positioned to capitalize on this lack trend 2. Investment opportunities for CVCs: smaller rounds and less competition may enable CPG companies to get stake in the most promising start-ups that would otherwise be quickly scooped by Sequoias and Tigers of this world ;) 3. Less 'well-funded' competition for incumbents: less exits and lower valuations means the large upstarts challenging leading FMCGs will need to be more frugal with resources potentially stifling investments As the saying goes, “In every crisis lies an opportunity.” CPG leaders who will navigate the best this environment may end up winning disproportionally (as we were writing on the topic) FMCG CEOs: 2023 M&A Report – Seven Key Learnings & Seven Predictions For 2024 https://lnkd.in/dT5A-jGZ To receive the corresponding deck, pl. leave your name in comment To get all our insights, follow us/ subscribe to our CEOs newsletter: https://lnkd.in/eR8vDpvE #strategy #zerobasedgrowth #mergersandacquisitions Frederic Fernandez & Associates

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Boards of Directors – How Relevant To The Business Is The Board? In 2014, activist investor Starboard Value successfully replaced all 12 directors on the board of Darden Restaurants. The following shows the Darden incumbent board at the time of Starboard's proxy fight, Starboard’s value creation plan initiatives, the Starboard director nominees and the before and after performance (revenue, EBITDA, EBITDA margin and stock price). Note especially the direct relevance of each Starboard nominee to the industry or some aspect of the value creation plan. How often do you see this level of relevance on public company boards?

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Earlier this year, we surveyed our fellow Los Angeles-based GPs to get a pulse check on the LA venture ecosystem. Here’s what we found: 💗 Deal flow is healthy, and most LA venture investors (68%) are seeing the same or more deal flow YoY. ✈ LA investors are spending time in a variety of markets, with NYC, Austin, and SF following closely on LA’s heels. 🔍 Innovation is concentrated in AI and machine learning, space, and commerce. 💸 Funding is happening, but it’s barbell-shaped, with deals concentrated at the early and late stages. Funding post-Series A has been challenging. 🚩 LA is differentiated, but not without its challenges. Key difficulties include not attracting enough AI talent (despite having the largest number of engineers graduating from our region over any other in the United States); talent relocated to more tax-friendly or less expensive locations; and the great SoCal / NoCal divide 🙏 Thank you to all our many respondents! I’m so glad to be part of a venture ecosystem that includes great minds like Anna Barber, Brent Murri, W. Christine Choi, Sarah Tomolonius, Rob Smith, Win Chevapravatdumrong, John Tabis, Jill Royster, Jesse Draper, Ashley Balla, Britt Danneman, Tram Lai, Carmen Palafox, Elaine Russell, Deborah Benton Amanda Schutzbank, Brian Lee, Petra Griffith, Minnie Ingersoll, Shamin Walsh, Gabe Greenbaum...wow, this list could go on forever...plus too many other exceptional humans to name. You know who you are! Explore our findings more deeply with our survey dashboard: https://bit.ly/3JsaLaB

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“When you have any signs of early demand pull, you have to follow it and work as hard as it takes to just make it happen.” This early company building advice from Filip Kaliszan is spot on, and it’s the Verkada founding team’s ethos in a nutshell. I’ve been able to see this up close by partnering with Filip over the years, but I’m so glad he generously shared his hard-earned lessons more publicly with other builders in this series for First Round Capital's PMF Method. Here are a few of my favorite takeaways: 🚧  𝗦𝗺𝗼𝗼𝘁𝗵 𝘁𝗵𝗲 𝗿𝗼𝗮𝗱 𝘄𝗶𝘁𝗵 𝗮 𝗿𝗼𝘂𝗴𝗵 𝗠𝗩𝗣: “The very first version looked very funny. It was a Raspberry Pi based camera. We just hacked it together from different parts — the supply chain was Amazon.com. We built maybe 100 of these little cameras and we gave them to friends and businesses we knew. That was never going to fit in a commercial environment, but man, it was so valuable to build it, because we could evaluate different streaming technologies and learn about the challenges of local storage. All these problems that we later encountered, we had already started solving. By the time the real product started selling, we had fewer bugs and ideas on how to navigate them. It just smoothed the road." 👷‍♂️ 𝗚𝗲𝘁 𝗼𝘂𝘁 𝗼𝗳 𝘆𝗼𝘂𝗿 𝗯𝘂𝗯𝗯𝗹𝗲 (𝗮𝗻𝗱 𝗼𝗻𝘁𝗼 𝗮 𝗹𝗮𝗱𝗱𝗲𝗿): “I remember flying to L.A. to install cameras at the Beverly Hills Equinox, one of our early customers. The gym closed at midnight, and we had until 5:00 AM to get the cameras installed. So next thing I know I'm buying some drills, getting up on a ladder and pulling cables myself. That client kept growing with us over the years because of the attention to detail we showed from day one. I've worked in the consumer space before. My perception of enterprise is that if you're willing to do the work, have the customer conversations, get on the plane and get out of your bubble to see how customers are using different solutions and build a picture of what will work for them, it's more of a well-defined process than it is a guessing game." ⚙️ 𝗟𝗶𝘀𝘁𝗲𝗻 𝗳𝗼𝗿 𝗽𝗿𝗼𝗯𝗹𝗲𝗺𝘀 𝘁𝗼 𝗮𝘃𝗼𝗶𝗱 𝗽𝗿𝗼𝗱𝘂𝗰𝘁 𝗯𝗹𝗼𝗮𝘁: “One of the mistakes that I see is sometimes folks listen to the customer for what they want as the solution, as opposed to listening to find out what the problem is. If you talked to our customers, on the surface I think what you might get back is that they want a sum of their favorite features from all of the competitors. But if you took the best features from all of our competitors and put it into one product, you'd build a bloated product with a bunch of not so great features. But if you dive a little deeper in that conversation, and you try to understand why they want these features, if you go to the customer and have them show you their workflow, and take notes about the things that are broken, that's when you start identifying the problems.”

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A lot of you have heard me say "we aren't thematic investors EXCEPT when it comes to our consumer thesis and Vertikal Brands". So what does that mean exactly, and how did we choose to double down on outdoor specifically? I recently sat down with Matt Blevins who heads up the strategy for Clearview Capital, L.P. and we had the chance to talk about just that! Tune into our third episode of 'Coffee with Clearview' to learn more about how we got started in the space, and how we continue to partner with world-class outdoor consumer brands. #consumerprivateequity #consumerproducts #privateequity #outdoorenthusiast #outdoorbrands

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I love this! Thank you to Rachel Brown from Beauty Independent to kick-off this exchange with Andrew Ross' provocative thesis and have us all react to it. I truly enjoyed reading everyone's thoughts on the topic of the shortening lifecycle of beauty brands. Here is a snippet of mine: "Because beauty brand lifespans are shortening, it is important that we are able to differentiate brands with staying power from brands that will end up being a flash in the pan. There are much more of the latter than the former in the market right now, and if a brand is not well-positioned, it will be challenging for that brand to survive over the long-term. That’s why we focus on understanding each brand’s differentiators and long-term relevance." See more here: https://lnkd.in/esVbwnu2 and you will discover what Kevin Murphy, Odile Roujol, Rich Gersten, Tina Henry Bou-Saba, Oliver Nordlinger, Claire Chang, Manica Blain, Sonya Brown, George Birman had to say. #beautyindustry #beautyinvesting Stride Consumer Partners

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Optimized purchasing and route management drives increased profitability for brands and stores to SHARE! With limited banking resources and no operating leverage, efficiency drives better cash flow. Plan your routes and shelf space with DATA to support profits with 240 Logistics!

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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Such an excellent conversation this week. For those in venture capital, this is a must listen. https://lnkd.in/gQUgM8q9

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After a whirlwind two decades of a corporate career – which has spanned a traditional management consulting firm, a Fortune 500 toy company, a world class entertainment agency, and a growth equity fund, I’m excited to officially share that I’m striking out on my own with Shruti Sehgal. Together, we’re proud to launch The Moonshot Company – a new kind of strategic consultancy, representing high-growth talent, brands, and investors looking to accelerate their cultural and commercial success from a place of authenticity, creativity, and intent. The Moonshot Company will specialize in integrated brand and growth strategies–culled from our prior executive careers in consumer, entertainment, media, finance, politics, and PR. Throughout my professional life, I often found myself at the center of consumer industries undergoing a major landscape shift. Shifting consumer behavior, the proliferation of social media, digitally-native consumption, and revamped business models have underpinned every business I have been fortunate to be a part of. Winter has always been coming. And it is through that lens that I learned a lot about myself as an executive. My curiosity has always found that change exhilarating - and I am particularly adept at spotting through lines and opportunity amidst a constant state of flux. Rapidly transforming industries don’t scare me, stagnation does. And yet, I have always felt a natural tension between building these industry-specific skills and the freedom to add my own interdisciplinary instincts and perspectives to bear, especially on someone else’s platform. But as the world has changed, so have I: this very tension I once thought frustrating is now a reason for being.  If I could go back in time, I would tell my younger self that my own diverse range of experiences and multicultural consumer lens always has been, and will always be, as instructive to my success and growth as anything else. The future of business and culture requires differentiated voices and leaders who can bring a much wider set of skills and a unique blend of deeply-lived experiences – both personal and professional – to achieve transformational outcomes for clients, and this is the foundational vision of The Moonshot Company. Simply put: this platform didn't exist, so we built it. As mothers, former senior executives, culture-obsessed consumers, and South Asian women – Shruti and I are thrilled to put our skills, networks, and novel strategies to work for clients who share our values, and whom we feel uniquely compelled to deliver Moonshot-level results for. If our vision and founder story resonates with you, please reach out. And as we embark on this new journey, I’d love to hear more about your own Moonshot below. 🚀 💫

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How to Profit by Divesting from Companies with Anti-Israel Stances As savvy investors, we must always be alert to the implications of a company's political stance on its financial health. Take, for instance, hims & hers, whose CEO, Andrew Dudum, recently made a controversial statement about hiring pro-Palestinian protesters just days before a potentially underwhelming quarterly earnings report. This statement, coinciding with a 5% drop in share value—erasing $100 million in market equity—raises the suspicion that it might be a psychological maneuver by a CEO fearing for his job ahead of poor earnings results. Given hims & hers' history of underperformance, with shares gaining only 8.32% since its IPO compared to a 23.33% increase in the S&P 500 and similar growth in the Nasdaq, investors could have seen better returns elsewhere. Furthermore, analysts are also showing signs of concern. Recently, Jefferies downgraded hims & hers from 'Buy' to 'Hold' and reduced the price target to $15 from $17, signaling a cautious stance on the company's growth prospects. This downgrade, coupled with the anticipated poor earnings, paints a troubling picture for the future of hims & hers. Additionally, the related Supernova festival tragedy on 10/7, where victims mirror the typical hims & hers customer base, might further alienate its clientele. Customers may sympathize more with the victims than with a company perceived to be exploiting political events to distract from business failures. This scenario suggests potential for increased customer churn and a continued decline in share value, making it a critical time for shareholders to consider divesting. For those open to risk, short selling could capitalize on anticipated downturns.

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Our view on the current venture capital markets. Curious to hear other investors' thoughts but I feel like seed stage valuation, at least in the gaming and entertainment sectors, has finally come down to the pre-covid level. Since February or March this year, we started seeing that the founders are willing to raise a $1-2m seed round at a $10m-ish valuation, not like $4-5m at $20-25m in 2022 and 2023. What are you guys seeing?

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Last week, I attended Houlihan Lokey's 2024 Global Consumer, Food & Retail Conference in New York. Here are some key takeaways that stood out to me. Continued Tailwinds in the Pet Industry: 🔹 Pet Owner Sentiment: With 92-96% of pet owners viewing their pets as family, there's increasing demand for *functional* treats, supplements, and innovative food formats like freeze-dried pet food, the fastest-growing segment within freeze-dry products. 🔹 Category Consolidation: Single-product and single-capability companies are merging into larger pet platforms, opening up M&A opportunities and filling portfolio gaps. 🔹 Expansion into the Cat Category: Dog-first companies are expanding into the cat category, where purchases are stickier (e.g., cat litter) due to the selective nature of pet cats. Rise of Preventative Wellness: 🔹 Increased Gym Visits: The rise in gym memberships and equipment utilization is driving up replacement rates. 🔹 Female Athlete Surge: The increase in female athletes is influencing market trends. 🔹 Customer Service and Amenities: High-quality customer service and amenities (e.g., towel service, childcare) are essential for retaining gym memberships. Personalized customer interactions enhance member loyalty. 🔹 Men’s Health Awareness: Growing focus on men’s health, addressing the issue of men suffering in silence. 🔹 HSA/FSA Approvals: The IRS and health insurance companies are increasingly approving preventative wellness expenses like gym memberships and fitness programs for HSA/FSA reimbursement. Franchising and Multi-Unit Asset Resilience: 🔹 Growth Despite High Interest Rates: Franchising and multi-unit assets in health and wellness for both humans and pets are rising despite the high interest rate environment. 🔹 Tech-Driven Analyses: Investing in advanced tech stacks enhances customer service and expands topline and margins through data-driven approaches. 🔹 Recurring Revenue Focus: Emphasis on creating sticky, recurring revenue streams through memberships, fostering habitual use, and offering services that are typically inconvenient or time-consuming to switch. I'm looking forward to seeing how these trends evolve in 2024! #PetIndustry #PreventativeWellness #Franchising #HealthAndWellness #TechInnovation #BusinessGrowth #Investing

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