Investor Spotlight: Jaxon Stuart, Spacestation Investments

0:02A few years back when I ran a beverage company we had to launch using those plastic sleeves to put our designs on the cans. but they looked bad. The sleeves get stretched out, they don't cover the full can, and overall they just look and feel low quality. Lucky for you, digital can printing technology has come so far over the last few years that now you can launch your beverage brand or new SKUs with a fully printed look and it's at similar pricing to those plastic sleeves. Our friends at CanWorks, which is the largest US-based digital can printer, are happy to work with our community at very low minimums, even one pallet.

0:32They've got locations in the East Coast, the West Coast, Texas. Get in touch with them through our contact form. It's at canworksprinting.com slash startupcpg.

0:58Something that's really helped me in my career is writing. I'm such a believer that writing will help you produce more clear thinking. And like number one piece of advice that I give consistently to any founder is to write a deal memo on your business that is like the ins and outs of why you're building this product, what the product does, and the future of what you're trying to create. Hey everybody, I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. Today, I'm joined by Jackson Stewart from Space Station Investments. Jackson rocketed from high school entrepreneur to CPG investor and now brings a blend of operator, finance, and venture experience with a healthy dose of heartfelt passion to Space Station.

1:47Space Station Investment sits at a unique intersection of venture, influencer marketing, and creator-led brands, born out of deep roots in YouTube, social media, and community building. They're not just writing checks, they're rolling up their sleeves as strategic investors to help launch brands into orbit. In this episode, we talk about how Space Station approaches investing, SPVs versus deployable funds, their people, product, progress framework, and what really matters in choosing an investment partner you actually like as a human. We get into founder takeaways from companies like Graza and Magic Spoon, why every brand needs an always-ready memo version of their business, and how founders should be thinking about AI and their strategy going forward.

2:28Jackson keeps it tactical, candid, and very founder-friendly. Enjoy!

2:36Hey, everybody. Welcome back to the Startup CPG Podcast. This is Hannah, and today I am here with Jackson Stewart, an investor from Space Station Investments. Jackson, welcome to the show. Thank you, Hannah. We're so excited to have you here today. I'd love to start out with you sharing a brief background of your personal experience and the path that led you to the space station. Yeah, yeah, for sure. So I kind of have a unique path into venture. So as a kid, like I'm a first generation college student, grew up in a small farm town. And yeah, I saw a lot of my friends going to work at Sonic or McDonald's making$7.25 an hour.

3:11And yeah, that just wasn't interesting to me. So I figured out entrepreneurship was a thing. It's like you can go make money yourself and started a car detailing business, actually, just in my small hometown. Started with your mommy minivans, cleaning up baby vomit, french fries, all of that good stuff, but then quickly evolved into doing larger projects, working on Ferraris, working on RVs and boats, and even started hiring some of my friends and paid them 2x what they were making all under the table. So yes, I started hiring a bunch of my friends, paying them more than they were making at their jobs.

3:42And yeah, I really just got this knack for entrepreneurship. And at the same time, started getting fascinated with investing kind of later in high school, Just the concept of the stock market and watching Wolf of Wall Street. I was just like, man, this is like a really interesting world. So again, first generation college student. I go to the University of Utah. I'm based in Salt Lake City. So that was just the closest university to me. And it was really all I knew from going to the football games and everything else. And yeah, like started studying finance and became more and more entrenched and fascinated with that world, but still had this love and passion for entrepreneurship and this business I had started in high school that helped pay my way through college.

4:18So I really thought the perfect combination of entrepreneurship and finance was working in venture because you get to work with a ton of great entrepreneurs. And in my case with Space Station Investments, like I've honestly felt like a founder building out this really early stage investment arm of the proper Space Station, which I can talk about in a moment. But that's really been my path into venture. So just recently was promoted to partner, which is exciting on the Space Station Investments team. And now I've been with the company with the fund for almost five years. So that's been my journey to Space Station, but maybe I can give you a little bit of the Space Station story because we're a pretty unique investor, if that's cool.

4:54Yeah, I'd love to go there next. Those are some really interesting canon events that you've had and clearly shows that you've had a lot of hustle and passion and excitement for different things that I feel like it makes perfect sense that you ended up in investing. I'd love to dive into a bit more of the background of Space Station investments. Could you share kind of the context of the fund, your criteria stage, check size, AUM, all the nitty gritty details and the high level overview of what you guys are doing? Yeah, for sure. So I'll give you a little bit of the background story. So we were actually founded by a YouTuber of all things.

5:27So his name is Sean Duras on YouTube. And between his channel and his daughter's channel, they're doing half a billion views per month on YouTube, spinning off a ton of cash flow. and really Sean McBride, the YouTuber, and then his business partner, Sean Holiday, took a lot of that cashflow and started building businesses underneath the Space Station umbrella. So Space Station Investments is really just the investment arm of the broader Space Station. And we have obviously the two YouTube channels. We have an influencer marketing agency. We have an animation studio, an esports team, a CPG brokerage, and a bunch of other businesses.

6:00But really on the investment side, which is what I get to work on every day, is we started initially as like a corporate angel arm. We had some excess cash on the balance sheet and our very first investment was in Magic Spoon. So the Hypro team, Better For You Cereal, based out of Brooklyn. We had one of our partners who invested and introduced us to Gabby and Greg, the two co-founders there. And we're like, hey, you guys should for sure invest in Magic Spoon and then help them with influencer marketing. And the two co-founders, I had joined the team at the time, but the two co-founders were like, yeah, let's do it.

6:31So they cut a small angel track into Magic Spoon's seed round. And they really went to work with trying to add value. They didn't know what the term value-add investor was at the time, but cut their check. And then immediately we're like, what can we do to help? And our claim to fame, and I have a little show and tell here, is many of you have probably seen the Magic Spoon Bowl. So this idea was actually incubated at the space station. So our managing partner, Tim Holiday, when we were seeding out product to a bunch of our network, which happens to be these YouTubers and influencers and other people like that.

7:00Yeah, we're like, man, we need to send something a little bit with some pizzazz with this box of seared cereal. So we're like, oh, we can get dog bowls off of Alibaba and these neochrome spoons off of Alibaba, and then laser etch them with the magic spoon logo and our logo and ship them out to all of these creators on YouTube, TikTok, Instagram. And it's going to be kind of like this cool viral moment, maybe. And lo and behold, it was. And Gabby and Greg loved the idea so much. And it just elevated the brand that like, can we take this and run with it? And they did way better with the silicone bowl and spoon versus our dog bowl that we were using.

7:35Anyways, that was the first investment that Space Station had ever made. Space Station investments didn't even exist. And it's really just since evolved into what it is today. So we started spinning up SPVs because we had enough people within our network wanting to invest in the companies that we were investing in. So that's about the time that I joined the team. Again, have a more kind of traditional venture finance background with a few other funds that I worked for. And yeah, it was brought on to help build out this syndicate model. So spinning up SPVs, investing deal by deal across the consumer landscape.

8:04So that was Oura Ring, Olipop, Slate Milk, Oats Overnight, Graza, a ton of CPG products, and then other consumer product, health and wellness, and then some SaaS sprinkled in there. So we're consumer generalists. I mean, really from the SPV side, we have so much flexibility. So we don't have minimums that we have to meet, maximums we have to meet. We can really just flex that SPV based on what the company needs, which has been really nice for us to build our track record that way. But the exciting thing is on October 31st of this year, we just had a first close on our formal venture fund. So now we're going to have two ways to support companies.

8:41One is going to be the SPVs. Those are going to live on. We're still want to bring deals, great consumer deals to our network of investors. But now we have this committed capital vehicle and any founder that's worked with us, I think would have positive things to say. But I think the hard part has definitely been we'll commit to invest, but we don't know what our check size is with an SPV. It's like could be 200K or it could be six and a half million. So if you could give us that range, that'd be awesome. A little small range. Yeah, yeah, exactly. So now with the committed capital fund, we have a more strict thesis, investing pre-seed to series A, cutting 250K to$2 million tracks into companies depending on conviction, stage, needs, and then really focused in that consumer world.

9:25So anything CPG, consumer product, consumer tech, or like your college e-commerce enablement or other B2B2C companies where we can make a ton of intros to the brands that we've invested in, especially if they help them with marketing or selling on e-commerce or whatever else, that's all within our wheelhouse. So there's the space station story for you. That's so interesting. You shared so many interesting nuggets. My brain is buzzing. I could go in a million different ways right now, but I just wanted to pause and take a second to explain SPV and double click on the concept for those maybe less familiar with it and contextualize what that means for relevance and deal structuring and how the deal process might actually get done.

10:06Yeah, for sure. So an SPV stands for special purpose vehicle. There's a fancy name for an LLC. and really this is how we invest deal by deal. So if we go out and find Oura Ring and we want to invest in Oura Ring, then we'll spin up an SPV, we'll go to our group and say, hey, we're investing in Oura Ring, we're really excited about it, like do you wanna join us basically? And then people opt in or opt out, they choose their check size and then we're off to the races, we have a close and that vehicle has only one company in it. There's not a grouping of companies, it's just Oura Ring. So we spin up a unique SPV for every single deal that we do.

10:41Compared to the fund, the fund is where we're taking commitments up front, but the investors or the limited partners don't know what they're investing in. They're just trusting that the space station knows how to pick companies to add value and to generate great returns for investors. So it's a very different model. It's a lot more based on trust and track record of the GP or the actual person making the investments. So anyways, there's hopefully a helpful breakdown of the two. Yeah, that's so helpful. And I think a great summary of it. Couldn't have done it better myself. And who's in your SPV network?

11:14What kind of profile are those investors? And would you classify them as angel investor network? Or how do you like to think about your SPV investment partners? Yeah, for sure. So we're pretty unique in how we approach the SPVs. I mean, initially, it's a lot of just people who have, call it the two and a half to$5 million net worth. You've kind of maxed out what you can do in the public stock market, maxed out your 401k, have some real estate. And it's like, what else do I do with this net worth? And it's like, well, you should invest in startups, especially ones that you are passionate about and want to see become successful.

11:47So anyways, that's kind of like an initial grouping. But I think what makes Space Station unique, going back to our roots in the creator economy, having one, a founder who's a YouTuber and a top YouTuber at that, and just our network within the creator economy from the Influencer Marketing Agency and just all these different activations we run. We own and operate the largest conference focused on creators on YouTube, TikTok, Instagram, all of that called BitSummit. We're co-owners with Daryl Eves, Mr. Beast, Jimmy, and then Space Station. We're each a third partner. So we're just really plugged in on our thought leaders in the creator economy.

12:21So that's oftentimes what we're adding value to our portfolio companies on day one. We're bringing in, if you're a prenatal supplement company, one of our strongest categories on the agency side is mommy bloggers. And that I think really resonates with that type of product. So we don't focus on forcing our companies to work with our agency or forcing our companies to do anything within the other businesses that the space station has. It's completely opt-in and you get special rates and lower minimums and stuff like that. They operate their own businesses. But what we found is founders are stoked when you can have a mommy blogger or other strategic investor that really resonates with your brand investing in your company, joining your cap table, because now they're incentivized to talk about your brand and product because they've seen it, lived it, loved it.

13:09And I think that differentiates us a little bit from other maybe celebrity or influencer backed funds, we're not focused on bringing really strategic people into our fund. We want like your family office, the people that you just don't know that have a lot of money in the fund, the SPV side, we're hyper curating who that grouping of people are to invest in these particular companies. So like to go back to the prenatal supplement example, if you have a fund that LeBron James is invested in and that fund invest in that prenatal supplement company, what is LeBron James going to do for them? Probably not much.

13:45But if you bring on Space Station, we'll invest out of our fund and then we'll spin up an SPV and we bring in women athletes and mommy bloggers and other people that would really resonate with your product and brand and be able to help push it. Like we think that's our unique model. Yeah, hugely unique value proposition and really interesting way to approach the investing side, a very modern approach that I think is very relevant for the consumer behavior landscape of today and how people are learning about things and shopping and operating. And I think that's really cool and really unique. So I can see why you guys have so many great logos already racked up in your portfolio.

14:23I'd love to look into the diligence process a little bit next. Obviously, I think as founders listen to this, I'm sure they're hearing all the starry-eyed, amazing things and seeing all the potential they could have for their own brands. But what are you guys really looking for as you're evaluating companies? And what is standing out to you in the diligence process? And how does that process work specifically for you all? Yeah, so we focus on three things. And we call it the three Ps and trying to get creative there, I guess. So it's progress, product, and people. And that's in reverse order of what's most important.

14:59And so number one is people, I think most early stage VCs will say that who is the founder behind the product and that's really who you're betting on. And then, yeah, we like to look at both product and is it differentiated in the market? Do we like the product? Like that's oftentimes how we make investments is we're pretty early and innovative on a lot of the products that we're using and consuming. The funny tangent is that's how I found space station investments is I was an early aura ring user. You can see it on my finger here. and I was just looking like, yeah, I wonder who's invested in Aura Ring.

15:30And I found this company up in Layton, Utah, of all places that invested in what I thought at the time was and still is one of the coolest like consumer health companies out there. And I'm just like, no way. There's someone right in my backyard that knows Aura. And I reached out cold on LinkedIn to basically just say like, hey, you invested in Aura Ring, Olipop, Magic Spoon. Like these are so cool. Like I'm customers of all of these. Can we talk? And so that's getting away from the point, But really, we just like to invest in companies that we would be a customer of, or we can clearly validate that there is a clear use case for this.

16:03It's not just a better brand, a better marketing approach, but like there's actual innovation and emote around the product. So yeah, as far as maybe like some takeaways for a founder as VC is doing diligence, I think one of the key things, like if you were to draw a thread across our portfolio of what makes us decide to invest in a company, because most VCs say no 99 % of the time and say yes, that 1%. So how do you become that 1 %? It's really just around momentum. And that could be a myriad of things. It's momentum behind the brand, momentum behind growth, momentum in retail, momentum behind traction, actually building the product.

16:43I'll give you one example. You can see probably over my shoulder, Graza. So we're early investors in Graza, and I think they've done a phenomenal job at building that business. But when we initially invested, they were six months post-launch. So there wasn't a ton of data to look at. But what we were finding is there was so much PR around the brand. For some reason, they had just really taken the PR world by storm. They were getting articles in the New Yorker, New York Times. It's like this is like a six month old startup that just launched. They had just started going into retail and started seeing great velocities there.

17:16But again, not enough to say like, oh, this is an obvious win. But we saw enough of those boxes checked that it's like there's a lot of momentum coming behind this brand. and that's what really pushed us to invest. So it wasn't anything individual. It wasn't revenue traction. It wasn't PR. It wasn't the social listening that we were doing. It was all of the things. And it's like, man, this is interesting. Let's go. Yeah, it's like popcorn. You're looking for the anticipation of when the kernel is about to pop and be along for that journey. I think that's a really interesting example with Graza as well.

17:52And kudos to them. I love the Graza team. I think they're doing a phenomenal job. You mentioned people as the primary evaluation bucket, a higher priority evaluation bucket. What are some of the traits of exceptional founders specifically in your portfolio that you work with and that you like to see in companies you're diligencing? Yeah, I don't think that we have necessarily like a specific thing that we're looking for in founders. Like there's a lot of the obvious stuff like grittiness, hardworking, Do you have background in the space? All of those, like, I think are just table stakes at this point, but we really just like to get to know the founder.

18:32And when you look at like a stat that I recently heard that kind of blew my mind is the average marriage in the U S last like nine and a half years. And oftentimes like you're investing in a company sometimes for 10, 12, 15, 17, 20 years. And it's like, you are signing on to a very long-term relationship with the person, you know, that you're taking money from as the founder. but also as an investor. It's like, you're going to be spending time with this team and supporting them through a lot of ups and downs. So it's like, do we just enjoy spending time with that person is one of our biggest diligence criteria.

19:08And yeah, like it's just time spent. It's not anything special test that you have to complete us flying out to meet with you. It's us getting on a ton of zoom calls and talking about things that aren't related to the business. Yeah. Like that's all interesting to us so that we can actually get to know who the human is behind the company that we're hopefully investing in. I love the human approach and I think it's really important. And given how many hours everyone spends at work with your stat, I feel like it might even be that you end up spending more time with a company like hours wise too than even in a marriage.

19:41So, so important. And I think there's a lot of hard judgment calls that need to be made in businesses. And I think who someone is as a human dictates a lot of the decision making and leadership that they have. So I understand why that's so important. Reversing the question now, why do you think you're a strong fit for founders? And what do you think a founder should be looking for in an investment partner as they're thinking about their side of the equation? The partners on our team were founders first and then built and bombed a couple of companies, built and sold the company. I'm more of like the born and bred investor.

20:14But even from building space station investments, there's been really, really scrappy times and hard decisions building this investment group from the ground up. I mentioned like we just had a first close on our venture fund, which is actually allowing us to like have a consistent paycheck. But all the SPVs, like we never know when we're going to be making money. And it's like we have to go out and kind of eat what we kill, which was scary, like startup like experience for us. And we're finally getting into that. I just told someone today that it feels like we just raised a monster series A from like L Catterton with this fund.

20:47I get what you're saying. And for everyone who's maybe needs a little bit more context here, when a fund raises from LPs, they get management fees, which is a percentage of the amount of money of capital that they've been given to deploy. And so that's where the salaries come from and the office expenses and all these other things. But an SPV, I assume you're not getting those management fees or maybe only when the deal gets done or if depending on the volume of what the SPV ended up being a percentage of that. So a lot less predictable and maybe a lot less recurring, maybe not on an annual basis.

21:21So yeah, definitely. I am sure a lot of founders resonate with that feeling. Yeah, for sure. So like, that's, I guess my way of saying it's like, we've been there, we get it. Like we, all we want to do is focus on our most important side of the business, which is meeting with founders and investing in great companies. And when you have to go spend time on fundraising or figure out how healthcare works or whatever else. It's like, those are just kind of like the necessary evils of the business. So yeah, it's like, I think that we just resonate a lot with founders in that journey. So like we try not to be jerks and don't request like just busy work of a founder to like waste their time on.

21:56And I've really just found like being a good investor is a pretty low bar. It's sad for me to say that, but it's a really low bar. It's like, if you can make some intros, not annoy people, be helpful where you can. and you're probably like a top 25 % on a founder's cap table. All the stuff I talked about previously, like the influencer work and working with the CPG brokerage, Space Station CPG on our side and access to these two YouTubers that do half a billion views for a month, especially if you're in the kids and family ecosystem. It's like those are, that's all of their content is on YouTube Kids.

22:30So all of those pieces that I think are the obvious ways that we add value. So yeah, I've already touched on those, so we don't need to go too in depth. It is sad, but true that I think so much empathy can be lacking in the investment dynamic because in some ways the power dynamics are just so lopsided at times that it sets the stage for that to be the way the relationship can be set up. I think the industry is changing a little bit as people are getting a little bit more broadly focused on CPG. Once again, there's a little bit more, not a ton, but a little bit more competition on the investor side, which always is like good to drive companies forward.