Investor Spotlight: Elly Truesdell, New Fare Partners

0:09The one that I learned the most over time was team and really trying to build some level of connection with not just the founder, because that very often as a retailer buyer, as a merchant, you are strictly lazing with the founder or a broker. But if you can get to know more of the team and see what those capabilities are, that unlocked a lot for us in terms of partnership at Whole Foods. And certainly as an investor, it's just critical to seeing how the founder is going to continue to build the business.

0:38Hannah Dittman:Hey, everyone. I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm excited to be joined by Ellie Truesdale, founder and managing partner at New Fair Partners. Ellie brings a rare, full-stack perspective to investing with experience across retail buying, founding, and operating businesses before launching Newfair, an investment fund focused on the modern eater and the evolving American palate. From her time leading local brands and product innovation at Whole Foods to building brands herself, she's helped shape some of the most important trends in Food & Bev.

1:11Hannah Dittman:In this episode, we dig into the difference between pitching to buyers versus investors, how to think about sales growth versus profitability at the early stage, and what the right team structure looks like when you're gearing up to fundraise. Ellie also shares what she looks for in standout founders and teams, plus hard-earned advice from her long career across the consumer landscape. If you're building in Food & Bev or thinking about how to scale a disruptive consumer brand, this one is a must-listen. Enjoy!

1:43Hannah Dittman:Hey everybody, welcome back to the Startup CPG podcast. This is Hannah, and today I'm thrilled to be here with Ellie Truesdell of Newfair Partners. Ellie, welcome to the show. Thanks for having me, Hannah. I'm very happy to be here. We're very happy you are here today as well. I'd love to kick us off with an introduction of your background and path to Newfair. Sure. It's been an interesting and almost incidental path to venture, I would say. I never intended really to be an investor, but have spent the last 18 years-ish in the natural foods world. I sort of built my career at Whole Foods from 2008 to 2017 in a really unique position where I oversaw the local brands and innovation program first in the Northeast region and then globally.

2:25And that really just meant that my whole job was to identify emerging categories of growth and promising young brands that we could grow first in a single store in some cases in a single region and then grow nationally. What was so unique about that job is that I wasn't just a beer buyer or a cheese buyer or a specific merchant, I touched every category of the store. So some days was on an oyster boat, some days I was in a chocolate manufacturing facility, and some days I was on a dairy farm. And that just sort of built for me over 10 years of doing that, an acumen across different categories of the store and was really able to become, because Whole Foods was so the platform and the place where you wanted to launch a young brand at the time, built a bit of a name for myself in the industry and the ecosystem of, oh, you need to know this woman, Ellie, among others.

3:15There were plenty of other similar roles to mine. I was the first person who then moved into a global role overseeing the program. And in doing that for so many years, nicely had a lot of people say, you know, you should really be going into venture. You should join a fund, raise a fund. And I didn't necessarily see that at first as my path, but I sort of dipped a toe, took an advisory role with a fund called Almanac straight out of Whole Foods when I left at the end of 2017, which is right after the Amazon acquisition. And then I had a stint both operating. I ran a co-manufacturing facility for 18 months, which was really valuable experience and has been something that I draw on a lot now that I'm investing.

3:52And I had the chance to co-found a brand in the pet space called Made by Nacho, which is a premium cat food business. I was lucky to be asked by Bobby Flay, the chef, to be his co-founder in that business. And we launched in 2019. We just announced it last week and we closed about a month ago, which is really, really exciting. But both of those experiences, operating, building a business, was in the background to moving over to the venture side and had the chance to join Almanac beyond those advisory years as a partner for three years and pretty quickly understood why people had been really encouraging me to go into venture just based on deal flow, background, how quickly I could lean into our portfolio companies and that I really, really loved working with founders and influencing or sort of hopefully shaping some of the outcomes and from a different position than I had at Whole Foods.

4:44And so that led to and more sort of the kernels of Newfair. We launched Newfair Fund One in 2022. I asked Hallie Bonner to be my co-founder who had been working with me for many years prior. We've now worked together for about seven years. And with the two of us, I think just had a real perspective on where we felt food was heading and wanted to invest exclusively in Food InBev across verticals, so across the value chain. But stay early stage. The big part of our value proposition is adding a ton of value as being operators ourselves. And yeah, we're in our fourth year of investing. We have about 15 companies in our portfolio.

5:22Hannah Dittman:Oh my gosh, Ellie. Perfect background and so interesting. Congratulations on the acquisition. that's so great. I feel like it is really interesting that I think there are a lot of investors with finance backgrounds, obviously. There's a good chunk of investors that have operating backgrounds as well, but it is very rare to find investors with retail buying backgrounds actually is so funny to me because it is the perfect complimentary skill set. So much of the way you're thinking in those jobs is so similar. And a lot of investment firms look to retail buyers as part of their diligence process as well, even.

5:59Hannah Dittman:So it makes perfect sense that you've ended up where you are. You've seen so much of the consumer world and have played such a big part in so much of it. So I think it's going to be a really exciting chat today. I know we've touched on Newfair a little bit, but I'd love to dig in a little deeper on kind of your criteria stage, your AUM check size, and some of the other details of what you're focused on there. Yeah, new fare. We tend to stay seed Series A. We have made a couple of exceptions there in our earliest days of raising a fund, which actually those have proven to be probably our least successful investments.

6:35Like sticking to earliest stages where we will continue to live. But Fund One is a$20 million fund and vehicle. We have done a couple SPDs, so AUM is really around$25 million to date. And we typically write checks$500K to$1 million for a check in seed in Series A rounds. And so much of what we like to do is get to know founders over a longer period of time, maybe when they're raising their pre-seed, get to know them, hopefully add value over those months or years of knowing them, and then investing in a smaller way in a seed and following on in a bigger way in a Series A. And as I mentioned, we've stuck to Series A, but we'll follow on through remaining rounds.

7:13And the one thing for us in terms of being a smaller fund is getting in early is helpful and pretty critical to sort of the return profile. And I always skip over this because I think it goes without saying, but of course it doesn't. We do invest exclusively in food and beverage based on specialization, based on passion, philosophy. But we will invest in technologies. We'll invest in 4Wall, of course, in consumer brands. And so across verticals of the industry.

7:38Hannah Dittman:Really, really helpful context and makes a ton of sense when you're saying value chain that it's kind of touching all the aspects of the process of a consumer brand existing in the world and the different things touching that as well that are related. I'd love to kind of pull back the curtain on your diligence process a little bit more and ask a question that I feel like is unique to be able to ask you, which is, what part of your diligence process do you think overlaps with a similar thinking of the retail buyer diligence process? Where do you see the kind of Venn diagram of how you're thinking about a brand and how they would be thinking about brands be similar or where might it be a little different?

8:15Yeah, something you mentioned earlier in that is often investors do go to retail buyers to use in the diligence process. I was definitely a part of that process regularly. And so I had seen that come across my desk quite a bit for many years. I built this over time as a merchant or as a buyer is really getting into and understanding the motivation of the founder. That's not really something I was doing in earliest days. I was sort of betting on products. I was betting on open category of note where we felt like there was just a white space. But over time and probably being burned by a couple of different teams, like amazing, incredible products, but just didn't have the team or the rigor that was needed behind it.

8:57since launching Newfair have been very founder-focused on what is this team prepared to build? What are they going after? And that was a part of our process as merchants as well. It's like, what are the ambitions for this brand? Are you looking to stay in a single region? Are you looking to grow this nationally? So that's one component. I mean, product was huge. So much of my job at Whole Foods was vetting quality standards, visiting production facilities, verifying claims, getting into a lot of the most romantic sides of food, but food safety, regulatory. So I think that background is probably even more scrupulous if you're representing a retailer than an investor.

9:36And that's been very valuable because we dig in a ton to supply chain and claims. And then we think a lot about pricing. We think a lot about competitive landscape, how you're showing up and among your multiple channels. That was such a consideration when we were bringing something in at Whole Foods. Is this exclusive to Whole Foods Market? Is it going to be the first of many? How are you thinking about your channel strategy, asking those questions and getting ahead of it? And then, yeah, I would say the one that I learned the most over time was team and really trying to build some level of connection with not just the founder, because that very often as a retailer buyer, as a merchant, you are strictly lazing with the founder or a broker.

10:17But if you can get to know more of the team and see what those capabilities are that unlocked a lot for us in terms of partnership at Whole Foods. And certainly as an investor, it's just critical to seeing how the founder is going to continue to build the

10:29Hannah Dittman:business. Super helpful and makes a ton of sense. And I think really nice to show the parallels and the differences. If I'm a founder who's embarking maybe on a fundraise for the first time, I probably or might have had experience with retail buyers. I might have retail distribution already. And now I'm kind of going on this journey of talking to investors. What advice would you have for me for how I need to adjust my pitch or storytelling to be better suited to a fundraise environment if I've had a successful version of that already for retail buyers? Yeah, I think so much of the focus when you're in front of a retailer is knowing their particular venue really well and making a case for or appealing to why you are the exact right brand for their customer, how you're going to show up for them individually and uniquely.

11:19I mean, so much of the conversation turns to how long are you going to be exclusive to us or how should we be thinking about your pricing in your program at an X mass retailer versus where we are today. And so I think when you're turning to an investor, reminding yourself that they want to know it all, like they want to hear how many retailers, how many doors you're going after, how quickly, why. And that really is important. And it's also important. I mean, so much of my time at Whole Foods and among all of my colleagues' time was spent in figuring out how do we make this totally unique to us and only us at Whole Foods?

11:56How are we the only one to have you on shelf for a certain period of time? We're asking you to do exclusive SKUs. We're asking you to build out displays and different merchandising units that we want for us only. It can be really detrimental to your business. I mean, now sitting on the other side of the table. I'm very often coaching our brands not to just jump at everything a buyer asks of you. If you're developing a ton of new SKUs with one retailer in mind only, you can't meet that from production or minimum order quantities. There's a lot that can go wrong there. And so I think really trying to show to your investor in a similar pitch, this is where and how we've shown tremendous success at X retailer or in this channel.

12:37This is how we're going to replicate that, tweak it, do it a little bit differently for this retailer. So I think having that expertise around what's working, using it as your example of why you should get behind this brand, you know, proven track record, but also we're going to use the same formula and do it a little bit differently for this retailer. And we have conviction for these reasons.

12:59Hannah Dittman:It's really helpful and I think a great tangible way to think through it too. It sounds like from your perspective, the retail buyer conversations, obviously you're pitching your product and your brand and why it's so amazing and all of those things. But the conversation is really anchored on how you're going to be a great partner for that retailer and how the synergies exist between your brand and the retailer to obviously drive volume to their store and make a great partnership. And talking to investors, obviously, there's the whole narrative of your company and your business, but it's a much higher level bird's eye view of how your company is going to be successful across so many different retailers or channels and kind of the inner workings of how that's all happened and going to continue to happen in the future.

13:44The one other thing I didn't mention that I should have is in your buyer relationship with your retailers, you almost always have a bit of a deferential relationship. And that's as it should be. Like there's a real power dynamic there. You want to make sure that they understand you're catering to them. You're here to be their partner. Whereas with your investor base, it really should not be that way. You as a founder should recognize and realize like you're not going out hat in hand and just accepting what your investors are telling you or even what a not yet investor is telling you, but should sort of be testing that relationship and seeking for their advice.

14:23Are they going to be able to add value? Where and how are they advising you on some key decisions you have coming, but also establishing a true partnership? And I am asking and sort of allowing you to invest in what I've been building for however many years. We are hopefully aligned and looking for the same outcome. But I do think keeping that in mind with those two pitches of they are different relationships and you want to really keep them that way.

14:49Hannah Dittman:I love that you're able to shine some light and color on this because I feel like the closest thing a lot of the founders have or closest experience a lot of founders have from a sense of pitching to external parties is with retail buyers. And that might be, quote unquote, the most practice they've had to kind of doing something like that and understanding the difference of what the conversation and tone and tenor might be in a different arena, I think will be so helpful for them. you've talked a lot about founder importance and team importance on the investment side and your focus on that what are some of the traits you're looking for in founders and teams what's kind of like the winning formula there in your mind for what really gets you sold or to have a lot of conviction as you're going through that evaluation process so much of it i think comes down to what What is the story of the business?

15:44What motivated this person to found or launch this business in the first place? You know, I feel really lucky to be invested in and have found the founders that we are, whose teams were a part of across a new portfolio. And a lot of them are people that had or ran into a real problem. Lucille, which is launching this week, launching tomorrow, is a senior nutrition drink that is looking to compete with Ensure and Boost. And that came from a place of the founder, Jess, was experiencing a situation with her grandmother who was in and out of the hospital with a condition and was being given these what she considered sort of horrible conventional drinks to keep up with her nutrition and felt like how has no one provided them a better solution for seniors, for elderly and sort of recognize this overlooked demographic.

16:28And so that I love, motivated from such a point of emotion and where she's creating a solution for her grandmother. Similarly, at Nara Organics, which is an infant formula company we're invested in. Esther, the founder, built that brand and business for seven years pre-launch because she went through the FDA approval process, which no one had done in 30 years in this country to get a new FDA formula approved in infant nutrition. And so I think being motivated by something that is outside of just the financial outcome, that you are looking to build something for generations that is truly cleaning up or taking care of and providing a solution for a population that didn't have it before.

17:08That's so exciting. And very often we find that either our companies and founders, particularly in our consumer investments that you're talking about more today, they have either developed an incredible recipe that they're passing down. I mean, an example of Bachans with Justin, he had taken his grandmother's recipe, Bachan means granny in Japanese, and had built this product that people can't live without. It's not necessarily solving a problem or curing cancer or doing anything to that level, but it has become indispensable for so many people. It's providing so much value. So I think that is a huge, huge portion is just where does the motivation and passion come from?

17:44I mean, we try to get to know our founders for months, if not years before investing. In the case of Esther, it was two years. In the case of Justin, I had known him for years prior. And I think what that allows us to do is to really see how they interact with their team, how much they are building a team, what sort of milestones they're hitting even in periods of time with Esther. She was still pre-launch over the years that we were getting to know her and was still really impressed with what she was putting forward and able to do. So that's a huge part of it. And then there's also an element, I sometimes don't even like to admit this because if we're negotiating a term sheet or if we're in early days of a round, getting to know a founder or getting to know them in a new phase, which is negotiation, I do want to see a level of pushback and I want to see a level of detail that I will feel really confident in when we are no longer the ones in that position with that.

18:37When we're on the other side of the table and we're partners and we are going towards building this company together, I want to have seen the founder not let anything go and be fairly, not difficult, but to a degree, difficult, uncompromising, totally convicted on the pieces of the business that they need to be. And then I'm going to feel really good that they'll represent our capital, our investors, the way that I would trust them to.

19:02Hannah Dittman:Yeah, that's a really interesting point. It's like walking a fine line of, of course, you want to showcase that you're going to be a good partner to work with and that you're humble enough that there's not a ton of ego and all of these things about at the same time, your business acumen and your ability to lead and be kind of the like soldier and the defense of your own business is also being evaluated. So it's definitely a fine balance. But yeah, you want to trust that a founder is going to provide, protect, defend the business and lead it to where it needs to go. So that also makes a ton of sense.

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20:39Hannah Dittman:We talked a little bit about team construction, and I think a lot of founders right now are kind of having a lot of questions circling around this given that there's so much talk about leveraging AI to help automate businesses and there's so much fractional support. The world has evolved since COVID to have a lot more fractional help or ability to include fractional aspects to your business. A lot of people have a lot of different perspectives on these things and how heavily they should be leveraged within a business. At the earlier stages, seed series A where you're focusing, and this will vary by so many different things, there is going to be no one right answer.

21:19Hannah Dittman:But in general, broad terms, what do you think the team lay of the land should look like? What should kind of headcount be? What are the key players in a business that you feel like you would expect to see at that stage of a founder looking for investment? There are really two routes to go. I've been thinking about this a lot recently, having been part of a company like Nara that's been building for seven years, built a tremendous team infrastructure. They were building a consumer facing app for babies and parents of babies, like a pregnancy tracker and a baby tracker, all the while of preparing their consumer launch as well.

21:56And so that is one example where if you have the capacity, the vision, and you think you have the access to capital to grow, build, and have sort of this intense architecture from the beginning, go for it. It has served her very well. She's had a fantastic launch. We couldn't be more thrilled. And partially that's because she built a large team for the size and stage of the business and put a lot behind it. I think you hear that a lot with second time founders. You hear that with brands that are sort of celebrity backed or have some maybe influencer talent component where this is going to go out with a bang because we have the brand awareness and opportunity to touch as many people as possible quickly.

22:40So in that case of I'm launching X talents beverage brand, and we're launching nationwide target day one, you probably should have a fairly formidable team and sort of the infrastructure in place. On the other hand, I think you can build really, really leanly as a single founder or as a founder with a couple of fractional support systems pieces, finance being number one to me. I think sometimes that get overlooked in the beginning, but having a fractional finance resource is so critical from the beginning. And beyond that, thinking through, can you bring on fractional sales teams? Can you bring on brokers?

23:19Can you bring on certainly fractional marketing from the beginning? Yes. And in that case in the more modest or lean build as you go, I think it's totally fair and appropriate to see a founder almost build into their demand. So create that demand before you go out and get it. People do it both ways. They hire their team to then create and have the following they want to, or they do it all themselves or with a lean two-person team and some fractionals to drive and create and find that opportunity that is the national target rollout. And then you use that as your sort of planting point to both raise money and to hire the team.

24:02So I think you can go about it both ways for first time founders. And if you are intending to or just would prefer to build in a more lean, conservative way, I think creating the opportunity, then raising always. And there is an element of it's always like I love the expression and the phrase, it's easier to raise on the sizzle than it is the steak. And I think that's so true. Like if you have a PO in hand for a Whole Foods rollout, raise that moment, get your money in the bank, hire who you need to, prove a ton of traction, raise again when you've got your target PO, you know, so sort of like using those milestones as your benchmarks.

24:39Hannah Dittman:Super helpful color. And I love that you've alluded to the fact that founder background plays such a big part or kind of what the company's trajectory and journey will be like in the early days plays such a big part of team construction. And not every company goes about building in the same way. So it makes a lot of sense that you want to be thinking through what the early days are going to be like, what the team needs will be like based on that. Obviously, if you're working with a major retailer and you've got a national rollout coming on, you're going to want a team to support that. But if you're kind of working towards getting to that milestone, maybe not overextending yourself too early.