Jared Jacobs

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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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“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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Want to know the story behind those unique Asian-inspired sparkling water flavors you've been seeing? I sat down with Sandro Roco of Sanzo on the Consumer Rundown podcast. We talked #Asian representation and voices, building a #beverage empire, and the importance of being a "good ancestor"! Listen to the full conversation – link in comments! #entrepreneurship #cpgindustry #beveragebusiness

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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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Speed of learning is one of the most important founder attributes — and sometimes that means getting support to move faster. I’ve seen folks like Carol do just this and unblock founders and their early growth. It’s powerful to ask for help!

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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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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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The face you make when you realize that you have become pretty good at sourcing off-market opportunities and have private equity and family office investors ready to back you, but you don’t have enough talent to take advantage of those opportunities. With that said, if you know of anyone in the commercial bakery, dry cleaning, food distribution, or commercial laundry space who is looking for board and/or C-level opportunities, please let me know. #boardadvisor #clevel #executives #commercialbakery #commerciallaundry #drycleaning #fooddistribution #privateequity #investmentbanking

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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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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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At last week’s ClimateTech Coffee 🚲 Bryan White and I were joined by Kimberly Gilbert, PhD to hear about her work on Carbon Neutralization and Ocean Storage (CNOS) through her company pHathom. Here’s a recap: The ocean naturally absorbs CO2 over time, but we’ve added so much that the ocean has become increasingly acidic. Ocean pH has dropped from 8.2 to 8.1 globally over the last hundred years, and as pH drops it becomes harder for coral-based organisms to form shells. To combat this, Ocean Alkalinity Enhancement (OAE) is an intervention that both reverses ocean acidification and removes CO2 from the atmosphere. Challenges with traditional OAE: - When you add the alkalinity into the ocean, it spreads out. It’s hard to measure the change in pH. - You don’t know exactly when the extra CO2 will be absorbed. Modeling and measurement companies are trying to help with this problem. Advantages of CNOS: - Co2 is captured directly at a coastal power plant or refinery, and then the concentrated Co2 is pumped into water that has limestone (and/or other alkaline materials) in it.  - This means the Co2 is dissolved onsite and the pH can be equilibrated onsite, which makes accurate measurement more feasible. Factors that affect progress:  - We’ll start seeing more companies enter in this space as the chemistry and its impacts are better understood and seen as safe  - Local and national permitting are a huge bottleneck - On the international permitting level, the London Protocol has a blanket ban on ocean geoengineering for anything except for research. There were good reasons for doing that, but it’s unclear who decides when that can change and the circumstances under which the ban is lifted. (Note: pHathom is not doing geoengineering; it’s doing water treatment on-site and releasing it back as ocean water) Open questions for the category/technology: - Can they come up with enough low-cost alkalinity sources, and get them in a way that doesn’t cause additional environmental damage or Co2 emissions?  - This approach will require pumping a lot of water. How much will that cost and how can the cost be driven down?  - Putting 100 plants’ worth of bicarbonate into the ocean is likely fine for ocean health relative to the climate benefit, but what is the point where the tradeoffs cross over? Some groups doing good work in this space:  [C]Worthy Carbon to Sea Initiative  University Research: UC Santa Barbara, University of Tasmania, GEOMAR, Dalhousie University, Scripps Join us for the next one in May! Details coming soon, and you can get updates by subscribing to the series page here: https://lnkd.in/g7DTGm2V

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It was a real honor to interview Brad Burnham co-founder of Union Square Ventures and partner Placeholder on the history of hype cycles in technology and the value they bring to capital and market formation. Brad has had tremendous success across decades investing at the frontier - when it was the frontier/ before it was obvious. Crypto is still the underdog and his views on the opportunity and its nuances are prescient. Specifically it is both a technical and financial innovation which can lead to excess volatility and a unique muscle as it relates to being a venture manager. But the returns are real. And the innovation is real despite some of the the common narratives. No one debates the breakthrough applications in AI at M13 we have been very active. It is also very clear that incumbents have massive data and distribution advantages which can make it challenging to find the right pockets to invest. AI is on its own hype cycle and as always the best teams (typically with contrarian takes) win. Very exciting times to be a venture investor.

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Amongst the most successful VCs in consumer in the past decade has been Kirsten Green at Forerunner So I asked her all about how startups can navigate the 70% reduction in consumer investing & why now might be the best time for VCs to look harder at the category. I loved this discussion. I always learn something from Kirsten. Click below to watch / listen https://lnkd.in/g3kiMPD5

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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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I've seen NO ONE read this correctly; the headline is pure clickbait. More GPs are planning to fundraise now (as they say "nearer") than last year. This is the largest YoY jump, instead of not planning another raise. Why? The data here suggests those who pushed a decision further out have decided. • Not decided: from 44% to 27% • No plan to raise: 6% to 13% = 2x increase • Deciding to fundraising now: 4% to 12% = 3x increase https://lnkd.in/gkAC6GGr

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If a basketball player drop kicks a ball during play, people wouldn't blame basketball for not allowing kicking...they'd question the players understanding. Founders (Players) can hate the VC fundraising (Game). Blaming Opaque processes or Nepo style allocation, but quite often these are excuses not the reason. The misspent energy of founding teams chasing the same Midas list everyone else has or simply not having a business appropriate for Venture rails; means they are setting themselves up for failure. There are well over 10,000 funds out there, with many interested at the early stage. And yes we do need a better way to raise relevance which is a core mission of OpenRound; but even if you could click a button and have a termsheet pop up to you (be nice wouldn't it?)...would you know the demands that cash is coming with? VC's are playing a version of the same game founders are, they have investors (LP's) who make up the fund, a VC needs to pick winners to return that fund with a multiple attached. So Founders need to think before signing a termsheet, not just the terms in front of them, what will they need to achieve to return the whole fund as a value back to that VC. Because thats the unspoken pressure that adds noise to all decisions as you scale. Founders need a better experience - that is without doubt. But founders need to know what they are signing up for before spending weeks kicking balls in the wrong sport. and now...this (IFYKYK) #Tuesdaytake #fundraising #investorrelations

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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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