#214 - Founders & Funders: The Early Stage Investor Event of the Year

21:18Hannah Dittman:So I think we'll get a lot of really cool, interesting nuggets from that and also an understanding of, what resonated in that company's pitch? Why did you decide to invest in them? What does the post-investment relationship look like? What were the funds used for? What key milestones is the brand now working towards? I think all hyper top of mind information if you're about to embark on a serious fundraising journey, especially if it's your first one. Our second panel is what's in and what's out. It's kind of like a fresh take from investors on trends, fads, category shifts that they are noticing and where they're placing their bets.

21:56Hannah Dittman:I think, you know, this will be a really interesting current landscape view of what's going on in consumer across the different sectors and different channels. And I think a really interesting way to think about how to position yourself when you're having these conversations or what might be coming down the pipe or what might be an interesting nugget for you to kind of like play into a little bit more as a brand and a great way for other VCs to know how their peers are thinking about things as well. Panel three is a checklist for investment criteria. So evaluation criteria for brands and founders.

22:31Hannah Dittman:I think this will be really, really interesting and tangible target metrics, rationale, differences by category, you know, a really good understanding of if there was a perfect straight A report card for a business of the top criteria that someone would be looking at. What are the things that need to get ticked off? And I think that's a really helpful North Star. It won't always be applicable for everyone, but I think that's a really helpful North Star to at least kind of know, hey, I'm really far ahead on this one, or maybe I need to work a little bit more there or have a narrative for why my metric is that metric.

23:03I'm excited about that one, especially because, you know, like I think you would just assume like, oh, it's probably the same for all of them. It's really not. They care about really different things and it might be much heavier on the founder or it might be much heavier on the total addressable market. And it's really cool to, especially because these are such hot funds that are coming to understand specifically with each of them, like, oh, that's what's important to you. Okay. I'm not, maybe I'm not, it's like, I'm not going to change my whole business based off your criteria, but it also helps you understand who you should be talking to that might find your brand the most interesting.

23:37Simon, what do you think? That one sounds pretty cool to you? Yeah, no, I think so. Because I mean, in the conversations I've, you know, had with some of, you know, these folks are going to be coming. And as I said, trying to start relationships early, you know, and nurture those is that you're totally right, right? So you know, we're in beverage. And let's just say out loud, the quiet part, energy drinks are dang competitive. I can't tell you, there are many funds who have just simply said, you seem cool, your product seems cool, we don't touch energy, we don't care who you are, what it is too competitive, right?

24:04And so to your point, I like what you said earlier, and about matchmaking. Because I think that's going to be really important here because you have to find people who have the same appetite you do, right? So for some, you know, funds, that's fine. It's energy is not going to be a fit. There's others we're talking to where maybe it will be, right? When we get to the point and we'll find out. And so I see on this list already, I know some that are interested in beverage because I've looked them up and seen what they've invested in. So that's really important to understand like what they value and also what's important.

24:32Some people really get to your point are going to be obsessed with margins. And hey, if you don't have this margin, I won't talk to you no matter who you are, or maybe it's route to market. So it is really important to understand that about each of these funds. So interesting. And yeah, they're really different. I was just talking to a pretty early VC. Probably they're even like a little small to be at this event that we're talking about. But he was telling me like, yeah, I actually, I have to have brands with good margins because these are my first couple of investments and it just has to look that way.

25:00Like I only have these two bets. It just has to be that way. I can't take a flyer on a brand that I love that doesn't have great margins. Whereas other VCs may have really different views on that and understand, like maybe because they were operators, they know what margins really look like at the early stage and understand how much better they get once you actually get that volume that you're looking for and even potentially get acquired by a big CPG and it comes all the way down. Right. So, yeah, super pumped about that. OK, Hannah, hit us with some more panels.

25:28Hannah Dittman:Yeah, sorry. I'm like down into it deep. But yeah, going off of what you guys said as well, you know, there is no investor school that all these investors graduate from. They learn from experience. It's a very apprenticeship model industry. So if you got bit really bad during a time in the market by X, Y, and Z, you have a little angina from that and you're kind of like allergic to it for a while. Or you had a really great experience with X, Y, and Z and you felt like you really learned a lot about it and you've kind of honed your expertise there. you feel a lot more willing to lean forward and take bets.

26:02Hannah Dittman:So, you know, this is a people business investing and you're dealing with people that have their own biases and thoughts and whatever coming into their mindset with. So that's, I think. That's so funny that you say it. It makes me think about dating as well, because I feel like a lot of people, they get out of a relationship and they're like, whatever was wrong in that last one, that's what I don't want. And this next thing, that's what I'm going to prioritize is not that thing. They can't have that fatal flaw that that person had and I'll compromise on the rest. A thousand percent. I mean, I think the best learning is when things don't work out.

26:33Hannah Dittman:And I think the postmortem understanding what went wrong and applying it is, I think, a huge portion of investing, especially on the earlier side. You know, on the later stage side, everything needs to be a hit. There can be no mistakes. On the earlier side, you know, not everything's going to work out super well. It's a higher volume strategy. So you're learning a lot from both ends of your spectrum constantly. And that's part of the name of the game. So I think that's also why this will be a really interesting event for investors as well, because to learn from a huge cohort of your current pure set and a dynamic changing market that just came out of COVID and markets were down and are kind of reopening up, it's a really interesting time to get some thought partnership on a lot of different things that might change the way you're investing as well.

27:17Hannah Dittman:Kind of going off of that, panel four will be real talk on margins. And we had founders in mind on this one too, in the back, you know, kind of what Daniel was saying earlier, you know, VCs have their takes on what margin should be or what they like to see. Some of that might be just intuition. Some of that might be driven by what model returns they need to see or whatever it might be. And then I think operators understand that in different stages of your business, different categories, different channels, that might be different as well. So we'll be bringing together both the perspectives and digging into margins and expectations and what you need to do to turn profitable, which is something I think everyone has top of mind.

27:58Hannah Dittman:And then panel five is kind of flipping the script on things. I feel like in these dynamics, I've said it before on the podcast, I feel like the power dynamics can be so skewed in fundraising. It's kind of like everyone trying to date like the really popular person and then it's like tons of options for them or something like that. So I think it's really important to know that the fundraising part is kind of where the dynamics are the most skewed. But then over time, it's the founder's responsibility to be really successful. And so vetting the partner that you're working with is really important.

28:31Hannah Dittman:So panel five will be how to vet a VC and thinking through the questions that founders should be asking potential investors. What should they be evaluating? Where could it go wrong down the road? And what should they kind of be on the lookout for in the diligence process to have their own kind of diligence experience as well. It's like what they always say when you're interviewing for a job, you know, you want to make sure that there's a good culture fit for the firm. And I think that goes for the investing investor relationship as well. And then another really exciting panel that I think will be interesting perspective will bring in some law firm legal expertise here too is DealTerm 101.

29:06Hannah Dittman:I think this can be such a black box for so many founders, especially people who haven't fundraised before. And you want to always feel like you're in a position of knowledge and strength, especially when you're doing something as serious as giving away or selling a portion of your company. So this is really meant to empower everyone on understanding what typical deal dynamics are, what should they be mentally preparing in their mind to discuss. valuation ranges, check sizes, scaling expectation, holding periods, terms, you know, all the legalese that is seems overwhelming, maybe a little bit, but is so hugely important, especially down the road when you have your massive successful exit, you want to make sure that all the dynamics were in place for that to be a fair partnership for you.

29:49That one I'm super excited about. You could also call it like ways you could get screwed. And trust me, the people writing the checks know about all of these things and they'll put terms in there and you just don't understand because you haven't been through it before. You don't know all of the things that you should care about now. And so, you know, who does know are the lawyers. They know it pretty well because they're usually the ones writing all this stuff into the contract. But everyone's coming together for the spirit of this, which is, yeah, let's just lay it out all on the table. Here are all the things you really should know about and what you should care about.

30:20And then, you know, you're never going to get perfect deal terms, obviously, from everybody, but it helps you understand what could really be a priority for you and the watchouts, especially because there's so many people who are raising for the first time, doing these deals for the first time. So we want the information balance not to be too lopsided, right?

30:38Hannah Dittman:A thousand percent. A mentor of mine once told me, you know, wielding knowledge exclusively as power when the knowledge is inconsistent across parties is such a negative. And I don't think anyone in the room would ever be a malicious investor. Hopefully the betting process, weeded out any of the bad actors. But I do think, you know, people don't know what you don't know. And it's kind of like when you're buying a house for the first time, if you're not prepared to ask the questions that you would need to ask, I don't know if anyone is going to go out of their way to make sure, hey, are you asking every single little question that you want to ask?

31:11Hannah Dittman:So it's definitely an empowering panel. I hope so as well. But I mean, I also have had conversations with VCs. I would call them more the quote unquote investors who will brag about some crappy deal term they got across or some valuation that just like really wasn't even fair. They're like bragging about it. And it honestly makes me sick. So like you just it's your responsibility to know what deal you're signing and what might be important. Because I mean, I do kind of agree with you, though. I think VCs in this space, honestly, if they just were after the craziest returns out there, they probably wouldn't be around early stage CPG investing.

31:50And I think most of us who do this for a living also kind of appreciate that. Like Simon could be doing a lot of things with his life. He's super passionate about doing this and he's doing great at it. Most of us, I think, who are in this early stage CPG game do it because we love it, not because it's absolutely the most amount of money that we could make of all the options that we have out there. Right. And so I have to believe that. Right. Yeah. A lot of the VCs are in the same boat, some of the loveliest people out there. They're also, they're incredibly smart people. I always forget this. And then we'll do a webinar with VCs or podcasts.

32:24And it's just so good because they really are, it's very competitive to become a VC. Like in my business school, that was the hardest job to get. There are only X number of VC jobs, even nationally each year. And so it really is just some of the sharpest people in the world were getting those jobs. So they're smart people and hopefully in general good people, but they also have a responsibility to their investors. And we obviously have all read about so many of these instances of companies getting taken away from the founder when the investors thought it was the right thing to do. So for somebody like me, who is just so supportive of founders and founder first, it's really hard to see that stuff.

33:05But you need to know what you're signing when you take these deals because the day you sign that first deal and give up some of the company, you're now an employee of that company. It's not just your company anymore. You work for people, including yourself, but other people. So I really like for everybody to be very open-eyed going into all that stuff. And great to have that rosy view of everybody and the investors in the world, but also be smart and know what's going on, right? Yeah. I'll jump in and say that. No, that's a panel I'm most excited about. I see that. So we actually work already with the law firm that's going to be hosting that, G &Z Ludin.

33:42And they're the best in the business. So I'm just going to give a quick testimonial. So this is something that if you're a founder coming, take this panel seriously. They're not cheap. They're the best in the business. So to be able to get a lecture where they're going to probably give away tons of invaluable advice, that might be the best thing you take away from this, actually. So I do want to bring that up because to Daniel's point that once you start raising money and When you start signing these contracts, let's be honest, I don't know many founders who are legal experts, right? I'm certainly not.

34:13And so you have to trust smarter people than yourself to do this. And it's really hard and it's really tricky. And I think I agree that like, you know, I don't think that there's necessarily, at least in the group that's coming here, predatory people. But they do exist out there in this. And the last thing you want is to spend your time, your money, your dream, and have it taken away from you because of deal terms that are, you know, not favorable. or even when it's not that extreme, I think it's that it's important you know what you're signing. It's important that you know what you're giving away and that there's certain rights you have and certain rights that the investors have.

34:46And the best relationships are all about setting expectations and negotiating, whether it's a contract for a deal or a contract for just being in a retailer, right? It's the same idea as expectation setting is the number one most important thing. And that's what that document's gonna be. So whether you're just doing a safe note or you're doing actual equity, It's important that you know, well, are they checking my books every quarter? Is that the right I'm giving them? Are they going to have a board seat? Are they going to have power to make decisions or to recommend people that we hire or not or how I run my business?

35:16And so being able to get that advice and hear how this works, because I think for me, that's the most intimidating part of the process is that, you know, when I'm being presented with something that's, hey, you need to make a decision on this legal document, I don't even know what it means. So how do you even make a decision? So that's, I'm so excited and happy that you're working with them for this panel.

35:33Hannah Dittman:Yeah, I feel like that all such valuable point of view and definitely insight. I feel like setting the relationship up for success is what makes you really excited to close the deal and hustle your little butt off to do everything that you just said you were going to do. So you want to feel super motivated once that contract is signed. And I think that's a great way to feel like really confident that, you know, you got what was fair and everyone is happy around the table. And that's a great way to start a partnership. We'll be right back. Are you going to crush it on Amazon this year? It's such an important channel, but it's so hard to do alone and most agencies are a total ripoff.

36:10We can't afford$5 ,000 a month and a commission on our sales. They just don't get it. That's why I love our partners at Daybreak. They are full service, meaning they do the creative work, the listings, the logistics, and of course all the ads, all with the most reasonable retainer out there. I work with them personally. I'm so grateful we have such a good partner to recommend out to you, our community. They do evaluate your product first to see if it might be a fit. So if you want them to have a look, email them startupcpg at daybreak.agency and they'll do a free audit for you. Good luck, everyone.

36:44Hannah Dittman:The closing panel, I think, will also be a really interesting testimonial. It's a founder keynote, which I'm sure Daniel can share a little bit more on here, too. but it's the founder of Ouroboros, who will be kind of speaking about the story of starting, scaling, and exiting their brand. I think, like I said earlier, tangible case study examples is so great to learn from. And I think someone who's been through the whole journey on the founder's side of the experience will be a really interesting learning for founders and investors alike to kind of see intimately inside what that experience was like for someone recently.

37:20Yeah, and I'm so excited about this one. Paul was really the first person that I went to once we started putting the panels together. Anyone who is a longtime listener of this podcast has heard his episodes. They're some of the best ones we've ever had. Paul has such great perspective, and he is just so relevant. He sold his business at the beginning of this year. He is really open about how he spent 50 % of his time, the whole time as a founder fundraising. And so, you know, he just has so many learnings from doing that. The things that went well, the mistakes that he made along the way, and his advice for founders is incredible.

37:59So I'm really excited for everybody to get to just come and learn from all the experience that he has. It's just so, it's so relatable. This is not like, you know, the founder of Siete who just made a billion dollars. It's also not somebody who hasn't been through it. This is somebody who is like all of us, has gone through this and just like extracts so many learnings from this. I'm always so impressed at just his vision, like how he sees the whole CPG industry having really gone through all these steps and scaled. so I'm super excited about that and really really grateful that Paul is willing to make the trip to come and speak with everybody so it's going to be so great and as we kind of wrap up here I'm just so excited for our future around connecting brands with investors and you know this is not going to be the only thing that we do I think we're really trying to gear up and figure out how do we actually make better connections with brands because we know what a pain point fundraising is And we want to do this and not just with this one event.

39:02We want to do this at events around the country. And so stay tuned for a lot more on that front. Pana is going to be doing tons of great interviews on the podcast. And we have some really cool events in store as well that will bring people closer to investors, even in their local markets. Simon, I was just curious, like, are there of the VCs that are coming? Are there any where you're like, whoa, that's a big get like that? That's a really or like that's a really interesting one. I didn't know them super well, but that's like, I'm really curious to meet them. Yeah, no, it's, I mean, it's, it's nothing but straight bangers.

39:34I mean, this is just solid lineup. I mean, I think there's some sleepers in here people might not know about, right? I'll, I'll shout out Humble Growth. Those guys are amazing. I've gotten to know them a little bit. Nick Giannuzzi, who, you know, started that. I mean, dude's a legend. Help broker some of, you know, through LegalX, where, you know, some of the biggest deals in CBG history. and I feel like maybe some people might not know that about them so that's really exciting but yeah I mean I'm just like looking through this through this like Melitas, Rakana, Midnight I mean these are all amazing VCs who write real checks to real companies like us you know and you look at their portfolios and you see these companies and these big logos like you mentioned Hannah you know but you have to remember like they all started like us you know these are all entrepreneur founder-led companies and I think that perspective is really important and I know at least like, look, we all want money.

40:25We all need money. That's necessary to run our businesses. And let's be honest, guys, like it's a slog. Like it is hard. Like if it was easy, everybody would do it. And so it can certainly be really discouraging being out there sending cold emails, you know, sending cold LinkedIn, calling people, just trying to get attention. So just to have them into the room, it's like, wait, hey, I'm that dude who's been annoying you on email. Like, hi, can we talk? Like there's a lot to be said for that. And I think that's what's going to be so powerful about this.

40:51Hannah Dittman:And I'm so glad we're socializing it early as well, because I feel like it really gives brands such strong ground to stand on to really come their best because they can listen to the podcast in advance. They can research these firms that's on our logo sheet and really have their hit list of who they want to talk to or try to kind of preview it with them in advance or you know, whatever they need to do. I think founders are such overachievers, such great people, such hustlers, so intelligent. I think sometimes they just need a little bit of directive on the fundraising side to be able to execute at the level that they execute everything else at.

41:27Hannah Dittman:So I'm really proud that we're such a wingman for these brands and bringing home the hype squad to assist because I feel like the fundraising arena, it really needs it. There's a reason every single founder will say fundraising is the worst part of my job. It's so much time. It's so much work. So I think it's awesome. We're giving a helping hand. I love it. Like, oh, yeah, I like that phrasing, like wingman for all the brands. That really is what we try to do. Damiano from Lupini calls us his co-founder without equity. We love that, too. That's what we're all about. We are. That's accurate. Yeah.

42:02And I mean, again, look, we've just spent this whole podcast just hyping up this event and not everybody is going to get to go to it. We are expecting this to be the most competitive application process that we've ever had. And just for any brand who is not selected to be at Founders and Funders this year, I really am sorry because we are here to help all of you guys. And we have so many opportunities where we can have way more people in our grocery runs. We really try to get as many people in there as possible. We have our shelfies. It's the biggest free awards program in the industry. And anyone who sends a product in, we're going to try to feature your product, at least in a story on our Instagram.

42:37Like we really are always thinking about how to help everybody, but we do have limited capacity for these events. So it will be really competitive. And so with the application process, put your best foot forward. I would say the things that are most important are the question in the application form around traction, because that's what the VCs are going to want to see also is like, I need proof points. What I don't want is like some farmer's market brand, you know, I don't even know. Like, yeah, you think it's really innovative. I'm not so sure about that. What I do want to see like a, well, a really strong velocity story at your first couple of retailers or a lot of growth or some quotes from buyers that just make me believe this thing is absolutely going to take off, even though it's early stage right now.

43:19So, you know, the kind of stuff and just make sure you put your best foot forward as well. There is a elevator pitch video in there. So just, you know, make sure you do a great job there that this is what it's going to be like when you're actually pitching to the VCs at the event. And if you don't get in, there's always next year. We really see this as the premier early stage investing event. And we plan to run it often, at least on an annual basis, and just do so much more to bring you guys together with these investors. But we will have these other versions also that any brand that would like to can just attend.

43:51This just happens to be, it's a limited capacity. It's going to be a really special venue in Union Square in New York, a really gorgeous loft, great space for the panels, great space for the matchmaking, great space for the happy hour also and so really excited for everyone to get to come and check it out they'll get to have some incredible energy as well from Huxley yeah I'm so excited and I just want to say thank you again to Hannah for really leading the charge on what I think is going to be a super beautiful event as well as all of our sponsors who have made this possible because as you can imagine this is actually quite a complex thing to put together and market effectively to everybody and we can't do it without our sponsors.

44:38So thank you again to everybody who has come in to support us on this event.

44:43Hannah Dittman:Daniel, you're such a good founder. You're too humble and you give your team all the credit. This has been an amazing project to be a part of and definitely your brainchild. And I think you've really cultivated such an amazing network and I'm so happy that it's being kind of utilized in this way. And I think you've done 90 % of the work here at least. So I appreciate all the love, but I think anyone in the industry knows that Daniel's a huge advocate of brands and founders and always is brainstorming new ways to help them. And this was definitely an exciting brainchild of his. So I think we're all super appreciative and glad to be part of the startup CPG family.

45:24Thank you, Hannah. We really, it's so great to have you on the team. So everybody, please get your applications in as soon as possible. If you know a brand that you think could be a really good fit, even if yours you feel like isn't at the right stage, please tell them about it. It's just going to be such a massive opportunity. I'd hate for anyone to miss out, anybody who's considering raising in 2026. I always have to cover my bases. None of this is, you know, investment advice. We're not advertising any investments here. This is a networking event that we're hoping people apply to. So nobody sue me.

45:54and I'm really looking forward to seeing you all at an upcoming event, if not this one specifically and on our Slack. So thank you, Hannah. Thank you, Simon. And we will see you all soon.

46:06Hannah Dittman:Thank you. All right, everybody. Thank you so much for listening to our podcast. If you loved it, I would so appreciate it if you could leave us a review. You could do it right now. If you're an Apple podcast, you can scroll to the bottom of our Startup CPG podcast page and click on write a review. Leave your company name in there. I will try to read it out. If you're in Spotify, you can click on About and then the star rating icon. If you are a service provider that would like to appear on the Startup CPG podcast, you can email us at partnerships at startupcpg.com. Lastly, if you found yourself grooving along to the music, it is my band.

46:44You can visit our website and listen to more. It is superfantastics.com. Thank you, everybody. See you next time. Thank you.