Investor Spotlight: Family Fund with Josh Wand and Sean Kelly

0:02Friends, did you know that a party has been going on this whole time with 35 ,000 people and you're invited? It's our Startup CPG Slack. You hear about it all the time on here. And if you haven't yet joined in, this is your moment. Take out your phone, type in startupcpg.com, and then click to join our community. You'll be at the party. You'll hear about all our events. You'll get in front of buyers, investors, brands, whatever's most important to you. We have such big plans ahead, but you got to be in the community to hear about all of it. See you on the Slack.

0:53I really believe researching the investors that you're speaking to, whether it's a high network individual, whether it's a family office, whether it's a venture fund, whether it's private equity group, being very direct upfront to understand what their allocation strategy is. What stage do they invest? Do they invest in consumer, in this specific vertical of consumer with this size company? And are they interested in learning more based on that? That in itself will save you 90 % of your time. Hey, everyone. I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm joined by Josh Wand and Sean Kelly, general partners of The Family Fund.

1:34The Family Fund is exactly what it sounds like, a deeply community-driven investment firm built by former founders and operators who believe the best companies are built through trust, transparency, and long-term partnership. Josh and Sean bring decades of firsthand entrepreneurial experience and an incredibly deep operator and founder network, which gives them a uniquely practical, grounded perspective on investing at the earliest stages. In this episode, we dig into what founders actually need to understand when navigating fundraising, why asking the right questions matters just as much as having the right answers, how to truly understand deal terms and the power dynamics, and why knowing an investor's focus, incentives, and target stage is critical before bringing them onto your cap table.

2:15We also unpack the traits that consistently show up in great founders, the difference between early stage problems versus later stage challenges founders face, and how to think about alignment as your company grows. This conversation is thoughtful, honest, and packed with hard-won insights from two investors who have been in the founder seat themselves. If you care about choosing the right partner, not just the fastest capital, this one is a must lesson. Enjoy!

2:41Hey, everybody. Welcome back to the Startup CPG podcast. This is Hannah, and today I'm here with Josh Wand and Sean Kelly, investors from The Family Fund. Josh and Sean, welcome to the show. Thank you for having us. Thanks for having us, Hannah. Appreciate it. Yeah, we're so excited. It's a double feature today. We've got two amazing investors to dig in with. I'd love to start us off with getting a brief background from each of you and the path that led each of you to the Family Fund? Okay, great. Well, first of all, Josh and I have been good friends, or at least I would say that, for over 10 years.

3:14We originally met through good friends that knew that we both operated and were building companies in the consumer and consumer adjacent industries. My background, we launched Family Fund, our first fund, in 2022, so just a few years ago. But the previous 20 years, I was an entrepreneur, so I studied biomedical engineering at Johns Hopkins in Columbia University. I've always been ultra passionate about elevating health outcomes for myself and for others. And I thought that the consumer ecosystem was the best way for me to help people become healthier. So I've started my own e-commerce company, food service business, CPG companies quite a bit over the last couple of decades and teamed up with Josh, like I said, in 21-22 to create a different type of consumer venture investor, one we think that deserves to exist in the world.

4:08And that's a little bit about me. Great background, and I'm sure a very colorful lens that you can relate to other founders with. Josh, what about you? Sean's very humble, but he's done a lot of cool things. I'm lucky to get to work with him as my partner. And first we were friends, came really close and decided to start this together. I was brought up in consumer when I was in my early 20s. I had the pleasure of starting a rum company with a couple guys and ran that for six or seven years and then realized I love people and I love building companies and people are the most important piece of that.

4:40And back in the day, there was really no recruiting platform specifically focused in the beverage arena. So I started a company to do that and built leadership teams and then we got into food and then we got into beauty and then we got into pet and kind of everything consumer health and wellness. It's called Forest Brands and built that company for about 15 years and then finally got to a point as a founder, I was like, I better get out of the way and bring in real professional leadership to run this and elevate the team. So now I sit as chair and through that venture, I had a lot of opportunity to have a front row seat and visibility into what brands were doing right, more importantly, what they were doing wrong and who were the right people that were leading the charge there.

5:14We started investing, just writing small checks and realized that a lot of these high growth companies wanted founders and operators on their cap table. It was deeply important to them and we had access to that. And so we helped them kind of coordinate and bring people into their businesses. And during COVID, Sean and I decided, wait a minute, there's something here. A lot of businesses want operators, founders, CEOs on their cap table. So we kind of took those learnings and said, what if we dedicate the next chapter of our lives to creating a fund where all of our LPs and our partners in the fund are exactly that, but it built some of the most successful businesses as a consumer and built and sold and dealt with integrations and have the bumps and bruises and are willing to mentor and coach this next chapter.

5:54So we did that and we do it together and we have a couple other great partners and really just, you know, we're lucky to do what we do and you don't go to school to study this. You kind of end up there through the evolution of life and it's a really good spot to be in. I love that. And yeah, I mean, kindred spirit, startup CPG knows how important community and people are. So I'm all about that. And I feel like especially in CPG, the people are so friendly and so much of the learnings and wisdom just comes from having people that have done it or faced a similar challenge before in operations and things like that.

6:25So I can definitely see the strong point of differentiation there. Also a great segue, I'd love to kind of get the formal firm overview from you guys. Things like criteria, stage, check size, your mandate, AUM, and your other points of differentiation. Obviously, your deep network seems to be a big one, but would love to hear the pitch? Sure. Yeah. So it's best to think of us as a Series A investor that's typically writing checks between one to five million dollars. We will lead and co-lead about half of our deals out of Fund 2, which we just launched in Q2 of this year, 2025. But we'll also participate and don't mind following a lead into the right assets and behind the right teams.

7:10We will also invest in pre-seed and seeds. About 20 % of our investments will be earlier and about 40 % of our capital goes towards reserves and opportunistic growth. So we'll also invest early in the growth cycle. We love doing that and our LPs do as well because it generates faster liquidity, earlier DPI for them. In fact, for fund one, which we launched as I indicated earlier in 22, we already have four exits, which we're excited about backing founders from the very beginning all the way to when their journey transitions, and hopefully we'll get the chance to do that with many other wonderful founders and teams.

7:45Besides that, our AUM, our first fund, we deployed about$36 million through fund one. Fund two, we are wrapping up our fundraise process in fund two, but we'll end up right around 90 to 100 million. We could dive into that. Josh, we don't need me bloviating too long. Do you want to talk a little bit about how we differentiate beyond what we already discussed? I think great investors can do one thing really well, and it's provide access. Access to deals and access for your leadership teams that need to grow the business. And we find that that's very often go to market strategy, rebuilding your supply chain, fundraising, thinking about executive leadership, thinking about retail partnerships, strategic partnerships.

8:28So the way that we built our community mirrors that. Having the best and brightest in each vertical of consumer, multiple layers. Retail, wholesale distribution, investment banking, founders that have built the businesses. And so the reason I say that is because if our founders or CEOs or COOs or CMOs or CFOs need access, if we do not have the answer, we will find it for them. And we don't look at ourselves just as investors. We look at ourselves as partners. We are in this with you. We're going to grow with you. And we're going to build the business with you through thick and thin. And so talk is cheap, but if you talk to the portfolio companies we work with, we're totally there to support them.

9:03And I think the key differentiator is the human component of it. We are working with humans, helping humans build businesses that are operated by humans. Humans and humans and humans. Anything that elevates the human experience. And Hannah, I'll leave it with a couple just little things that we like to say. We're not just capital. We're a consumer ecosystem. And we don't just invest in consumer. We convene consumer. So a couple of things, but I appreciate you bringing that home for us, Josh. Yeah, I love that. Yeah, no robots. And we teach humans how to leverage AI. Yeah. That is a little bit more robotic.

9:35We're very into that, but humans have to use it. Yeah, humanoid component. That's really great. And yeah, I totally think that the more people around the table and the more smart people around the table, the better the outcomes typically are. And the truer the partnership really is so true. So many founders, especially as they're building quickly and rapidly, need people they can trust and people that can tap in quick. So I can imagine you guys bring quite a lot of power to the table. We're talking so far about Fund 1, Fund 2. I just kind of wanted to take a little segue. I think we've covered in other episodes a little bit of how funds get and deploy capital.

10:14But given that you're in the middle of a fundraise or the tail end of a fundraise, I'd love to capitalize on the moment and kind of run through a little bit of learnings here. So how do you guys get the money that you are deploying? And when you say something like fund one, fund two, what is that really referring to? And how does that all work for the investor side? Yeah, absolutely. For fund one and fund two, you typically have a set amount of capital to use to deploy into investments per fund. And once you deploy all of that capital, you're either done investing and you're just managing your companies and your assets and working with the teams that you've supported, or you need to launch and fundraise for a second fund so you can continue investing along the way.

11:01And so that's what we did. We launched, you know, fund one, invested out of it for three to four years and then launched fund two, which is a little bit bigger, but with a similar strategy, but also taking quite a few of the learnings that we had from fund one into fund two to hopefully consistently get better and better. Josh and I, when we came in and decided to launch the family fund and made this jump, one of the things that was, I guess, a little bit, I don't want to say anxiety producing, but one thing that we had to be really sure about is the question of, is this something that we want to do for the next 20, 30, 40 years of our lives?

11:37And are we ready to actually make the transition from founder operator into investor? And that required some, we knew we were excited about it and we knew we were interested, but it required some inner searching to ensure that the answer was a hell yes. And the answer came back, hell yes, even though for fund one, Josh and I were still operating and still CEOs of companies. But for fund two, we are 100 % committed. So this is full-time. This is everything that we're doing. If I'm a founder, is there a difference for me, whether I'm in your fund one or your fund two? Yes, there is. Just your involvement.

12:13You know, fund one is fully deployed. so you're always a member of the community but as a participant in family fund one you have exposure to a little over 25 portfolio companies that we invested in and the financial outcomes that result in those investments fund two the majority of our lps came back and we've got some additional founders that came in because they really deeply believe in what we're doing and maybe we didn't have a relationship with them early on or they wanted to see the traction the proof points but we've also brought in some pretty significant family offices, global family offices that come from consumer backgrounds that have the ability to add significant value to the companies that we invest in, whether through distribution or manufacturing synergies or to retail.

13:01So I would say that we were grateful for everyone that comes along the journey, but our ultimate job and our primary responsibility is to provide top decile returns as investors. And people don't come back unless you're great investors and you provide them with great moink and great IRR. And we've proven that we can do that, but we also don't pass the hat with Family Fund and founder community. I mean, it's an invite only situation where we have to curate it very carefully. Who are the most impressive founders and CEOs that have been through these journeys, but also great human beings that we really want to be around and that we want to invite to our family reunions, which is our AGM.

13:42And we might get to know their family members. And there's some that are great people that we haven't invited that might not be connected to, but those that are part of it, there is a lot of power in that community, which is why we call it the family fund and founder community, which is a mouthful, but that's really what it is. Yeah. And you asked Tana, if there's a difference, if you're a founder in Fund 1 or Fund 2, I think in terms of your integration into the community, there's not, right? Family Fund as a brand, regardless of where in Fund 1, Fund 2, Fund 3, our portcodes have the same access and similar support, but obviously you're continuing to evolve as a fund and you would certainly hope that you get better and better.

14:21So for one of the, as an example, for Fund 2, we're definitely taking a more active approach with our brands. And part of that is that fund one, we were only participating, we were only co-investing, we weren't leading deals. For fund two, we're leading quite a bit. And so we're taking more active participant with higher influence, higher check sizes, more company ownership. And so we're absolutely even more involved in the companies that we support in fund two than just compared to fund one. And yeah, fund dynamics. I mean, the average check size, how long you've been investing out of the fund, what your funds length is, what the fund's expectations are around liquidity and exits.

14:58All of those things matter significantly to founders. And it's actually something that many founders never ask questions about. They're just looking to raise money and they don't ask all of these questions that actually end up being highly influential for them. Yeah, great call outs. And going back, I also love that you call AGM your family reunion. Very cute. And for those listening, annual general meeting where your LPs all gather and you kind of present what's going on in the investment fund. I agree to your point, Sean, about founders not always knowing the questions to ask about these things.

15:30And I think you can hear kind of wildly different experiences sometimes that a founder might have with an investment firm or just founders on their investing journey in general. And I think a lot of that also boils down to the dynamics of what's going on. As you're mentioning, you know, leading an investment versus co-leading, that's a big difference. Majority stake, minority stake, that's a big difference. There's a lot of nuance other than just money getting into the bank account that impacts how that experience of both getting the money and post getting the money working with an investment firm might be.

16:05And there's a lot of other things at play going on there on both sides of the table. So I think not to put words in your guys's mouth, but if you had any advice for founders on some questions to ask or ways to diligence or better understand the investors that they're speaking with or evaluating, what would you share with them or guidance would you give them? I feel like so many founders are so busy running their business that fundraising is this opaque, challenging process and so time consuming. And I really believe researching the investors that you're speaking to, whether it's a high networked individual, whether it's a family office, whether it's a venture fund, whether it's a private equity group, being very direct upfront to understand what their allocation strategy is.

16:51What stage do they invest? Do they invest in consumer, in this specific vertical of consumer with this size company? Are they interested in learning more based on that? That in itself will save you 90 % of your time. Because so many founders go through and they pitch and they pitch and they pitch and they're just talking to the wrong people. So I think like really being targeted, just like you are with your customers. If you're going to Target, you know who the buyer is and you know what set they buy for and you know when they rotate. I think that's the bar minimum. Unfortunately, many founders don't even, it's at that point.

17:23I mean, it's actually incredible how many founders come in and ask very few questions. They ask you to invest, but they ask very little. And when a founder comes in and is actually thoughtful and is asking questions that show that they've done their homework, they've done their research. it makes you want to invest more because you actually, so as the investor, you're sitting there saying, oh, wow, they probably apply this thoughtfulness and this curiosity and diligence. And also, oh, by the way, they're not just desperate and begging. They actually are asking these questions because they want to go and find the best investor, not just any money, right, that exists out there.

17:55And so for founders, if you can do this, I recommend it highly. A lot of different questions. Some of my favorites are, can you walk me through a time one of your investment struggled and how you showed up. Boom. What happens there? What's your default reaction when you disagree with a founder? What typical changes about your involvement when a company misses plan? And then some of the stuff can be a little bit more direct and specific. What's your philosophy on board seats at early stages? How do you prepare for board meetings? What's the hardest feedback you've given a founder? How many boards are you currently on?

18:24What about that one? Again, think about the investor because if the board, if this investor's on like 12 boards, What are they actually going to do for you? And then to wrap some of these up, asking somebody, these are my milestones and this is what I'm looking to achieve. How are you and your firm specifically going to help me achieve these milestones? Let's discuss, what are you really going to do? Not some BS about value add and I'm going to connect you here, but this is what I need to do and how are you going to help me get there? I think that's a great one is what can I expect from you as an investor?

18:55Where can I lean in where you strategically want to be involved in my business? Because a lot of investors are minority investors. They just don't care. The way you check and they want to sit in a board meeting. And a lot of them really have deep experience. And either is that person who's a sponsor or an operating partner or someone else in the organization that's kind of been on a similar journey that can really help you out. And I find a lot of the value is between the board meetings. The board meetings are table stick. And very often a dog and pony show if you don't know how to actually orchestrate.

19:24But if you're able to understand where groups can support you deeply and that aligns with what you're looking for, great. But it's matchmaking. If you're a real business, you're not just looking for investors. You're looking for the right partner. Disentaglement strategy there is really hard. Yeah, so make sure that these people are aligned in the type of journey they want to be on with you. Such great advice. And I love the practical, tangible questions that you can ask. I think sometimes it's just a little bit of a knowledge gap for founders. Like if you don't know what the relationship is typically like post-investment, it's kind of hard to visualize what questions to evaluate, to know where things might go wrong.

20:05I think your analogy comparing it to a retail buyer at Target was a very good one and definitely the way to think about diligencing the process. And I would just add, if you're not familiar with it and it's a little too intimidating or hard to get in touch with investors to start asking some of these questions, find a fellow founder who has raised before and ask them what the dynamic is like. What is the relationship like? There's so many founders that I'm sure would be more than happy to vent and talk about some of these things. And I think as many questions as possible, the same way that you would diligence a co-man, the same way you would get recs for packaging or anything else, get an understanding of the landscape of what the relationship is like.

20:44and then start to get formulating your questions. We offer that up a good amount of time. If it's a company that we just deeply believe has real opportunity potential, maybe it's a little earlier, the timing's not right, but we just happen to like them, maybe we might never invest in them. But say like, hey, there's a founder or two in our community that we think you'd benefit from speaking to. And we'd be happy to make a connection because they built Perfect Bar or Hugh Chocolate or these people want to have the conversations. And those tend to be very powerful in really impactful conversations.

21:16So to your point, it's like that's where you hit a wall where you don't have access to other people that have fundraised. If you do, like learn what not to do, like avoid the landmines. It's more important what not to do than what to do because the challenge with fundraising is you're selling a piece of your company and very often you're not putting any money in your pocket, but you're selling more of your company and you're losing more control of your company. And as you do this, it's like, oh, I'm great. You just get a really high valuation. Let's celebrate. It's like, actually, think very carefully about whether or not you want to be in the driver's seat and do it really well and make sure that this is your dream.

21:54You always have the ability to make those sound decisions on behalf of your dream. And remember, as evidenced by this podcast, investors love to talk. Good investors are good question askers, and it really is about you, the founder, but let them talk. So the end of your call, ask them on a scale of one to 10, how likely do you think you are to invest in my company? What did you like about my pitch? What did you not like about my business? Like get feedback along the way. Don't just keep on doing the same thing. Like let people help you. Hannah, one of the things that you talked about early on is one of the best things about consumer brands and the overall consumer ecosystem is the collaborative nature.

22:33People want to help. People want to empower even assholes. I don't think actually want to be assholes. You know, people like to be helpful. And so that's really what we built the foundation of the family fund on is that we will do everything we can to be the best collaborators and to put that community around each of the companies and founders and teams that we support. I can tell you guys have so much passion for this and really believe in your mission and vision for your fund and the people around it, which I think is great to have that genuine, authentic care and drive behind what you're doing other than just making money.

23:07Hannah, we have just so you know, like, and this is real and this is authentic and it's genuine, like we have unbelievable empathy for the founder journey. Josh and I have been founders for decades. We have been through hell. We have been through in the end of those moments where we did not know how we are going to survive an extra day. We've been elated at the pinnacle of success when it felt like nothing could go wrong. We've had all of it. And so I think that's just part of it is like, I think being a founder is glorified now. used to be you could only be glorified if you were a celebrity. Now it's like entrepreneurs are some of the top celebrities in the world.

23:39And everybody talks about how amazing it is. But the actual journey is agonizing and it's challenging. And so I think that empathy is real for us. And you know, we're happy that we get to focus all day long on other people's problems today rather than just our own problems. I totally feel that. It is totally different. I've been on both sides and both sides are hard and both sides care a lot. But man, are you up at night wanting to sweat and cry sometimes on the founder side. That is, it's a much more emotional road for sure. Learning how to temper that and stay as close to the middle is one of the skills you got to develop.

24:18Big time, yeah. I always think if a bunch of founders got together and everyone just kind of wrote one page of the war stories, the battle stories that they went through, it would be an epic book. If you come to our AGM meeting and you hear the stories, there is a lot of laughter and there is a whole lot of tears. And these are people's real journeys of being in the fetal position all the way to the top of the mountain and then achieving significant wealth in many cases, realizing, wait a minute, that actually doesn't define me as a human being. I have a whole lot of money and now I have to separate my identity from it.