Investor Spotlight: Bill Schultz, Beliade Consumer Partners

0:02Hannah Dittman:Did you hear that? That's opportunity knocking. We've been building something big. Introducing Opportunity Knocks, a new campaign giving startup CPG brands exclusive direct access to submit to leading retailers, distributors, investors, media, and more. Here's how it works. On Fridays, a new submission window opens exclusively for active Startup CPG email subscribers. Each campaign features a custom form tailored to that partner. Share your brand story, products, distribution, and traction. Startup CPG delivers your applications directly to the partner's team. Some campaigns include a live fireside chat so you can meet the partner and ask questions directly.

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1:19Successful outcome can look very different depending on the type of founder you are. What success looks like for one founder might look very different for another. Success for you might be, hey, I want to run this business for multiple generations. I want this to be steady-eddy grower, to compound over time, and to throw off cash, and I want to own all of it. That's a very different fundamental approach than a brand who's going to raise some venture funding with venture funding type expectations for an exit in a few years. And so I think part of it is like kind of zooming out a little bit before you raise that first venture dollar.

1:56Be honest with yourself what you really want. Which one of those two paths do you want to go down? And so having some honesty with yourself early on about what you want before you go about the journey, I think, is a really important thing.

2:10Hannah Dittman:Hey, everybody. I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm joined by Bill Schultz from Bellyod Consumer Partners. Bill is a partner at Bellyod, where he focuses on investing in high growth consumer brands across categories like food and bev, retail, personal care and lifestyle. Bellyod Consumer Partners invest in the consumer brands, redefining how modern families live, eat, play and thrive, anchored in health, wellness and everyday well-being. Bill started his career at Goldman Sachs covering large established consumer companies and now spends his time backing emerging brands on their growth journey.

2:47Hannah Dittman:That combination gives him a really unique lens across the full consumer spectrum from scaled incumbents to early breakout challengers, along with a deep industry expertise. In this episode, we get into how Bill thinks about identifying breakout consumer companies, what actually matters in diligence beyond the surface level metrics, and how founders should approach the fundraising process, including the mindset to go into it with. We also dig into perspectives on trends, how to separate signal from noise, and why strong business fundamentals matter more than ever. If you're building, fundraising, or just trying to better understand how experienced consumer investors are underwriting opportunities today, this one is packed with practical actionable insight.

3:28Hannah Dittman:Enjoy.

3:33Hannah Dittman:Hey, everybody. Welcome back to the Startup CPG podcast. This is Hannah. And today I'm so thrilled to be here with Bill Schultz of Bellyod Consumer Partners. Bill, welcome to the show. Thanks for having me. We're super excited for you to be here today. I'd love to dive straight in with a brief background and your path that led you to Bellyod. So my path here was pretty unique. I spent the first decade of my career at an investment bank, mostly in investment research. I covered the publicly traded consumer and retail sector. So at that time, I kind of had a front row seat to kind of the direct consumer 1.0 tide that was coming in and how that was like really impacting all these like large publicly traded businesses that I covered.

4:17The businesses were also staying private for longer. It was just really clear that all the fun stuff was happening in the venture stage of the market, not really in the boring, old, stodgy, publicly traded businesses anymore. And as part of my job there, I would do a lot of like, we're trying to bring some of these venture stage businesses into our research orbit. So I did a lot of like private company outreach. We would do these conferences, you know, really to get our investment banking clients aware of this emerging crop of great brands that were scaling in the category. And during that tenure, I had met my current partner and founding partner of Bellyad, Azim Smartindolfi.

4:57We hit it off right away and we kind of followed each other's career for a few years. He was like kind of quietly assembling this like killer portfolio of great direct-to-consumer brands at that time, Roan and Cotopaxi. And he was a very early investor in some of these really great brands. And when he was looking to raise a third fund and go a little bit bigger and build a team around him, I jumped at the opportunity. So I've been at Beliad now for this is my seventh year.

5:26Hannah Dittman:Wow, so awesome. You've really seen kind of the spectrum of the world, I'm sure. So that'll be a fun chat and some great context for the conversation today. Could you also give a firm overview of Beliad? I'd love to better understand your mandate differentiation and where you guys are focusing in terms of criteria, stage and check size. Definitely. So we're pretty narrowly focused. We only do brands. We don't do tech, software, enablement, anything like that. We're pure brand investors. We do some retail selectively, but mostly consumable product businesses. So think food and beverage, personal care, beauty, lifestyle, peril brands, things of that nature.

6:05Generally, our bread and butter is seed to Series A. We'll lead seed rounds out to Series A. We'll be a little bit more of a hybrid venture into early growth fund. Our whole focus is like founder-led businesses. So really mission-driven companies where there's a really clear buy-in, like a clear founder market fit of who's running the business. And we're seeing really clear early evidence of like a cult-like following behind the brand. And generally we're starting to have conversations with companies when they're approaching maybe a million or so in revenue. and our focus is kind of like one to 10 million in terms of first investment.

6:47What's maybe unique about us, like unlike a lot of venture funds who are maybe really on the frontier of like edgy categories that don't exist yet, I'm not going to name any names like bashing sectors or anything, but the way we try to focus is like looking at disruptor brands in like established categories that already exist. So we really focus exclusively on like disruptor brands in large established categories that we know well, and we feel like there's white space opportunity for a disruptive brand to come in and take share.

7:19Hannah Dittman:That makes a lot of sense. I would love to dive into kind of an example to paint a better picture of something you mean. Is there anything in your portfolio that might be a great way to illustrate some of the kind of thesis that you're thinking about? Yeah, I'll give you maybe two examples that come to mind. So one is a brand that I love. I'm on the board of the company and I'm super passionate about it. It's a brand called Little Sesame. They make hummus. They started actually as a four-wall, like a fast casual restaurant concept. And during COVID, they pivoted to launch a food CPG product. And they're the fastest selling, fastest growing hummus brand at retail today.

7:56I would say a perfect example where you have a pretty large category of retail that already exists, which is hummus. It's a multi-billion dollar category. There's two brands that make up the vast majority, more than half the market share in the category. Those brands have been on the shelf for a long time. We thought there was a lot of room in the category for somebody put out a product that's new and different, really built more from a chef's perspective, high quality ingredient profile. So one example is a little sesame hummus. Another would be Coterie Diapers. We were investors in the company's seed round a few years ago.

8:31If you don't know, that's a diaper business. And that brand was really built around the idea that modern American families are really demanding a new type of baby care product. We're seeing it in like baby food products. For example, we had conviction that diapering as a category was going to be sort of the next big area for that. So diapers, obviously a multi-billion dollar category retail and Coterie was the disruptor brand in that category.

8:56Hannah Dittman:Yeah, great examples. And I think it makes a lot of sense. You hear a lot about aisle disruption or emerging brands kind of taking on soggy incumbent areas that might be overlooked. I think we saw it earliest in the days of kind of like the big obvious categories. But there's so many different areas of all the different stores where consumers want a better option, a higher quality option, a more interesting option, one that resonates more strongly with them or fits their needs. So that thesis makes a ton of sense. And I agree. It doesn't have to be this kind of earth shattering, tech minded disruption or innovation to reach consumers.

9:37Hannah Dittman:I think some of the best brands tap consumers lives in the routines they already have with just a better switch option for them. And consumers keep on consuming the way they maybe always have or maybe discover and learn something new. But it's not this like fundamental game changing shift. No, we have like a fundamental view that the biggest structural tide that's happening right now in consumer is what we define as like the rise of the modern American family, which is shopping for products a lot differently than prior generations did. And there's a lot of reasons for that. One is generally new families now are millennial led families, right?

10:16It's a millennial household. They are generally a little bit older than prior generations when they're starting to have kids. Their discretionary power is obviously a little bit more advanced than it was in prior generations in terms of their ability to go after purchase products that really resonate with them as consumers versus brands that just so happen to exist on the shelf. And so that's an idea that we think transcends across health, wellness, CPG products, really any category that touches the sort of modern American family. Seeing that with coterie diapers is like a perfect example. But everything from food products that are being purchased to personal care, beauty, all these things are seeing a huge step function change based on a shift in the modern American family.

11:00Hannah Dittman:Yeah, I love the way that you've summarized that. And I think it makes a ton of sense. The fun thing about consumer is it's so psychology driven. Why do people make decisions? Why do they buy what they buy? How do they operate their lives? And I think some of the best investors and the best brands are really anchored on thinking through that. What's going on in the consumer's life journey and mind? So that makes a ton of sense. While we're on the topic of trends and behavior, I'd love to pick your brain on some thought leadership and ask you if there's any market shifts, insights, or categories that you think might be relevant for founders currently fundraising or starting a brand right now as they're kind of crafting their narrative and thinking through how to communicate what they're working on to investors.

11:46Hannah Dittman:Are there any nuggets that you think that would be helpful for them to be thinking about in the back of their minds? Yeah, maybe a little bit of a contrary in there. My point of view is that as a founder, you should care a little bit less about trends and a little bit more about like enduring structural long term changes that are playing out. That's generally how we invest as a fund. We're not trend driven investors. If you look at our portfolio, especially as a venture investor like us, we're making investments that we are planning to hold our position in a company for upwards of a decade sometimes.

12:22We really want to see a brand that's built for a long duration, not for a short-term trend. So I would say we're less focused on companies who are pitching to us as like the next GLP-1 augmenter or protein-driven XYZ. I would say we tend to focus on brands that don't try to incorporate trend into their pitch.

12:45Hannah Dittman:Really helpful. And I think a great perspective to highlight, too, because I feel like every investment firm is so different. And as a brand navigating the fundraising journey, it's kind of similar to when you're building products for consumers and there's a saying, you can't be everything to everyone. I don't think you can be everything to every investor either. And some investors are super innovative seeking. Some are more thinking about market tailwinds and waves and how you fit into that. And their thesis is more driven by external market factors than less so by the individual company trend.

13:22Hannah Dittman:And everyone thinks so differently and their investment strategy is so different. So I also think learning about the investor that you're trying to meet with or just intuitively knowing how you think and you approach business and finding an investor that aligns with that can be really helpful as well. Yeah, I think so. I think of it as like within the world of CPG investors, there's funds like us who are specialist brand investors, but we don't have necessarily a specific industry that we focus on. We can look at a food and beverage brand one day. We could look at a personal care brand the next.

13:54We could look at a direct consumer lifestyle brand the following day. So for us, it's less about sort of spotting kind of short term trends. When we're investing in a company, our expectation as sort of a venture investor at a business is that we are playing for significant outcomes. That's what we're looking for. And it's generally hard to execute on delivering that type of huge outcome if you're purely focused on kind of near-term trends, if you're trying to chase that next, like, what's hot right now. And that's how we think about things. We're looking for enduring long-term consumer businesses.

14:30Hannah Dittman:Great point. Thinking through, obviously, you've had a lot of pattern recognition. You've seen a lot of different companies. You've spent a lot of time in this space. Is there something that you wish more founders or operators knew or understood as you spent time with them that you think you can shed some perspective on to proactively help them maybe avoid some pain points or obstacles? Yeah, I would say a couple of things I'll point to. I have a perspective that the vast majority of CPG brands should be run as family run, founder run, small businesses. And I think a lot of times there's an expectation, hey, I'm starting a brand.

15:08I must raise a significant amount of venture capital to have a successful outcome. Successful outcome can look very different depending on the type of founder you are. What success looks like for one founder might look very different for another. For example, success for you might be, hey, I want to run this business for multiple generations. I want this to be steady-eddy grower, to compound over time, and to throw off cash, and I want to own all of it. That's a very different fundamental approach than a brand who's going to raise some venture funding with venture funding type expectations for an exit in a few years.

15:49And so I think part of it is like kind of zooming out a little bit before you raise that first venture dollar. Be honest with yourself. What you really want. Which one of those two paths do you want to go down? Both of those paths are very different strategic decisions. And going down the path of venture capital and bringing in a lot of venture money obviously brings in expectations about the type of outcome you're going to be striving towards. And so I guess having some honesty with yourself early on about what you want before you go about the journey, I think, is a really important thing.

16:21Hannah Dittman:Really sage advice and great points. oftentimes also I feel like a little bit of a chicken and egg situation for founders at the beginning because to start up you need money and so you're thinking I've got to find money and then to get money you also need to prove out performance so I think it's kind of thinking through the long term vision of a business as well and not just the current problem that you're tackling in the today obviously there's so many ways to skin a cat and the most obvious answer is to go get money from someone but i think to your point you're kind of signing yourself up for a very specific journey and a very long one if you're able to achieve a fundraise and that's something that i think every founder should be hyper aware of what that actually entails and what you're really looking at and the sacrifices you have to make both within your life and maybe potentially even within your business to be able to pursue something like that.

17:20Hannah Dittman:I love the words of wisdom. And I think it's also a testament to investors that are empathetic of the founder experience from their side and saying like, hey, we don't want to just like make money off of you. This has to be good for your life too. So I think that sheds a lot of light on how you're approaching things. I would love to kind of think through some pattern recognition. Obviously, you've seen a lot of companies, you probably have quite a large portfolio. Post the fundraising process, when you're in post-investment operations. Do you feel like there's any kind of common pitfalls or areas that brands frequently run into problems on that others can be thinking about ahead of time?

17:58Yeah, I'll start maybe some pitfalls. One of the things we see a lot, I would say like, and I'll maybe bring this back to like the conversation we were having before about like kind of skill sets for founders, but we have found through pattern recognition that our sort of like most successful founders in our portfolio have been founders who are like really, really on top of their financials. Their financial acumen is 10 out of 10. And it's pretty intuitive, I guess, as to why that would be the case. But generally, we find that founders who have a really good handle on their financials, their unit economics, even things like basics, like what's their cash conversion cycle look like?

18:36And it takes a certain type of, I guess, a financial acumen to really understand, like, okay, if I push harder on my manufacturer here, every dollar of savings I'm getting on the margin is going to compound over time. I would say that the most financially savvy founders in our portfolio are generally the ones who are now running those nine-figure type businesses. And that's something that we can kind of feel out early on through our diligence process. We always ask questions like, walk me through your unit economics, and what does your margin profile of look like? And what do you need from a capital perspective to get from two to five to 10 to 25 million dollars in top line and why?

19:17And we find an overlap between like our kind of most successful founders and who are the sharpest in terms of their financial capabilities. It's a Venn diagram with overlapping circles.

19:27Hannah Dittman:Great point. And I think in today's modern age, it's a lot easier to learn things. There's obviously fractional support has been a big movement post-COVID, but also AI learning. I feel like you can brush up on concepts and things that were once much harder to understand or would take quite a long time to wrap your head around or you'd be deep in Google. You can kind of quickly get up to speed on things or even get some AI help to help bolster your own skill set. So yeah, I think all things that founders should be kind of digging into and trying to round up themselves with, whether it's within their team or within themselves or both.

20:02Hannah Dittman:Obviously, when a brand goes to fundraising, there's kind of always risks in any business. And obviously, as investors, you're thinking about which can and cannot be mitigated. Maybe a brand, everything looks great, but their margin isn't exactly as high as you would like it to be. Or maybe they haven't reached profitability yet. Maybe they haven't built out the team fully. Or there's always different things going on in a business that might be not a perfect mark on the scorecard. What types of risks are you comfortable as an investor wrapping your head around and how should founders be approaching trying to think that through as they go through a fundraise process?

20:42Hannah Dittman:Yeah, I would say a couple of things. One is like kind of non-starter things for us would be like unit economics and gross margins and contribution margins are one of those things. It's sort of hard to optimize for down the road if you're starting from a weak position. A lot of times those things show that you don't really have maybe a lot of pricing power. For example, I think you want to shore up those foundations early on in a business. When we're diligencing a company, I would say one of the first things we tend to look at is like, what do the contribution margins of this business look like?

21:15What are the unit economics? How do we understand the gross margin profile? And those are kind of, I would say, areas that we won't really overlook. Those are foundational things for us. Things that are like we can overlook would be if you're raising an early stage, like maybe it's your first institutional capital raise, probably don't have all the team around you that you want. And there's probably huge gaps in your resume and your experience that subsequent hires are going to help unlock for you. And I think it's a matter of, as a founder, having like intellectual honesty about what those gaps are.

21:51Are you somebody who's like creatively minded? You have such strong founder market fit. You understand the product and the category really well. But maybe there are certain areas like branding and growth marketing and things like that that are areas that you're less savvy on. That's okay as long as you know that and there's a path with growth in the company to bring to bolster the team with those types of skill sets. So I would say like team gaps are areas that we can feel confident in, like not necessarily overlooking, but understanding as a potential point of risk that we have to then figure out a way to solve for.

22:27Hannah Dittman:Great points and really helpful the way that you laid that out so clearly with examples. We've mentioned unit economics quite a few times in this conversation. Could we double click on what you mean by unit economics and kind of what's the North Star guiding light that founders should be aiming towards when we're talking about these things? Yeah, I would say there's not really like a one size fits all across all the categories that we invest in because a great gross margin for a food CPG brand is going to be like a pretty bad gross margin for a beauty brand, for example. So I would say it's kind of category dependent.

23:03We have sort of benchmarks for all of those categories. But the things we tend to most focus on, I would say like at a high level, contribution margin is kind of for us like the end all be all. And we define that as effectively how much is it costing you to get that product from sale to a customer. And we pay a lot of attention to that because a great contribution margin, a higher than average contribution margin, allows you to take liberties in other parts of your P &L that you otherwise might not have been able to do. For example, if you have a really good contribution margin in your business, you're able to fund marketing that maybe some competitors wouldn't have been able to do without a huge amount of capital being raised.