CPG Founders & Fundraising: A Live Recording From NY Tech Week

22:02Kelley Arena:I don't know any great founder that has worked like that. So I think that term is bullshit, but it's integrating work into your life in a way where you feel like actually what you're doing is living your life in the most authentic expression of yourself. So it's like, I think what balance is, is just doing the thing that lights you up the most. And if this isn't that, it's a really hard thing to screen for as a founder, but if this isn't that you're going to burn out.

22:28Annie Evans:Yeah, that's totally fair. is there something that founders are doing super wrong in the early days that you're like oh my gosh I wish you didn't say that or do that like super red flag Kelly I'll kick it off to you first

22:45Kelley Arena:like being an asshole no say it louder being an asshole I mean this is a relationship business first and foremost and like make no mistake the founders that are great at fundraising are just afraid of people like everybody's being in a room and making chums and being in the right places but also adding value to the rooms that you're in and being like a good give back to other founders in your community like that it does tend to go around because you just get this reputation of I want it like when you're investing in someone that journey's going in five to ten years so right if someone comes to me early on and I'm gristling at how they're speaking to me or I'm like, well, it could be a fantastic business opportunity, but at this point in my life, I don't want to hang out for the next seven years.

23:34Kelley Arena:Totally fair.

23:35Annie Evans:And that's something I try to emphasize to founders super early on, especially if they're coming from a totally different work environment. When you're getting into CPG and especially food and beverage it actually is a very tightening community and that's something I always emphasize of like the word will go around if you're not

23:57Kelley Arena:it is a shit-talking community we are we know all the things going on Annie how about you something that is like red flag red flag is when you haven't finished like I figured out your product and it kind of sucks. Like it doesn't taste good. It doesn't feel good, but you're out there just so focused on raising capital because you need the money to place the, um, to place the inventory run. It's product first. Like you gotta, I don't like when people are raising because they need money, but they're still trying to figure it out. Cause you're going to be more stressed when you have to report to all the investors that you're not hitting your numbers because your thing sucks and no one's buying it.

24:39Kelley Arena:Now, that's easy for me to sit and see because we all know it takes money to do the inventory run to see if people like it. You know, and I get that. But you might just have to go at a slower pace, do a crowdfunding campaign. I've done one. I know there's like a stigma. I think they're great.

24:55Annie Evans:So, you know, that's a really good point, too. And also, it sounds like going back to the balance of being super focused on building the product and also making sure you're looking at the overall brand. and it's kind of like that deep dive those rabbit holes but also making sure you're taking a step back to be able to communicate the big picture of what you're building well can I add one?

25:19Kelley Arena:raising a lot of money before you find all people care even if your product is great and your brand is great sometimes you're like your first deck is like I experienced this problem so I made this product that's cool that's an end of one I still want some sort of data like this the rest of the world care is there a space for you to fill um is there actually a demand and so raising money before you figure that out even there's a lot of ways to do this before you find product market fit you know it's it's surveys and focus groups and just getting out there and getting feedback and you can use those points as traction when you're fundraising even if it's not actually sales metrics you know anecdotal evidence still is evidence

26:00Annie Evans:i think that's a really okay founders write that down because that is really helpful too of leveraging what you can even in the early days but to be able to point to the fact that there's other people who would have demand for this product right it's not just your own story of making this product in your kitchen and now you're convinced everyone's gonna love it being able to point to some numbers and data to other people. Is there any piece of advice, Annie, that you would say moving from, say, if someone's pre-revenue and into their first year in business, and maybe they are selling in some of our great specialty retailers here in New York City, and they're starting to now move up to the next level of some chain grocery stores.

26:48Annie Evans:What do you think would be a good way of approaching that next phase or making that shift when approaching an angel investor?

26:59Kelley Arena:So it'd be funding to go into big box? Yes. So I wouldn't get an angel investor for that. I would look into debt financing. If you have a PO in your hand, you should be able to go to Deصل or what are the other ones? Trade funding. I know a lot of this a little later Rosenthal Rosenthal yeah so

27:26Annie Evans:can you break that down to just so that someone in the room who's super early stage they just understand what that difference is

27:37Kelley Arena:so for retail and if you have a PO it's better to get a like debt financing so that you're not giving away equity for your company from an investor as long as you can. So it's just getting money and paying it off as a loan and debt and not giving away equity like you were to an angel or agency.

28:00Annie Evans:That's a very good piece of money.

28:01Kelley Arena:Also, Lunar Capital. Right? That's one of their specialties. Kelly, how about you?

28:09Kelley Arena:Well, I can say this thematically enough. I see founders who are ready to fundraise and they just start cold outwrenching everybody in like the venture and cpg community that's a known deployer start with your homemates like start with the people that you used to work with i see people like i was in boston consulting group and now i have a cpg brand so i'm like oh blessing everyone else you work with so many accredited investors who know your work ethic they know what you're about they trust you they see you they've got to know you over the years go to your own bosses go to the people that work beside go to the people who are obsessed with your brand if you've got early customers who just love it like hey do you want to build this with me like i think that's a you're presenting an opportunity to people and i've seen it too or you know you go on race vending and then your friends around you are like i would have been a part of that right and i know there's there's a lot of women in this room too and i do find i hate to always do the gender thing but i do find that uh the gals are way more risk averse when it comes to asking people for money you're not asking people for money you're giving an opportunity to build alongside of you so reframe that ask and the most successful people in fundraising are the ones who are so resilient to the word no so just like you gotta you're gonna get a thousand no's but it doesn't it doesn't matter it doesn't matter it's just like a statistical game if you get you know 10 no's for every one yes then every no just gets you closer to the yes and just keep up with it yes uh one of my

29:41Annie Evans:side hustles over the years was a full-collar for a soft firm and they would say, literally I would just have to call, call it and get hung up all the time, but one big yes and it was like, we're back in business everybody. But it really taught me so much about business, right? Of just getting slammed up.

30:01Kelley Arena:I know an executive coach who works with founders and part of their first lesson is just resilience training and the method is you have to go everywhere you go, you have to ask for a discount you go to your coffee shop like and i have 10 discount you go to blooming else can i have a 10 discount everywhere you go just ask for money off and you'll be told like no a lot but also sometimes yes but the real lesson is not how many s's you get it's how resilient you get to the word no and then you're unstoppable once you're not afraid of putting yourself out there and someone telling you to need it just kind of live it totally and something kelly that you

30:36Annie Evans:touched upon of leveraging the network that you may have worked with or just friend circles for the people that don't necessarily have that going in. Something that I truly admire about both of you and what you're building is this more community-based format to angel investing and getting in a room with angel investors and being around founders who are on a similar path because usually founders are like the one outlier in their friend and family group who is the wild crazy one who's like i'm gonna become a founder and everyone's like are you okay but being in these environments like today it really helps solidify that you can do it and that's what i really admire about dream ventures and i know with halo so annie can you give us a rundown of how DreamVentures works.

31:30Annie Evans:And so for the founders in this room to really have a good understanding, I know you have all of the new membership too, just helping us get a sense of this opportunity too. For sure.

31:44Kelley Arena:So we have a community that we run called the Insiders. Laura is our head of community. She went through our accelerator and is now our head of community. It's called the insiders and you get our amazing digital fundraise course, which Kelly created and is the brains behind. It's really, really amazing. Group, I can attest, I'm sure. And that's how we met. You also get invites to events and we have office hours. So I do them one week. Kelly does them next week. So people pop on and they'll say, I have a meeting with my dream. Do you see tomorrow? Any, can you like help me prep or can you review my deck?

32:25Kelley Arena:Or I'm thinking about bringing this advisor on. They want 5%. What do you think? So super supportive community for anyone raising, growing, scaling. and then with us in terms of i'll give you the example we host irl events when we're raising capital it's a great way especially with a community approach especially if you're doing an spv so we did a really fun one recently with sleep or die at maxwell social it's around the corner um true beauty ventures came because they led the rounds they came and spoke to why they invested a million and led the round and sort of kicked off the event. Lauren, the founder flew in, we had sleep or die, like, you know, kind of kidded throughout the whole space.

33:12Kelley Arena:People could see the branding. And then we did the same sort of format in LA with Truvity Ventures and, you know, angel investors and funds. And honestly, I mean, it was a hot deal that, you know, she had a lot of brand awareness, But Kelly filled that SPD in like two shakes of a lamb's tail. Because instead of the founder having 100 meetings, Zoom meetings, we had 15 people come. We had more than that in New York. 75-80 in New York, 75-80 in LA. So call it getting in front of 150 people. and so that's how we were able to fill the angel syndicate so quickly um and even like turning people away so you know not always the case because she had a lot of like brand awareness and excitement um but definitely i think getting people in a room and hosting an event is a good thing um if you have gotten in a group with your product right and also i would say that i wouldn't expect that you're going to host an event.

34:23Kelley Arena:I want to manage everybody's expectations. You're not going to host an event and raise your entire round, but it's a great way to bring folks together and introduce the brand, have other angels meet and start to like create relationships. Right? Yes.

34:38Annie Evans:So, and Kelly, can you just explain to people who aren't familiar yet with SPV and how that works with trade ventures yeah sure um so our spv model is separate than the accelerator the accelerator

34:56Kelley Arena:and the insiders the community for early stage balance getting them ready for the fundraising process so we both have separate investing entities as well and ventures and golden hour ventures is our investing entities so um what we do and how we operate is we form spvs which is used interchangeably with syndicate if you hear syndicate and spv it's really the same thing spv is just the legal structure of the thing which stands for a special purpose vehicle what we do is we get allocation in rounds generally in our venture backed and then we syndicated out to our community of angel investors so our angels are usually writing anywhere between like five and twenty five thousand dollar checks sometimes that check is too small to get access to a hot deal So if we get allocation of those routes, generally sourced by our venture partners and our venture buddies, we can spin up basically a single purpose fund that's going to go right to that company.

35:49Kelley Arena:Within it are LPs that are writing checks between five and 20. And then we group them together. We make one wire to the founder and their capital stays clean. We stay on as kind of their co-investors along with the syndicate, who is kind of like their little invested board of ambassadors. The cool thing is that founders can do this themselves. We do this for founders or deals that we know our angel community would love. But you as a founder can also do a founder-led SPV. So you want to keep your cap table clean. You don't want to have$105 ,000 checks on your cap table, which we have a whole module devoted to that.

36:25Kelley Arena:So I could spend a lot of time on why you want to clean cap table. But really, if you think you have a lot of interest, that's kind of fragmented into small checks. You can do a couple of events and open an SPV. and kind of have this vehicle that's capturing all those small checks. And then you can close it and have a clean cap table, move on, keep growing. And then when you're ready for more venture institutional, you can go out right that way.

36:49Annie Evans:Thank you for breaking that down because there's so many, you know, acronyms in this CPG community. So that was a really beautiful description. I really appreciate you breaking that down. Last question. I want to hear all about Halo. We teased it in the beginning, but I'm so excited for this platform.

37:09Kelley Arena:Yeah, Halo is really the culmination of all of the different work. We talk about all the jobs we've done, right? I have an investment entity, you have an investment entity. We co-run the accelerator together. But what was happening is like, what's the hub in the middle of the ecosystem? We get all of this deal flow. Some of it is outside of my thesis and golden hour. But I know I have, you know, five or six angels in my network that would care. So I find myself like just emailing all of the time. But what I wanted to create was the actual marketplace that could match make our angel community with the kind of deal flow that they would love.

37:41Kelley Arena:And there's a lot of these kind of communities that exist. I'll say what the differentiated part is this is really built for our angels. It's not built for brands, truly. We are being super selective about what we show to our angel network. And I think that's kind of the secret sauce is that we want to hand select the ones that feel really special to us. And we do deep diligence on them. We get to know them and then we kind of silver platter them off to our angel network and say, look at this founder. You're going to thank us later. And then they can invest via syndicate or direct, depending on check size, via the platform.

38:16Kelley Arena:We also have a lot of angel investing education on the platform. We get a lot of people going, I want to write a check, but I don't. I've never done this before.

38:23Annie Evans:That's me. I'm so excited to write my first check this year. That's why you both, I'm so excited for this panel too. I admire both of you. like this is my next chapter so i'm very excited about all of it can we turn the book the table

38:38Kelley Arena:and ask you a question in terms of like you know dream angel investment would you are you thinking it'll be something food drink beauty wellness i really what's exciting me right now food and

38:52Annie Evans:beverage is my wheelhouse i feel like i know this space so well and that's why i love working with early, early stage founders, because I have to say, I think I'm pretty good at picking the jockeys so that I think, um, have what it takes. And I do a lot to even vet clients that I take on. And so a lot of it behind the scenes in this last couple of years now is really seeing how founders make decisions, how they pivot, how they figure it out, how they are fit to be the best founder possible to bring this product to market and be as successful as possible with it so this is what i've been studying and i've worked in many different verticals but i feel like my first check will be the beverage yes okay we're manifesting and you have your podcast so you're like such a like strategic angel you can amplify thank you so much so that's kind of what i've been building honestly it's the brand strategy it's the podcast for the media and i feel like that next you know piece of it will be the angel investing so i can offer that as a way to make myself stand out too and getting equity as an

40:15Kelley Arena:advisor hopefully for all of the work that you do amazing okay guys we are not investing here I love this energy.

40:21Annie Evans:And also on that note, speaking of emerging CPG food and beverage brands, I just want to give a shout out before we close out today to the brands that sampled. So let's give another prop to them. We have Kato Kendall. Raise your hand. Yeah, stand up, Kendall. She's been selling out like crazy at Metal Lane, Pop-Up Grocer, Happier Grocer, and she's launching in all fairways tomorrow. She won the fairway competition and she's just crushing it. It's whipped cottage cheese first to market. And I'm so proud of you, Kendall. Next, yes. Next we have Little Twist. Dahlia, give a stand up. Yes. So she has simple baking mixes with a twist.

41:14Annie Evans:It's all allergy friendly. her brownies are truly insane gluten-free nut-free all the things free but it tastes incredible so easy to make at home dahlia is also raising a friends and family right now so and angel there you go see we're working the room guys perfect um no me rupa where are you yes dream ventures alumni and also that was such a major green flag when i first met rupa she's like oh i just finished dream ventures uh incubator i was like you're absolutely becoming my client i know what you just trained for and let's go and so she's creating the new era of kid meal brands. It's beautifully crafted, science-backed, organic.

42:08Annie Evans:You just add hot water and it's a complete pantry meal in a very convenient pouch. And I did hear many people in this room say they want to eat it themselves. So yeah, it's brilliant. Pesto Joe, where are we? yay Karina so she is like I said from Jersey doing the farmer market circuit but she's ready to essentially relaunch her brand and go into retail and her recipe it's fresh pesto and it's based off of her dad's recipes and it's incredible fresh I love the authentic Italian family roots Italian Jersey girl, no pesto. And so I'm so happy. This is her first New York City event. Oh, my gosh. So this was like a big deal.

42:58Annie Evans:And I was like, you need to be in this room. So we're going. She's the sauce, Nicole. Yay, stand up. So she's the sauce, sauce with benefits, added fiber, protein, and she literally sold out everywhere. we had a crazy pre-launch sold out shut down the factory situation like it blew out of the water so proud of you Nicole and she's sampling her new buffalo sauce that's incredible that has not launched yet so it's this was the debut this was overnighted from her co-packer last night to make it for this event so thank you Nicole so proud of you and then we also have Sappy she's on here, her name is Allie.

43:45Annie Evans:She's out of Denver, but it's toasted vanilla bean coconut sugar syrup. It's delicious. I have samples in the back. Help yourself. And just thank you again, Kelly and Annie, for doing this panel and saying yes to this event. This has been such a dream, so please clap it up for Kelly and Annie. Thank you to Kelly for making it all happen. And thank you, Kelly. Thank you, Laura. Thank you both. So please have samples, talk, network, and thank you again so much for coming today.

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46:09Annie Evans:You'll recover money that you never should have had leaked in the first place. If you're a brand selling in retail, go to tryglimpse.com backslash trial for 30 days free and let them know I sent you. Thank you again for listening to this episode of the Emerging Brands Podcast. It really means so much to me that you listen to this show, share it with your friends and support it. If you are a CPG food and beverage founder and you're ready to launch a brand, people want to shop, head to withkellybennett.com for the details. And as always, thank you so much for listening, shopping the brands featured on the show and following brands I'm working with.

46:53Annie Evans:It means so much. See you on the next episode.