How Whole Foods Invests in Emerging Brands with Ellen Gorra

0:00Hannah Dittman:What if your next investor meeting is already waiting for you? Applications are now open for Startup CPG's Founders and Funders 2026, our flagship event built to connect the most promising emerging CPG brands with investors ready to write them checks. Sick of cold emails, cancelled meetings, and pounding LinkedIn pavement? Well, consider Startup CPG your ultimate warm intro. Join us December 10th, 2026 in New York City for the fundraising event of the year. This year, we're back and bringing together 200 of the top emerging CPG founders and more than 100 investors for nearly 1 ,000 one-on-one pitch meetings.

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1:44One thing I would try to learn early on, just understanding cap table math, because it can be very convoluted and hard and it surprises a lot of people. So having a good grounding in that, understanding debt resources that are out there, whether it's an SBA loan or different financing partners. But I think that is an interesting thing to learn about, especially as an investor. And I kind of like have a hate love relationship. I think a lot of people do with LinkedIn. It's like you go on and someone's just raised a huge fund or someone's exited and, you know, well, I made a ton of money and it's just like everyone's high-fiving themselves and others, whatever, which is great.

2:17And oftentimes I do like that. But I think sometimes you can feel like sometimes it can rub me the wrong way.

2:25Hannah Dittman:Hey, everyone, I'm Hannah Dittman, finance and operations host of the Startup CPG podcast. And today I'm excited to be joined by Ellen Gora from Whole Foods Market. Ellen leads Whole Foods equity investment and warrant partnership efforts, partnering in different strategic ways with emerging brands as they grow within the retailer. In this episode, we explore how Whole Foods evaluates and invests in emerging brands, how its investment approach differs from and overlaps with traditional venture capital firms, and the categories and trends currently capturing Ellad's attention. She also shares lessons from her career, practical advice for founders looking to get their products into Whole Foods, and the best ways to connect with the team.

3:05Hannah Dittman:Whether you're preparing for retail expansion or want to better understand how one of the industry's most influential retailers identifies, evaluates, and supports emerging brands. This episode is packed with actionable insights you won't want to miss. Enjoy!

3:23Hannah Dittman:Hey, everybody. Welcome back to the Startup CPG podcast. This is Hannah, and today I'm excited to be here for an investor spotlight with Ellen Gora of Whole Foods Market. Ellen, welcome to the show. Thank you, Hannah. Thanks for having me. We're so excited to have you here today and really excited to learn a little bit more about the interesting things that you're doing with Whole Foods and how this all works. I'd love to kick us off with a brief background of your career and the path that led you to where you are today. My background, I career-wise started off in financial services. So I worked at Piper Sandler out of college, not in traditional investment banking, which is where a lot of people in investing start, but I was in equity research, which the whole intention of that was like get a grounding in the financial markets.

4:07I was actually covering financial services at the time, which maybe for people who don't know, but a usual bank that reports earnings actually doesn't have a P &L. So it's a very different type of financial model and, of course, business model, but a good place to get started. So I was there for about four years and then wanted to switch and get more exposure to the buy side. So I work in a company that was covering kind of like more exposure to hedge funds and private equity funds and different types of strategies, sovereign wealth funds. And there, then after that, I went to go work with Elle Catterton in Asia.

4:37So I was covering everything from India to Australia, mostly focused, though, on Northeast Asia. So Japan, Korea, Taiwan and Hong Kong. I helped start the Hong Kong office. This was like 2014. So I was a VP there and mostly did broadly consumer. So restaurant investing, restaurant chains, a lot of beauty, especially with Korean and Japanese markets and some entertainment. And so I made an investment. We invested$80 million in a public company that is a K-pop manager, technically. I mean, K-pop entertainment, let's say K-entertainment, mostly music. And they're actually the managers of Blackpink, which some people might know, but it's called YG Entertainment.

5:15So I made an investment or helped with Sal Catterton make an investment in that company. And I kind of like took a step back thinking this is going to be the coolest thing. I love music. I played cello in college. I listened to a range of, you know, hip hop. But I was like, this is going to be so cool. I'd love to do more entertainment investing. And so as things unfolded, I had the opportunity to go work at Live Nation Entertainment. So I was with them in L.A. And I guess I love music, but being purely rooted all day long in entertainment, it just was not for me. And one of the takeaways, I guess I'll get to a punchline early, is like, I think the food industry is fantastic.

5:47So after Live Nation, I left and came to Whole Foods and have been investing and partnering with food brands that we work with and sell. And it's just a phenomenal industry. I'm so happy to be spending now majority of my day in food. You're now the music of taste buds. Yes. We'd have wrapped it in.

6:03Hannah Dittman:Yeah. What a great background. And you've seen a lot of really cool, interesting things in your life. I'm sure there's a lot of different lenses that you pull insights from and thoughts as you're navigating the consumer world and the avenue that you're focused on now. I'd love to better understand your role with Whole Foods, how this all kind of works out. Obviously, we all know Whole Foods is a retailer, but how does the kind of investment and brand partnership side of their ecosystem work within the broader company? Yeah. What I take is like what attracted me about Whole Foods is our positioning.

6:38And this is Ellen's distillation of what makes Whole Foods special, but really on the quality standard side. So we are a destination for shopping in the United States that has really unprecedented way of distinguishing products like that we sell with this lens of quality standards and wanting to ensure really trying to sell products with the highest health benefits or, you know, implications for customers. And that's what customers are demanding as well. So I lead an equity and warrant program that we have. And one of the big thing on quality standards and as part of that is also supporting independent brands.

7:10So that's something that's very important to Whole Foods Market as part of that journey, supplying, you know, in the local and just broadly emerging better for you brands. So as part of that support, we have a number of programs. But for example, we have a lending program that my colleague runs. But another way to do that is occasionally we invest. So we invest capital in strategic partners. So that's our equity program. And then we have another program called the Warrant Partnership Program, which most of these are confidential or portfolio companies. I can mention some of them. But our warrants are really interesting, and I had never done warrant investing before coming to Whole Foods.

7:46So it's essentially the way you can think about it is sales in exchange for equity. So as we achieve more sales at Whole Foods Market for the brand, then we can get usually single digit equity into the brand's business. And the whole point of this, though, is not just to have ownership stakes in small brands or emerging brands or even big brands. But when that brand or company sells, that stake that we have in the business is actually donated. The proceeds are donated to the foundation, to the Whole Foods Market Foundation. So we're all about win-win partnerships at Whole Foods. And this is we like to think of it as like a win-win-win, because if we can achieve more sales with the company, we're winning as a retailer.

8:25They're winning as a brand. And then also now the foundations, which do wonderful, great work around the world, ranging from supporting African female entrepreneurs to school lunches in the U.S. So it's just it's a really neat way to give back to the communities.

8:39Hannah Dittman:That's so awesome and exciting. So when you're thinking with your investor hat on, I just want to make sure I'm fully understanding how you guys are thinking about investing. oftentimes typical things that will come up like returning a fund, right, or needing a certain multiple in your deals. And that's determining check sizes that you're writing and all of these kind of structural things. How are you all thinking about deal structuring? And what does that look like given the unique mandate that you're all focused on? Yeah, it's interesting because usually you'd think in our equity program, we're actually giving companies cash.

9:14In our warrant program, we're not giving them cash up front, but we are committing to more of an operational commitment, you know, an enhancement to drive sales. But that being said, the warrants program, in fact, has more of this lend or, you know, mandate to return capital because of the foundations that we want to fund them. The equity side, while we want to invest and make investments in companies where there will be a financial benefit, a lot of it is driven by strategic purpose. So one of the companies that we invested in on the equity program is Vital Farms, and that was around this quality standards of raising the quality standards for raising hens and delivering eggs to consumers.

9:49And that they like a lot of lit for themselves, but also the broader industry. And so that was a really successful example of an equity investment and how it aligned with our values. And equity tends to be more of a strategic type of brand that we partner with or company strategic to our core business, whereas warrants, we can kind of like partner across the store. So maybe a smaller category, but we could do a Warren partnership with a popcorn brand and try to see benefit and both benefit from upside.

10:18Hannah Dittman:Very interesting. And, you know, now that we understand a little bit more about how that works on your own, when you're canvassing or sourcing partnerships or brands or deals to work with, are those only from the Whole Foods ecosystem for both equity and Warrens? Like you have to already be in Whole Foods or are you kind of out there looking at brands to then partner with and bring into Whole Foods? What categories or sizes or growth trajectories are you focused on? Yeah, I am not a merchandiser and I do not pretend to be one on TV. So I do not bring brands into the store. But like you said, the former example.

10:55So I'm working with really brands and companies that are existing partners to Whole Foods and our merchants do a wonderful job of onboarding incredible, innovative, cool companies. In terms of stages, I would say On the warrant side, typically we're looking for usually to start a partnership with like a seed or a series A stage business. But that being said, I'm also working on one with a public company right now. On the equity side, it can also be a variety of businesses. Equity, what's really interesting right now is areas more of the perishables business. So the way that we think about usually classify the store is center store, which is what it sounds like, center store and perishables, things that are perishable.

11:35So dairy, produce, meat, seafood. So where I'm spending a lot of time on the investment side is more on the perishable side at the moment. And then warrants is really anything in the store.

11:44Hannah Dittman:What kind of trends or consumer behaviors or market shifts are you focused on or getting really excited in perishables? What are the themes or theses that you're thinking about on a regular basis right now? Yeah, perishables is really interesting. It is, I would say like the headline there is around the branded IP types of breeds and strains that you're seeing of produce going on. So, for example, a company, Row 7, has badger flame beets and different types of garlic, which is a mix of a garlic and a leek. But Row 7 is a company, it was founded by Dan Barber, a chef, and it's really driven for produce for taste and health.

12:24You know, there's produce historically, especially in the U.S. There's a lot of factors where commercialization, financial return or squeezing like the financials out of produce business because it is a low margin business and it's incredible, but are incredibly hard, I should say. So I have a lot of regard for people in any value chain of the produce business. But Row 7 is just trying to shift things away and basically provide to customers maybe some types of products, whether it's potatoes or pumpkins or squash, that historically haven't really been focused on by big produce businesses because they might not be as resilient to weather changes and stuff like that and need more kind of love and care by different farmers.

13:03So maybe they do cost more money, but they are usually more health and flavor forward. But so a company like that is a really good example of what's going on in produce in terms of really leading with differentiation and flavor and also this branding. Like customers know now a honey bomb or different types of tomatoes and like by name. And that historically hasn't been the case. And I think it'll continue to shift that way.

13:26Hannah Dittman:Very interesting. If I'm a founder who's selling in Whole Foods and I'm really excited about something like this, what do you think the benefits of partnering with you or getting into one of these programs would be for me as a founder? What kind of things should I be thinking about as I might be thinking about future benefits or ways that I want to build my business in a way that would be beneficial for this? I guess a couple of things. And as they relate to, you know, what I'm working on or different parts of the business, like the lending program or LEAP, which is an accelerator program we do, took two cohorts a year.

14:01I would say ask yourself if like Whole Foods Market really is a key destination, a key retailer that you want to partner with because you might be giving up dilution to us or might be committing in terms of none of these programs necessarily require you to be exclusive. But once you decide yourself, hey, this is going to be a retailer that I really want to partner with, there are certain like longer term decisions that you make around the communication with your merchant and how, you know, if you do want to offer exclusives to a retailer like Whole Foods Market or keep yourself more flexible to others.

14:31But yeah, so I would say is Whole Foods Market really a strategic partner? And then the benefits are that we have 550 stores. So there are other incredible retailers, Erewhon, Bristol Farms, Wegmans. We just have a different, I would say, obviously a footprint, number of stores. So just something to consider as you look at the different programs. And one thing I would note too, especially around the lending side, and one thing to cover is just more and more an emphasis on, or I think the ability hopefully to bootstrap or to raise via debt early on is something that I think is being impressed upon founders and like early stage businesses more and more.

15:09So yeah, like our lending program is interesting for that matter.

15:12Hannah Dittman:Very well said. Obviously, brand, product, market evaluation is a huge part of the job as you're thinking through these things. How are you typically approaching that diligence or evaluation side of the equation? What are the core pillars that you're looking at or target benchmarks or other things that really matter for you as you're deciding what would make sense for Whole Foods? On the warrants program, I kind of work backwards. So if a merchant internally raises a brand like as a as a potential candidate, that's most of how I source partners or externally. If an investor contact says, hey, there's I made a new investment and maybe they're good for the warrant program.

15:53One of the first questions I ask about that business is kind of like what's the exit scenario look like? On one hand, I think, and this goes to your question about trends. On one hand, consumers like more artisanal products, more niche products. And that's great. On the exit side, sometimes a company can be growing, but it's like if it's too niche, will it really exit? Will Hershey's or Pepsi want to buy it or will a PE fund buy it and create a secondary liquidity moment for that company? So that's one thing that I start with in terms of the warrant program, thinking, OK, is this something that would potentially have a liquidity event?

16:25And then working backwards, there's a lot of factors, but usually it's thinking about the balance of with our stake at today's valuation, can we get a return that we want, have kind of a threshold that we try to target, again, for the foundations? So can we get a return based on today's valuation with where the potential exit might be?

16:44Hannah Dittman:And when you're thinking about liquidity events or returns, how are you kind of understanding or wrapping your head around that question? You know, if I'm a founder trying to answer that question proactively for myself with my own business, how would I go about understanding whether I would be a potential target for a strategic acquirer down the road one day? And how would I go about understanding whether or not my company would be able to drive a return for an investor? I mean, in terms of the strategics, you can do things like, it sounds silly, maybe old school, but and Tachi Bete can help with this.

17:18But you know, what are the companies saying in their public and their quarterly earnings? What are they saying that they're looking for? What do they just acquired? And even just doing scans of recent two year acquisitions, you know, just looking in the market of, okay, are they, everyone's talking about like, I want to be the next Simple Mills of XYZ almond flour, and they were at almond flour, but like, do you want to be that kind of brand? And so I think kind of looking at it from that and trying to really be honest about is there a market out there that would buy this business. But another channel is the selling to a private equity fund.

17:50If you can be, I would say like that's where profitability, I would say typically most investors are not going to look at a company that's like less than five million in EBITDA. So just seeing if there's a path to get there for your business. And then once you do kind of like what a multiple would be on that EBITDA, because there's a range and it's a range for what kind of margin you're creating and what category you're in. But yeah, if you're over five million in EBITDA, I think you could also think about the strategic financial path.

18:16Hannah Dittman:And when you're thinking about, does this make sense from a returns perspective? How do I go about thinking about that? Obviously, there's some component of fun math that's going into that. But also there's drivers behind the growth and the trajectory of a business that also equally matter to make that math work. Yes. And so I guess thinking about it, for example, there's a frozen food company that was raising capital and talking to them about a partnership, but they were raising just at a very high valuation. And so when I think about if we could get to a place where agreeable on a position, if I have a 3 % stake in this business that is valued pretty highly today, I'll probably get diluted down.

18:56So they'll raise more money. Let's say my stake goes to 2 % or 1.5%. So when I have one and a half percent of a business and if they only grow by, you know, if their valuation or where they get acquired only grows two, threefold, will I make my return that I'm targeting on that now diluted stake? So I think just thinking a little bit about that, putting yourself in the investor's shoes if you're a brand on how to help what they call underwrite their return. So painting a picture as much as you can. I always advise companies to do that if you're raising capital. Like spell it out for me about how I'm going to make this money back.

19:28And most funds want to see over four times return on their capital. Some private equity funds want to see less than that, but a lot like to underwrite at least that three and a half times, three times going lower.

19:40Hannah Dittman:That makes a lot of sense. And when you're thinking about, you know, if I'm an operator and I'm a founder and I'm like, OK, I understand what the growth goal or need would be. What do I then have to think about what has to happen in my own business to achieve that, even if it was outside of Whole Foods or something like that? Are these the kind of things that you're talking about with companies or that a company is thinking about itself? Or is it a little bit more broad or different than that? I was talking about this with, I don't know him super well, but I'll quote Josh Golden from ACG and they're unaccomplished.

20:13They're on their six fund now. He and I were talking about the exit universe now and I was asking him how he thinks about it. I can't answer across the board how a company is going to build it. Likely they'll have to go to another retailer. But we were talking yesterday about how, you know, maybe five, 10 years ago, you could be$50 million and sell to$50 million in revenue, sell to a strategic. And now it kind of feels like it's gone up. And so you need to get to like an$100 million revenue standpoint and be profitable, which wasn't as much of an emphasis two or three years ago. And so that's just some of the things it's like, I don't know how X brand is going to get there, but those are some of the things that we're seeing in the market, the shifts of higher revenue.