The Angel Group

0:00Welcome to the Emerging Brands podcast. Sharing the stories behind brands you'll want to shop next. I'm your host, Kelly Bennett. I am a New York City-based brand strategist for CPG Food and Beverage Brands. In each episode, I'll take you behind the scenes of founders that are building better-for-you products and bringing them to market. it. Also, I talk to brand builders, retailers, industry experts, and tastemakers who help bring those cool products to your shopping cart.

0:30Alyssa Arnold:You will hear stories of real life founders, their launch strategies, and practical advice you could use to grow your own brand or simply discover what's next on shelf. And the best part is you could shop all the brands featured on the show. This podcast is brought to you by Hummingbirds. Hummingbirds is the go-to platform built for creator-powered retail activations. They're connecting everyday creators with CPG brands to generate shelf-level awareness, drive in-store momentum, and generate authentic content in markets that matter the most. Go to hummingbirds.com for all the details and let them know I sent you.

1:15Now, let's dive into the new episode. Hi, everyone. Welcome back to a new episode of Emerging Brands Podcast with Kelly Bennett. Today, we are going to dive into the world of investing, fundraising from someone I really respect in the space, Alyssa Arnold. She is a partner at The Angel Group, and Alyssa has a very cool story. She's a founder, investor, sees things from a very unique perspective. So Alyssa, thank you so much for coming on the podcast and sharing with us today.

1:50Alyssa Arnold:Thanks for having me. I'm excited to be here. You're so welcome. To dive into the first aspect of today's conversation, because I'm just genuinely excited to also talk about your career. First is, what is the Angel Group? Because there's many CPG food and beverage founders, some in beauty, also lifestyle that listen to the podcast. The Angel Group is a really important player in this space and an organization that I admire. Can you first break it down for us of what is the Angel Group? Yeah, so I think at our core, we're a private network of industry professionals that invest in early stage CPG.

2:34Alyssa Arnold:So we originally started, our originally founding member was Adam, who's one of my partners. and he was standing at the floor of Expo West looking around saying like, if we all just invested together in these brands, although we're all individually small checks, I read it together, we could be big checks and we could be really helpful to a lot of these early stage brands and guiding and making network connections. And so the group was born. I think it was about, you know, 10, 15 members originally co-diligencing together, investing together, leveraging one another's experiences and expertise. And now we're at 250 members and the guys just launched a fund called Supernatural, which is a$30 million fund investing in a lot of pre-revenue to super early stage brands.

3:18Alyssa Arnold:So we have a committed pool of capital, which is the fund alongside the membership base, which is kind of just a traditional angel group. And it's amazing people in every different corner of the CPG industry, some that don't come from CPG, but bring like IP lawyer experience and things like that. Really trying to bridge that gap between providing expertise and network and support as well as capital to a lot of these early brands that might not have all of those pieces to plug in. That was also incredible. And again, why I'm so excited to have you on the podcast today. So when did that, when did the Angel Group initially start?

4:00Alyssa Arnold:Yeah, it was in the 2020 days and in 2020 ones, really when it started really getting going. And I think everybody was looking for connection and connectivity. The second partner, Chris Robb, joined about three years ago. And I think that's when everything kind of kicked into high gear. And then this past year, Adams had exits with Poppy and Siete. He's also an investor in Bubble, which we know is going out for the M &A, Goodles and some other really prolific brands that have seen some great successes. So the group's kind of jiving and we're starting to get gelled together really well with some of this proof of concept people are starting to really believe in the consumer sector again as an investment.

4:44Right. And what was the Supernatural Fund that you mentioned? And just if you could break that down, because again, so many early stage founders listen to the podcast and I just love when we can connect the dots for them so they understand exactly what we're referring to. Yeah.

5:01Alyssa Arnold:So the fund is a$30 million committed capital fund, very traditional venture capital. Adam and Chris, my two partners, are partners in the fund, as well as Jared Cohen, who was a member of the Angel Group, and they created this fund. So there's a large pool of committed capital that they can put to work very quickly. So that's a venture fund. Conversely, over on the Angel Group side, we are a group of angels. So we don't have committed capital. We can't go into a brand and say we can do 250K. Instead, we allow the brand to come in and present to our network. And then the investors individually usually directly invest.

5:40Alyssa Arnold:Sometimes there's an SPV or some kind of capital pooling that we're able to do depending on what the cap table needs. But everyone's making individual decisions on which brands they want to invest in. where a fund is you put your money into a pool, into a pot, and it gets diversified at the GP level. Got it. What we're able to do is bring in committed capital with the fund, and then we're able to bring in individual angels that might have expertise or network or knowledge or passion for specific companies in one place or another. And it actually ends up being there. Some members are in the fund.

6:19Alyssa Arnold:Some members aren't in the fund. A lot of the fund, though, is non-member capital and more family office and kind of high net worth individuals that bring those bigger checks. And the angel groups, really, the people who are passionate in the everyday, a lot of times, they're advisors and supporters more at the brand level. Got it. Thank you for breaking that down. This is also a space I'm personally interested in getting more involved in. I always tell people my big long-term goal is to be an angel investor. So thank you for breaking that down because that was super helpful. Yeah, and then if we wanna get into my history originally.

6:56Yes, I wanna know everything about how you got into this.

7:00Alyssa Arnold:Just to build up the third type of kind of investment hub in early CPG spaces, these SPV generators. So Dream Ventures is a really amazing one. Annie Evans and Angelina. Yes, who've both been on the podcast. Yeah, so many of their brands also too. Yeah, amazing humans. And they really are where I learned the SPV component of it. So Sidecar is a facilitator. AngelList is a facilitator of these SPVs. But they're pulling capitals for individual deals again, and then they're making a carry and a management fee off those. So similar, it's kind of a mix between the angel group and the fund. It's kind of the middle ground is what these SPV generators are.

7:39Alyssa Arnold:So there's kind of three different optionalities. And that was originally, you know, what I created was Pearl Influential with two of my partners, the founders of Entrepreneista, Stephanie and Courtney. And we really facilitate these SPDs for early stage companies and a lot of female investors. We were really passionate about bridging the gap between female investors and making their first angel investments and really wanted to build that bridge over to female founded brands. And then that was recently acquired by Cherub Technologies, which is Jacqueline Johnson's company. And she was able to really take Pearl and kind of bring it to such a larger audience and really be able to give it such a greater wealth of deal flow.

8:26Alyssa Arnold:Because I was obviously one person and super limited. And so Cherub has been able to take that and really multiply its effect and its capabilities. these. Which is so interesting because before we hit record, I we were sharing how the last time we were able to have more face to face time, you were still working on Pearl and now it was now Cherub, right, acquired it. So what if you could just also break that down of what Cherub is and also how it works with Pearl and what you were just saying, like deal flow, just breaking that down a little bit more for new entrepreneurs? Yeah. So what I realized with Pearl, it's a little different than the angel group.

9:12Alyssa Arnold:Angel groups, really a membership community. They're looking to us to kind of deal flow and diligence and, and bring, you know, really vetted deals that, that the guys really believe in Pearl. We were really trying to service a much more general audience. So we have a thousand investors. It wasn't a paid membership and everybody had different expertise or interest. It wasn't very sector specific. And I just realized there was people wanted so much more deal flow from me. And there was just so much more than I could actually facilitate for the group. And so Cherub's this like online platform that's matching funders and founders so that you can kind of search for and find the right investments that meet your thesis or your personal passions.

9:57Alyssa Arnold:And I felt like Pearl was really a barrier for a lot of people because I couldn't give them this diversified deal flow that they wanted across all these different stuff. And the angel group's really nice because it's very specific in CPG. We have an expertise and a focus. When you're joining that group, you know it's going to be CPG. Pearl was very general. We wanted to really give women a breadth of all the different investment opportunities they had. And so Cherub was really able to take that and exponentially deliver that promise and that deal flow and that quality of deal flow. And so Cherub's this amazing platform they're now doing where you can kind of have an AI assistant helping you with your fundraise.

10:37Alyssa Arnold:It's a great platform. I would definitely suggest everybody check it out. Very cool. Thank you for breaking that down. That's super helpful. And that goes into my next question. now that you have seen it from so many different angles, right? And also being a founder yourself, what type of first steps should, again, those really early stage CPG founders start taking in preparing themselves to potentially get in front of angel investors or just starting to pitch their idea for fundraising? It can feel so daunting and so overwhelming and just so nerve wracking that you are, you know, you created this idea and now you're sharing it with people and asking for a check.

11:26What can entrepreneurs, founders do to better prepare themselves before they even start reaching out to, say, the angel group?

11:37Alyssa Arnold:Yeah, so I mean, that's like the most difficult question. Unfortunately, there's never a playbook. And I think that's one thing I talk about a lot is like there is no such thing as a playbook. If there was like everyone would be doing it and it would, you know, it would it would break the system. So it really is dependent on what your brand is, the amount of capital it takes to get into market. But generally seeing some sort of velocity. So we really believe if you can get into a tastemaker account and we can see that the product has velocity, We can understand that the consumer is interested in the product and it's not just, you know, a thesis.

12:14Alyssa Arnold:And in some cases, we're OK with a thesis. And so it's hard because, you know, we do do pre-revenue. So it's not definitive that it needs to have this traction. But if you can bring the product to market, showcase the traction, showcase the consumer interest, showcase customer data that's helping inform the decisions that you're making in some way, shape, or form. It really helps create a much more fluid process and a lot more interest during the fundraise. And it always is dependent on how much capital is needed to bring things to market. Some founders might not be able to seed that round. And so in that case, I would just really dive in and understand the white space that you're serving in, understand the market opportunity, and really present that in a really well solidified way so that the investor can really buy into what you're building, why you're building, why you're the person to build it.

13:11Alyssa Arnold:So at this really early stage, the founder story, the founder capabilities is super important. We look for a founder that's really agile, that can pivot very easily because very few cases is the brand that you think you have today going to be the brand that you have in five years. If you're seeing success, there's going to be a lot of hills to climb and you might have to veer left or veer right, depending on what comes at you. And so a lot of it is founder market fit and founder analysis and finding the right investors for you, I think is the last thing I'll say on that. And, you know, for us, we're looking for a specific type of founder.

13:55Alyssa Arnold:And so for founders, I want you to interview investors just like the investors are going to interview you. Know that these are your, especially in this early stage, these are your partners and you need to be able to rely on them and they need to be positive partners for you and not people that will subject you to a financial model over the health of the business or, you know, a growth number. That's a great piece of advice. And thank you for breaking that down. Because as a brand strategist for pre-launch CPG food and beverage brands, I am always emphasizing brand story, but in particular founder story and why they are the founder to make this product and brand successful.

14:38And I really make them practice telling that story and putting themselves out there because in these early days, that is a huge piece of the puzzle of why them? Why are they the best for this job? So thank you for reiterating that.

14:55Alyssa Arnold:I had a mentor that once said, if one person sees the white space, they're not the only person who's going to see the white space. And so I think that's really important too, that it's not just about the white space. It's about the white space, the right time for consumers to really lean into that white space and the right founder to execute. So it's a three-prong analysis that we really make. And I think everything else comes second to that. Even the product quality comes second to that. You have those other three components that it's workable. But those three components are vital. And then, of course, product would be the next most important in the quality of the product.

15:36Yes. And something that you touched upon as far as velocity and showing that data early on, Do you have any advice on how to leverage, say, maybe those specialty stores that you're in or how you're demoing or how you're selling direct to consumer? Just things that would be really helpful to start thinking and keeping track of.

16:00Alyssa Arnold:Yeah, I mean, I always believe it's prioritization and focusing. So if you have a connection with someone who can help build DTC and you feel like you guys can have really great traction there, then that's a great place to start. But conversely, if you have a connection or you think you have an inlet to a specialty store and you think you can drive some retail velocity and showcase, then that's a great place to start. Don't do all the things. Like it shouldn't be the TikTok shop and the Amazon and the da-da-da-da-da. The more places you are, the less you can focus and being really intentional in showcasing that your thesis is correct is really important.

16:38Alyssa Arnold:I even saw a company that is, you know, selling online. They're delivering just to New York because their product can't be shipped very far because it's a refrigerated product. But they're doing just enough to really showcase that even in their locality, they're not going to get huge numbers because it's a smaller pool. But they're showing percent of population that's purchasing the item and things like that. So just showing that penetration and that level of interest that can validate the market. it. Being creative about how you're approaching this, depending on what you have at your disposal is really important.

17:16Alyssa Arnold:I really believe that every founder has their ability to showcase their value. It's just going to be different from one founder to another because it just depends on who you have as a friend or in your network or in your connections. And that was a really great point that you just brought up of storytelling, the interest, and how you are building this demand for your product and how a founder leveraging that also online is a really powerful tool for these conversations as well. And it shows something about the founder, right? Like not only the product, but it shows the founder can use creativity, can apply there.

18:01Alyssa Arnold:And so now I know if I go give them these amazing experts and advisors and all of this expertise and money, that they're going to do really intelligent things with them. They're not going to just squander it because there was some playbook that they were trying to follow. They're going to lean in where they know they can see the most success. And in some cases, it's food service and going food service, which isn't sexy. It's not 5 ,000 Costco doors or something super, super sexy, but it puts money in the bank, it proves greater market traction. It's what the company needed at that point. So it's really finding your best path with what you have, what your product is, where it's served, and really being able to think dynamically about those things and prioritize based on the opportunities in front of you.

18:51I'm going to send this recording to all my clients and why I bug them to create storytelling content and tell their founder story, this is such a good reason. So I'm so glad we have this record and be like, see, this is why I annoy you, because I want you to show your awesome skills as a founder and storytelling.

19:13Alyssa Arnold:We're investing in people at this stage. We're investing in people. And the product is definitely, I mean, it's important, but it's definitely second. But yeah. And also too, so many founders will tell me, well, my product is so delicious. Great, that's base level, right? You should have a delicious product if you're going to all this trouble to create it. It should be delicious, but we have to really push it from there and find something really unique and different that makes it pop. And that founder, especially in this early stage, as you're saying, makes that really come together. Yeah. Yeah, for sure.

19:55Alyssa Arnold:Is there any other piece of advice you would share to a founder that some best practices that just helps catch your attention? Oh my gosh, it's so broad and so hard. And I knew you were going to ask this. I'm still struggling with what that advice would be because for every founder, it feels different depending on, you know, where, where they seem to be lacking. But, you know, the thing that comes to mind is don't be sensitive about valuation, find the right investors, look at it as, you know, a, you know, a really important relationship and as the core to your business, um, and want everyone to win, you know, everyone who comes in to your business, you should want them to win, um, not just, you know, individually, but not to be the environment that you're looking for in co-investors as well as that they want you to win.

20:46Alyssa Arnold:And then it's this really dynamic relationship where everyone wants to find the win-win. And so, yeah, that's probably one of our biggest sticking points with a lot of founders is coming in with overinflated valuations or things like that and not appreciating the value that our team might bring or other investors might bring and that this is a dynamic situation where everyone needs to feel like they have the opportunity to win big. And I think if you can mutually align with people, mutually incentivize with advisors and support systems and make sure everyone is mutually aligned for success, it's going to be a lot easier to find success.

21:31Absolutely. And when is a good time to maybe introduce yourself or start putting the feelers out of possible partnership, would say the angel group?

21:45Alyssa Arnold:I always say start the conversations before you need money. I mean, it's always easier to have conversations before you're in a point of need. It also, I think, just naturally allows you to have a more free conversation and really feel out if they're the right people for you. And again, I think at that early stage, if you have the advantage of being able to have those conversations before you need those conversations. Right. Who's your most ideal partner? And then sending investment updates is always super great. And if I'm just reading about it and I'm seeing your traction, you know, month over month or quarter over quarter, I'm going to get a lot more excited.

22:26Alyssa Arnold:I'm going to have a history on the brand. And so then when you come and you're ready to talk about, I'm ready to, you know, start pulling together around, it's already just a really warm conversation. and we can really talk about future. I mean, I'll talk about past because you've already proven that to me. Right. I'll say the other thing that's super important is these monthly or quarterly updates to your investors and to, you know, friends of the brand that could be future investors. Knowing that the founder has that cadence and has that visibility into the business allows us to know, like, we're going to be able to be helpful because they're really forthcoming with information.

23:05Alyssa Arnold:They're organized. They know their numbers. those types of things are really important to see in these early founders. Again, I'm going to send this to all my clients. This was so helpful. And thank you again for breaking it down into very simple, practical steps that they could be thinking about even pre-launch and building into how they move forward as a founder. Because so many people listening and my clientele are first-time founders. This is the first time they said, I'm going to do this. This is an idea I've had. I can't shake it. I'm going to follow through with it. So everything that you shared today was super helpful for helping them understand how to move forward as a founder and some simple but I know challenging to be consistent with things just to put into their practice.

23:58So I really appreciate you sharing that.

24:01Alyssa Arnold:Well, I'm so glad. I know being a first-time founder is really hard. Finding networking connections is really hard. And I always say to my team, the best thing we can do is make introductions to founders, even if we're not investing in them, because that is a really vast opportunity to serve these founders in many ways. So I am on LinkedIn and Instagram and places. I'm sure somewhere in the show notes, you'll drop that. But please read out if you need a connection or network to someone. I think providing that connectivity is the best service we can do. Amazing. Well, thank you again for coming on and sharing your story.