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Since launching in 2012, online investing platform CircleUp has helped startups - like Back to the Roots and Smári Organics - raise over $280 million from investors across the U.S. CircleUp plays a particularly vital role in the consumer ecosystem because unlike technology companies consumer startups and investors don't flock to hubs like New York and Silicon Valley; Making it both difficult and unlikely for them to connect and partner. As a result, meeting the right investors is often a make it or break it determinant for companies that are reimagining a traditional food concept like Quinn Snacks did with popcorn or creating an app like Kindara to empower women to proactively manage their health. We're thrilled to have CEO Ryan Caldbeck join us on Beyond the Headline to share how CircleUp is supercharging companies on their platform to become the household brands of the future. Here are some snippets from our conversation. We'd love to hear your thoughts on the episode below. On Today’s Consumer Revolution: - “There are amazing tailwinds in the consumer and retail space. In every single category, large brands are losing meaningful amounts of market share to small brands.”
- “Millennial consumers feel empowered to speak up across every part of their lives. Vocal advocacy for the consumer has spread to other generations who are now realizing that when you ban together and demand better products that meet your needs, those products get made.”
- “The giant CPG companies are terrified. It’s compounded by the fact that they are all incentivized to meet quarterly earnings, and the smaller companies can take a much longer-term view and invest in new products.”
- “It is an incredibly robust time for acquisitions in consumer and retail. Every year is a record year. In 2015, there was $238 billion of M&A in consumer. That’s twice the size of M&A in the tech space. Half of it was into companies with less than $200 million in enterprise revenue. The M&A is moving farther and farther down market.”
On Investing in Consumer Startups: - “There is a phrase in consumer investing: What is this product's reason to exist? People always say consumer is a crowded space. It is crowded, but what industry on earth isn't crowded in 2016? It’s a $14 trillion market, three times the size of tech. Is it crowded? Sure. It’s also a much bigger pie.”
- “The returns in early stage consumer are phenomenal. According to the Kaufman Foundation, the returns are on average three and a half times your investment in four and a half years with half the volatility of tech.”
- “The best consumer investors think for themselves, are methodical with the metrics they measure, prioritize diversification, know how to talk to entrepreneurs, and are disciplined about assessing valuations. You have to stay disciplined in the consumer space.”
- “Personal experience is what makes you believe that a founder is better equipped to start that company than anyone else in the world.”
On Building and Funding Consumer Startups: - “There are four key drivers of success in consumer: Distribution, team, brand, and supply chain.”
- “You have to take the time to ensure that your investors are aligned on vision and value. If they don’t care about part of your story, it will come out after you close.”
- “When you think about constructing your board prioritize these things: The individual is low maintenance. They are founder first and have empathy for entrepreneurs. You are aligned on engagement expectations and value added capital.”
- “Culture doesn’t work itself out. You really need to invest there. It’s the thing that keeps my co-founder Rory and me up at night the most. Your values should act as a framework for you to make decisions. If you cold call anyone at CircleUp and ask them what our mission is they will be able to tell you immediately. Our mission is our North Star. We’re really proud of that.”
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