Kate Flynn’s Post

VC capital down 97%!!!! 😱😱😱 Is CPG venture capital dead? Not yet, but there is no doubt a big shake up is in the works. We are not just seeing brands go bankrupt, but there will be a large number of CPG venture capital firms move out of the space or close up completely. Let’s look at how we got here. Prior to 2010, the venture capital market for CPG did not exist. Most of the capital for brand development came from friends & families, and it wasn’t until brands grew to the magical PE threshold of $10m in revenue or $2m in EBITDA were brands able to access institutional capital. Then came the rise of digital marketing (DTC) and online based corporate infrastructure platform applications (quickbooks online, online banking, etc) in early 2010s that started leveling the playing field for consumer startups. The ability to bypass retailers and market directly to consumers reduced the impact of the large strategic stranglehold on brick & mortar distribution. Also, productivity gains through a distributed corporate infrastructure allowed for more professional manage without the traditional fully burden cost of a InHouse team all located in a single location. This rise tigger hypegrowth for that first cohort of brands, leading to a wave of strategic M&A from 2015 - 2019, first in big food & beverage and then followed by the diversitied groups such as P&G and Unilever. However, cracks were already showing. Most brands acquired during this time failed and strategics started changing there M&A strategy model, requiring brands to be larger before acquisition. The next phase brought the beauty and personal care wave, with food & beverage VCs diversifying into other categories. While this was happening, the amount of capital flowing into the market continued to accelerate. Then COVID hit… Instead of slowing the momentum, COVID super charged the capital flowing into consumer, with the early stage seeing a true bubble. COVID trends distorted and already distorted view of reality, as growth was unnaturally charged with capital in digital marketing without real customers being created, and it all hit reality with two major market changes. IOS change in May 21 and the increasing interest rate environment / quantum tightening reducing the investor liquidity for private capital. Fast forward to today, the venture capital dollars for CPG is back to where we were in 2010, practically zero. So what’s next? Over the past 10+ years there have been a massive infrastructure build to support early stage CPG that continues to allow for efficient brand development. There has also been a number of successful firms that have proven smart investors that can truly be value add can propel brands. So while the competition for capital is going to be fierce for years, those groups that do have deployable dollars will more than likely increase the probability of success for their portfolio companies. #cpg #venturecapital #cpginvesting

Private equity funding is playing a greater role in consumer startup funding, particularly as venture capital funding dipped last year. Among startup brands, venture capitalists typically make early investments in promising companies — or sometimes even concepts — predominately based on the potential for big growth. But private equity involves making controlling investments in more established companies and helping sustain profitability. In the current environment, more founders of brands are looking to extend their runways through PE. While the expectations from PE firms differ from receiving VC, startups are leaning on private equity to help them grow profitably, and with a concrete exit strategy in place. What’s more, some PE firms are starting to take a greater interest in earlier-stage companies. #privateequity #venturecapitalist #fundraising #funding #startups #investing #familyoffices #hedgefunds #PE #VCs #GPs #LPs #FOs

Venture Capital for eCom brands is a terrible idea The venture business model expects most investments to go to 0 with some reaching unicorn status. Unicorn startups are expected to pay for all the other investments that don't pan out This is ideal for SaaS because software doesn't have the same constraints as eCommerce - namely not having to operate in the physical world of atoms In other words, software is easy to distribute and optimized for hyper growth To rapidly scale an eCom co, you need to deal with increasing complexities like international logistics, massive cashflow constraints, demand planning/reordering, slim margins, outgrowing warehouses and reduction in ad efficiency just to name a few If you fuck up one of these things, you can blow up the entire company. Forcing these growth constraints on eCommerce brands is a recipe for disaster That's why so many DTC VC backed companies are imploding On top of that, most DTC brands don't have the scale potential to make venture work (ie: much less potential for $billion outcomes when compared to software) The best eCommerce brands like Lulu and Nike took decades to build. There's a reason for this eCom is best suited for sustainable growth compounding over decades It's not optimized for Venture Capital

Exciting shifts are happening in the world of startup investment. While venture capital has often been the spotlight stealer, it’s time for private equity firms to take a bow. In the current scenario, where VC funding has seen a decline, private equity stands as a beacon of potential for consumer startups.   This isn't just about money—it's about sustainability and nurturing profitable business models that stand the test of time. What does this mean for the future of consumer startups? A landscape ripe with potential for growth. #venturecapitalists #privateequity  

Do Venture Capital firms and Private Equity play the same role in startup fundraising? The short answer is No. Firms specializing in private equity investments are occasionally labeled as "venture capital firms." Nonetheless, there exists a clear differentiation between venture capital and private equity entities. Venture capital firms primarily support nascent businesses by injecting funds to fuel their growth, focusing on early-stage investments. On the other hand, private equity firms concentrate on mature enterprises, assisting them in securing capital for expansion or other strategic initiatives. Biggest Private Equity Players in Startups: 1) Bain Capital: Bain Capital is one of the world's leading private investment firms, with approximately $175 billion in assets under management. The firm invests in a variety of industries, including healthcare, technology, and consumer products 2) KKR: KKR is a private equity firm that has made a name for itself through strategic investments and partnerships with high-performing companies. The firm invests across various industries in each region, reinforcing KKR’s commitment to global investment 3) Blackstone: Blackstone is one of the leading firms in the private equity industry, with a portfolio exceeding $137 billion. The firm invests in established companies across various sectors worldwide Biggest Venture Capital Players in Startups: 1) Sequoia China: Sequoia China's founding and managing partner, Neil Shen, is the top investor on the Midas List 2023, Forbes' definitive ranking of the top 100 tech investors. The firm invests in Chinese unicorns, including Meituan, Pinduoduo, and ByteDance 2) Andreessen Horowitz: Andreessen Horowitz is a venture capital firm that invests in early-stage startups in a variety of industries, including healthcare, fintech, and consumer products. The firm has a strong focus on technology and has invested in companies such as Airbnb, Lyft, and Slack 3) Accel: Accel is a venture capital firm that invests in early-stage startups in a variety of industries, including software, cybersecurity, and healthcare. The firm has a strong focus on technology and has invested in companies such as Dropbox, Facebook, and Spotify #shahriarsuncommonsense

LIST OF INDIA’S TOP VENTURE CAPITAL FIRMS FOR STARTUPS Capital is one of the major components to start a business. Well-established businesses found it easier to avail capital for the expansion of its business but a small business and new startups found it very difficult to avail required capital for the business. That’s why the importance of venture capital is increasing nowadays. Venture capital firms provide the required capital to the start-ups that have the potential of growing in the coming future.  Venture capital is necessary to encourage entrepreneurial talent among youth. These venture firms not only provide the required capital for business but also gives meaningful advice and guidance to the business. These investments are too risky as the returns totally depend on the performance of the startups. Yet, some businesses don’t opt for this option because of the dilution of ownership and control in the business. In this article, we are going to talk about some of India’s leading venture capital firms for start-ups. So, let’s start: Top venture capital firms for start-ups- Accel Venture capital firm Accel is a venture capital firm for a startup that was founded in the year 1983. The founders of the firm are Arthur Patterson and Jim Swartz. The firm is also known as Accel partners and primarily focuses on sectors such as Infrastructure, Mobile & Software, Internet, and Consumer Services. The headquarters of the firm is situated in California. Venture capitalist firm works with early-stage, growth-stage investment, and seed. Some of the start-ups funded by Accel are Myntra, BookMyShow, BabyOYE, Freshdesk, Flipkart, etc. To read more, Click the link below https://lnkd.in/gZwssqy6

Exciting News in the World of Venture Capital! Lightspeed Venture Partners Bolsters its Team with Industry Veterans Vivek Gambhir and Kevin Aluwi Lightspeed Venture Partners, a key player in the venture capital landscape, has significantly increased its impact in India and Southeast Asia. Welcoming aboard seasoned leaders Vivek Gambhir and Kevin Aluwi as Venture Partners, Lightspeed is gearing up for an enhanced focus on fostering innovation and supporting the next generation of startups in the region. Vivek Gambhir's Accomplished Journey: With over 30 years of experience, Vivek Gambhir's illustrious career includes serving as the Chief Executive of Godrej Consumer Products Limited and as the Chief Strategy Officer of the Godrej Group. His recent stint as the CEO of boAt Lifestyle, coupled with board positions at startups like Mamaearth and magicpin, positions him as a valuable asset in shaping the journeys of emerging businesses. Kevin Aluwi's Trailblazing Experience: Former CEO of Indonesian giant Gojek, Kevin Aluwi joins Lightspeed with a wealth of experience in on-demand services, particularly in food and transportation. His expertise in marketing, product development, and scaling operations is set to play a pivotal role in guiding founders across various domains. Bejul Somaia on the Collaboration: Bejul Somaia, a partner at Lightspeed India, highlights the collaborative role Gambhir and Aluwi will play as Venture Partners. They are set to work closely with founders, contributing to the region's growth and development of portfolio companies. Lightspeed's Vision and Track Record: Lightspeed Venture Partners, having invested in around 100 companies in India and Southeast Asia, focuses strategically on enterprise software, fintech, consumer goods, and e-commerce. This move follows Lightspeed's successful fundraising efforts, raising $500 million for its fourth India and Southeast Asia fund in April last year. https://lnkd.in/gp27kg_g #VentureCapital #Startups #Innovation #Lightspeed #TechNews Let's stay tuned for the dynamic impact these industry leaders will bring to the startup ecosystem in India and Southeast Asia!

When we first launched Pentas Ventures over 2 years ago, our investment focus was solely on software companies. CPG was a category that we had a lot of exposure to and relevant to our backgrounds but we always thought that most CPG companies were not built to be venture-backed. It took some time for us to build a system around determining what type of CPG companies could use venture capital to their advantage and maximize their odds of scalable success as a result of it. We validated this system through investments in companies like Partake Foods, SkinnyDipped (and a few more that we can’t announce just yet) So what is a clear indicator that a CPG company can use venture capital to its advantage? Innovative products within mainstream categories. The word ‘mainstream’ is the key factor here. These are products in categories that existed for decades (if not centuries) where market demand already exists and therefore the TAM is massive. Founders are not burning cash trying to validate if the demand for the product exists at scale. Here the founders have figured out a way to differentiate their product in a sea of competition, usually through an innovation within the ingredients to improve the product quality or came up with a better-for-you version. If that’s the case, you want to grow as quickly as possible to grab as much market share as you can. That is not to say a CPG company in an emerging category can’t be successful using venture money. It definitely can, but you’re climbing a steeper hill (CPG is already one hell of a hill). As a founder, be very honest to yourself about your capital needs. Venture money can make things easier in the short run but will make it a lot more complicated and difficult in the long run if you have overestimated your market size. There may be sufficient demand from a niche audience to make you a very successful bootstrapped company, but if you’re raising venture money your sole purpose is to take over the world.

This is both a cautionary note and also a awareness note on where Venture funding is headed in the US currently. While the Venture Capital investments have come down gradually from the peak of Q4’21, in a sign of 'less-risk approach', *late-stage funding* was up by close to 10% year over year and 30% quarter over quarter. Simultaneously, early-stage funding came down. Companies are investing in strategic sectors — including semiconductors, AI, electric vehicles and sustainability — and they raised large funding. The largest AI rounds went to OpenAI competitor Anthropic. The company raised $1.3 billion from Amazon and committed to using AWS and Amazon’s inhouse chips to train models.  Cloud data company Databricks raised $500 million at a value of $43 billion in a deal led by T. Rowe Price. Meanwhile a number of previously well-funded firms have gone bust in 2023. There has been significant cash-burnout for investors and opportunity-burnout for the entrepreneurs and employees. - In August, Hopin, a start-up that raised more than $1.6 billion and was once valued at $7.6 billion, sold its main business for just $15 million. - Last month, Zeus Living, a real estate start-up that raised $150 million, said it was shutting down. - Plastiq, a financial technology start-up that raised $226 million, went bankrupt in May. - In September, Bird, a scooter company that raised $776 million, was delisted from the New York Stock Exchange because of its low stock price.  - Convoy, the freight start-up that investors valued at $3.8 billion, spent the last 18 months cutting costs and laying off staff and recently announced that it was shutting down. - Zume ceased operations in June 2023 after an 8-year run. Initially, the startup had ambitious plans to revolutionize the pizza industry by investing $446 million in equipping delivery trucks with robotic pizza-makers and smart ovens. - The unicorn social app IRL shut down after admitting 95% of its users were fake. It had raised approximately $200 million across various funding rounds. - Buzzer, the streaming startup backed by Michael Jordan, Kevin Durant, Naomi Osaka, and other stars shutdown this year. It offered sports fans a personalized and immersive experience by providing live sports discovery and the ability to explore live moments. 

Venture capital and the scaling of start-ups in Australia has been a struggle the past several decades, so this story is noteworthy, and a great example of fund management. Australia-based start-up Canva are the most prominent venture capital-backed company in the local ecosystem, so the measured distributions while maintaining significant upside by Sydney-based venture capital fund manager Airtree is truly notable and a much-needed invigoration for the #australia venture capital market. Airtree, founded in 2014, has been using company-led #secondary sales to slim down its equity stakes and get liquidity from some of its most promising bets. The company’s portfolio is made up of Australian #unicorns including Canva, last valued at $40 billion, Immutable ($2.4 billion) and Linktree ($1.3 billion), among others. Airtree backs companies at the pre-seed and seed stage; as companies stay private longer, they aren’t returning money as often during the traditional fund lifecycle. Airtree originally invested in Canva’s $6 million Series A round in 2015. The firm slimmed down its stake in the startup in 2021 when the company was valued at $39 billion. Airtree got a 1.4x return on Fund I from a recent Canva sale and was able to maintain the majority of their original stake. Well-done Airtree! #alternativeinvestments #privatemarkets #valuecreation #exits #venturecapital #canva #distributions #fundmanagers https://lnkd.in/ePyz8QbN