Investor Spotlight: Brian Bernstein, Rich Products Ventures

0:02All right, friends. So as you know, here in the pod, we're currently featuring some of the amazing brands backed by Redwood Capital Partners. They are one of the leading funds in the space, and you're going to hear all about one of the brands in their consumer fund. So today we're talking about Refresh Gum. It is a modern chewing gum brand, bringing back the gum that you grew up loving, just made better. It's designed to look, crunch, and chew like your favorite nostalgic gum, but without all the synthetic plastic gum base and without the artificial junk. Instead, they use a real tree sap gum base and only the highest quality ingredients for a cleaner, premium and nostalgic chew.

0:39Refresh Gum can be found in over 6 ,000 stores across all 50 states in the U.S. And you can also order them directly at RefreshGum.com. Use our code RefreshCPG for 20 % off your order.

1:09So if you are building a specialty brand that may become a great lifestyle business for you and your co-founder and maybe a few other folks, but it may not have the potential to scale to be the next$100 million disruptor in the category you're building in, you may want to think about ways to build the business without raising venture money. Because once you have an investor in the business outside of friends and family, you have to report to them and they're going to push you to get a return. They're investing to eventually get their money back and a return on that investment. Hey, everyone. I'm Hannah Dittman, operations and finance host of the Startup CPG podcast.

1:48And today I'm excited to be joined by Brian Bernstein of Rich Products Ventures, the corporate venture arm of Rich Products. Ryan brings a rare full-stack perspective to food and consumer investing. He spent time across investment banking, operating roles, and corporate venture investing, including experience at Blue Apron and within QSR at RBI before joining Rich Products Ventures. That background gives him a deep, practical understanding of what it actually takes to build, scale, and evaluate businesses in the food space, not just on paper, but in the real world. In this episode, we break down what corporate venture is and how it differs from traditional VC, the core buckets of diligence Brian and his team focus on, and the metrics that actually matter when evaluating early stage food businesses.

2:31We also talk through exit pathways, what makes an investment compelling during diligence, and the lessons Brian has carried forward from a long career spanning finance, operations, and investing. If you're a founder curious about how corporate venture thinks, how strategics evaluate risk and upside, or how to position your business for long-term partnership and optionality, this conversation offers a thoughtful, behind-the-scenes look full of practical learnings and advice. Enjoy!

3:00Hey everybody, welcome back to the Startup CPG podcast. This is Hannah, and today I'm here with Brian Bernstein, an investor from Rich Products Ventures. Brian, welcome to the show. Thanks for having me, Hannah. We're so happy that you joined us here today. I think this is going to be a really fun chat to get into. I'd love to kick off with just getting a brief background of your career, your path to rich products, ventures, and what you're doing there now. A little background on my career to start. I've always been a food person, but I've taken that through a number of different capacities from a career perspective.

3:33I started in investment banking, working at Bank of America in their consumer retail group, advising some of the largest CPG companies, food manufacturers, and some other retailers. The fun deal I got to work on back then was doing Yeti Coolers IPO, which at the time was a brand no one really knew, and now they're everywhere. So cool to have been part of that. Coming out of investment banking, everyone traditionally goes into private equity. Coming out of banking, it's kind of this training ground. I wanted to really understand the operator's side of the table rather than just being an advisor.

4:08So instead of going to a private equity shop, I joined Blue Apron, which at the time was kind of the hot consumer, direct-to-consumer company. I thought it was really going to change the way people were eating forever. So joined there just before the IPO, got to be there for the fun and ultimate downfall of the company, which I think was probably a better learning experience than it would have been if a company was continuing to do well. Really had to learn how to operate in challenging times with cash that was becoming more and more precious and guiding the company towards profitability. So I learned a lot during my time there in a number of strategy and finance roles and ended up, after a bit, seeing the writing on the wall, wanted to pivot a bit in my career from a role perspective.

4:56So applied to business school and around business school, continued to work in food. So spent some time at AB InBev. During business school, I got my feet wet in the investing world, working at a small VC fund that was run by the founder of Insomnia Cookies, who had obviously had a successful exit and had a little VC fund that he was running on the side. So it was he and I running that fund. And then after business school, I was at business school at Warden. And then after business school, I moved down to Miami and joined Restaurant Brands International, which is the parent company of Burger King, Popeyes, and Tim Hortons.

5:31I was in a business development role there and learned the food service world, which is a whole other beast, but great learnings there. And ended up coming across the opportunity to join the fund where I am now, about a year into my time at RBI. So I took advantage of the opportunity and joined Rich Products Ventures, which is the corporate venture fund connected to rich products. Our parent company is about a$6 billion revenue food manufacturer. They're 80 years old, based in Buffalo, New York, still privately owned by the Rich family. And they have innovated and acquired to be where they are today.

6:08So they're one of the largest frozen food manufacturers in the country with about 20-ish manufacturing facilities domestically and another, call it 15 or 20 internationally, that the parent company sells about a billion plus of CPG business, and the remainder is actually into food service and B2B. So it's a diverse manufacturer producing products across a number of categories, whether it's pizza or baked goods or proteins or frozen appetizers. They're one of the largest in-store bakery companies in the country. So if you ever go to a Kroger or a Walmart and you see those clamshells of cookies or cakes.

6:48Those are products that Rich's makes. And then on the branded side, a few of the brands that Rich's owns are Farm Rich, which is one of the larger frozen appetizer businesses in the country. Seapack, which is a frozen seafood business. For Real, which is milkshakes and smoothies that are in convenience stores with a smart blender. You take the milkshake out of the freezer, put it into the blender, it blends it up and you have a freshly blended milkshake. And then we continue to look at new opportunities to acquire new brands. That for real was one of the most recent acquisitions, though today Rich's announced actually that we acquired a pizza manufacturing business called Great Kitchens.

7:27So continue to be acquisitive as a parent company. The venture fund was started eight years ago. That's where I sit. We're based in the Bay Area. We're a small team of three of us And we invest in kind of anything that touches food after the farm. So that takes kind of categorize it into four different categories. One is what we call the future of food service and food retail. So that's automation and software and hardware that goes into the food supply chain or into food service operators. The second bucket is what we call sustainable production, which is food waste reduction technologies and sustainable ingredients and proteins that could help shape the way people eat in the future and serve as inputs into consumer brands as they develop new products.

8:13Third is the dynamic supply chain. So that's software and hardware solutions that go into the food supply chain. Think next gen distribution models and stuff like that. And then lastly, and where the startup CPG community is likely most interested is nutrition and health, which encompasses better for you CPG, which is a real focus area for us nowadays. So that's kind of us and our parent company in a nutshell. We are traditionally a follower as an investor. So we do not traditionally lead rounds that we have, but happy to share more details on kind of what we look for and what our standard investments look like.

8:49Yeah, that's so helpful. And thank you so much for the colorful context. I feel like, first of all, you have the perfect background for where you're sitting. I mean, everything from QSR to like very interesting, dynamic, modern ways to approach food and food services with Blue Apron, tons of finance experience and broader food and consumer background. So it makes perfect sense to me how you ended up at Rich's. And I feel like it's almost like faded for you in a way that the way your career is planned out. Second of all, I am a huge sucker for the bakery section of the grocery store. And so I'm sure that I've been a consumer many times.

9:29And it's one that that has been stale and is ripe for innovation, too. So it's it's an exciting category for sure. Yeah. Listen up, founders. Anyone revolutionizing the Better For You bakery section, we've got your guy. Yeah. And as you mentioned and kind of led me to, I'd love to double click a little bit more on some of the baseball card stats of your investment profile, mainly stage, check size, and kind of like mandate as it comes to investment, whether that's like a revenue target or a profitability target or certain things that you're focusing on specifically when you evaluate investments.

10:04So from an investment perspective, what our standard investments look like is we're generally investing somewhere between$1 and$3 million as a first check into startup businesses. Those companies can be a variety of stages. Nowadays, especially where a number of businesses may have been around for a while and maybe looking at recaps, we've done deals in businesses that are pre-revenue. And we've done deals in businesses that are approaching nine figures in revenue. So it's relatively wide mandate. So it could be seed all the way through series B or C. Huge mandate. Very opportunistic. Which means that we're looking at a lot, too.

10:44So in any given year, we're probably looking at somewhere between 350 deals. Of those three or 350 deals, we're probably actually investing in somewhere between three to five new businesses any given year. So, you know, call it one percent of the companies we look at, we end up investing in. So it gives kind of a little bit of a peek under the covers as far as when you are doing your outreach for fundraising, definitely be strategic with who you're reaching out to. But you need to cast a wide net because a lot of investors are looking at a lot of deals and there's only so many checks to go around.

11:20So definitely be strategic with who you're looking for, but also be willing to kiss a lot of frogs. As far as where we traditionally look for businesses to be to invest, especially in the CPG world, your business would have some traction in retailers. We like seeing that chasm start to be flirted with when it comes to crossing the chasm between natural and conventional. A lot of brands will succeed in natural and have no standing in conventional. So to become a big brand with the ability to generate an outsized return for an investor, I always think you need to be able to cross that chasm. We, as a differentiator for the fund, I'd say, versus some other traditional financial investors, we are definitely investing to get a financial return.

12:07But we have the strategic capabilities that Riches brings to the table that we're able to support our portfolio companies with. So I'm happy to dive more into some of what that looks like. But in general, I like to think of us as a financial investor with extra value added capabilities that we can bring from riches. So that could take the shape of a variety of different strategic capabilities that we have as a business. I think I hit on all your points, Hannah, but. Yes, no, you're doing a great job. You don't even need me here. I feel like you've got it down pat. This is such great context and super helpful.

12:42I'd love to spend some time talking about corporate venture. That's not maybe a term that everyone is as familiar with or type of firm or investor that they've encountered. I think sometimes the knee-jerk reaction for founders, especially earlier stage founders, can have like a little bit of a layer of fear with corporate venture because they're thinking, okay, I might be kind of competitive with their existing portfolio or their parent company. me? How does this all work out? Like, would they like steal my ideas if our deal didn't work out? Or would they need my information and then just use it for my information, but not actually want to invest in me?

13:20How do I think about this? What does this mean for exit potential for me? You know, I think there's a lot of nuanced questions that stem from maybe not fully understanding what corporate venture actually is, how it is similar and how it is different to the more mainstream, if you will, I guess, financial institutions in the consumer investing space. So I'd love to give you the floor, pick your brain and kind of get the spiel on corporate venture and your thoughts. If I was a founder approaching you with some of these concerns, what you would be telling me about them. Happy to explain corporate venture to folks.

13:54So corporate venture has taken a number of different shapes in the consumer industry over the years. Some have been much more strategic in nature. Some have been purely financial in nature. We're somewhat of a hybrid. I'd say we're probably about a 7 out of 10. If you were to put a scale between 1 being 100 % strategic, 10 being 100 % financial, we're probably sitting around a 6 or a 7. So what does that mean? When we're looking at investments, we understand that corporate venture funds could be viewed as a threat. They could be viewed as a burden, potentially. We like to view our fund as an asset.

14:28And why do I say that? I like to think what we're doing is 100 % of what a financial investor would do from a diligence perspective. From a financial support, we're going to invest and then we'll potentially be a follow-on investor as well. We'll be there to advise you on big strategic decisions. But we'll also have true operating experience around the table, whether that's the three of us at the Venture Fund who are all former operators. The other two partners at the fund, one has been at Rich's for over 20 years. The other one was actually For Real's first employee and stayed on board when For Real was acquired by Rich's.

15:04So has the experience from that For Real business as a startup and then as a startup within a big food company. So we bring all that operational experience. And then we're also able to bring some of Rich's assets to the table to help strategically. So whether that's sales resources or if it's customer relationships or manufacturing support, or maybe it's just looking at how your supply chain operates today and advising you on how it may be able to operate more efficiently based off some of the experts we have internally. So those are all some of the things that we could bring to the table as a strategic investor.

15:39Now that the big concern with strategics is, like you said, they're either going to be a burden to have on your cap table because they're going to make me report differently or they're going to make me operate within the confines of this big company. I think what's important to note is normally when we're investing, we're having single digit ownership percentage. We are not going to be reporting you as a business segment within the broader company. We're investing in you from a separate entity, the rich products ventures entity that we're investing off the balance sheet. We're actually set up independently so we don't share information kind of across the wall that we draw when we sign NDAs, which that's a whole other story.

16:20I don't encourage NDAs in early stage businesses. I understand some of the desire to get one in place, but we are very clear when we talk to businesses that none of this information crosses over to the corporate side. We do not sign any sort of right of first refusals, which is another big concern with corporate venture funds is that they're going to make me sell to them down the road and it's going to limit my exit options. We don't burden any of the startups that we invest in with that. That said, if we invest in the business and everything's going well, theoretically down the road, we could make the handoff over to our corporate development team and say, hey, this is a business that we've invested in.

17:00They are coming to market now. We're going to hand over the relationship to you guys. We own X percent of the business, but we are not going to stand in the way of any negotiation that you have from a potential acquirer perspective. So that's generally how we will operate. Our evergreen fund, so we don't have to fundraise in the future. So that's another valuable component of CDC investors is they don't have this five to seven year timeline. Instead, ideally, we do want to exit still on a traditional VC timeline, but we are longer term investors. We want to be good partners for the long term. And we understand how successful food businesses will be made, which is with the long term in mind.

17:44So Rich's hasn't made it 80 years with kind of that short term mindset that a lot of traditional financial VCs may push onto their investments. Yeah, huge bonus for your job as well. Not having to go through the whole fun cycle fundraising process and be on that hamster wheel all the time. And I think three things you said really stood out to me. The first of all is there's kind of like that big barrier information wall, similar to like a sales and trading and investment banking floor where you're not really technically part of the same entity. But there's rigorous checks in place to make sure there's no insider trading or insider information sharing going on.

18:19Second of all, yeah, huge value add being so niche and specialty focus, but also have so much information at your disposal and pattern recognition across a portfolio of hugely successful brands and an understanding of what needs to get there. And third of all, I think to your point of you're an investment firm, so the incentives are aligned for you as an investment firm to show returns. And the best return might be a different strategic exit or like you're saying to even, you know, for your best performers to even have a pathway to like an auto filled in exit could be amazing and could be a huge benefit to founders.

18:56Or if not, your goal is going to be to get the highest return for your company. That's what your job is going to be based off of. And so you're really aligned with the founder in a lot of ways of what they're going to be looking for, too, in terms of building a successful company and then eventually, ideally, exiting a successful company. So I think those are all worth double clicking on and just re-highlighting some of the things you said that really help, I think, explain a lot of the benefits of corporate venture and kind of unique quirks that can add some special additional sprinkles of help on there and qualm some of the fears or the unknowns maybe that founders might initially kind of be thinking through as they are very strategic and forward thinking people typically.

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20:21So what makes a company a compelling investment target for you? You know, we're talking a little bit of stats earlier as far as like some sort of traction and distribution and revenue and scale and things like that, but would love to just more deeply understand what really seals the deal for you in a diligence process. And as an investor, what are the things you're really looking for, for a company to index on, for you to feel high conviction in getting a deal done? Yeah. The most recent investment that we made was into a business called Evergreen, which is a frozen, better for you waffle business.

20:57They have been around for a few years, but really excited about what they're doing to the frozen breakfast space and going after the big egos of the room. So what do we look for and what drove us to the conviction to make an investment in that business? One was really the founder. So Emily Grodin, who's the CEO and founder of the business, created the business because of personal pain point that she had in serving her kids healthy breakfast on the go any morning, any regular day of the week. And that was a pain point that she wanted to solve. So she was an attorney and went into the food world without prior food experience, but really identified this as a challenge that her and other moms were facing.

21:39So developed the product in her own kitchen, started manufacturing it, was scrappy with figuring out how to manufacture it because it was a unique product that there wasn't a ton of Coman Capacity for at the time. So she created this brand, started to sell a natural channel. It's now kind of crossed that chasm into the conventional channel that we like to see. And we really were fans of the brand because of what we saw as the ability to expand this brand into a potential platform play down the road. So I can't provide any of the kind of secrets as far as what's in the pipeline there, but expect some exciting announcements to come in the coming months.

22:15So that's a product that's going after a giant category, which is something that we look for. Frozen waffle category is over a billion dollar category. It's dominated by Ego today. There's been some other insurgents who have been acquired by private equity brands or other strategics over the years, but there was never anything that was truly going directly after Ego. Everything else was either gluten-free or protein-based. And Evergreen is 100 % just better for you, good tasting frozen waffles. So that was something that we liked about that business. We liked the founder market fit, given that she was a mom trying to solve her own problems.

22:54And the product tasted great, which is another key criteria for us. And it was starting to show they already had great velocities in the natural channel. And it was starting to show the signs of really gaining traction in the conventional channel with some strong retailers and further new retailer banners that are coming this year. So that's what drove that investment. And we're definitely excited about the path that they're on. Some of the other recent investments in the CPG category that we've done, one is in a larger business called Ripple, which makes pea milk, plant-based milk, and other pea protein-based beverage products.

23:32They're a more scaled business, so that kind of shows the diversity of scale that we're able to invest in. And then the other one that I'm excited about in our CPG portfolio today is delicious, which is a frozen novelty, bite-sized, permissible indulgence. I can throw a bunch of buzzwords out there, but there are these really delicious cookie dough and gelato bites that are about the size of a golf ball. And you pop one and it's a hundred calories and it satisfies for dessert. And honestly, that one came about because when I met them at Expo West a year ago, it was the best tasting product as I walked the floor.

24:08And we, as a result, knew that there was something there and that they had a platform that could kind of reinvent the frozen novelty space. It's a category that's dominated by some of the big ice cream players. There's been some success with, you know, Truefru and Fruit Riot, but nothing that was really very indulgent, clean label, and had the potential to really create a new form factor that people could love in the future as an everyday treat for themselves. So they're one that we're also excited about and also similar story to Evergreen. Saw the velocity in natural, starting to see great velocities in conventional, and we wanted to be part of their success.

24:48Super helpful. And thank you so much for the different kind of lenses on case studies of different things you've got going on to compare and contrast against, I think, some of the patterns I'm pulling out from you, if I had to boil it up, is one, you know, you have your market thesis, which is essentially kind of the high level exit potential or scale potential narrative that you're saying, which is, you know, an aisle that's ready to be disrupted, a white space that's needing to be filled. It's the kind of the right time, right place, why this makes sense in the market today and why this could be so big.