Investor Spotlight: Josh Resnick, OpenSky Ventures

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1:09One of the things that I look for in founders of the companies we invest in is someone who can tell a great story. And so you have to be a great storyteller to attract the right team members, to keep your team engaged, to attract investors, to get the consumers of your products as a part of your brand community. And it's the same thing at a fund. We need to tell a great story. And a great founder needs to have a focus on KPI. So how is their product doing? What's their velocity? How are they showing momentum? And same thing for us. We were able to talk about the fact that we returned capital in year two, which is really rare for a fund.

1:46Hannah Dittman:Hey, everyone. I'm Hannah Dittman, operations and finance host of the Startup CPT podcast. And today I'm joined by Josh Resnick, co-founder and general partner at OpenSky Ventures. Josh is a seasoned entrepreneur and investor with deep experience across consumer, commerce, and venture. Earlier in his career, he built and sold multiple companies, including the luxury confections brand Sugarfina, which became one of Fast Company's most innovative retail brands. He's been an active angel investor and LP in the consumer space prior to founding OpenSky, where he's had great success in Fund 1 and is currently raising Fund 2.

2:21Hannah Dittman:In this episode, we break down what makes a compelling early stage investment and the founder traits Josh consistently sees in standout companies using real brand examples. We also unpack how valuations work and why they matter, the risks of trying to scale too quickly, and how investors think about the progression from pre-seed to seed to Series A. If you're building a brand, thinking about fundraising, or want a clearer window into how experienced investors evaluate early stage companies, this episode is packed with practical insight. Enjoy!

2:54Hannah Dittman:Hey everybody, welcome back to the Startup CPG Podcast. This is Hannah and today I'm thrilled to be here with Josh Resnick of OpenSky Ventures. Josh, welcome to the show. Thanks Hannah, I'm happy to be here. We're happy that you're here as well. I'd love to kick us off with a little bit of a brief background of your journey so far and the path that led you to OpenSky. Okay. Yeah, you got it. Let's see. I grew up in LA, Malibu of all places, and I never learned how to surf, which is really weird. But in any case, that is what it is. I was an entrepreneur basically since age eight with a classic lemonade stand and just setting up all these, for some reason, food-related businesses in elementary school and middle school and high school and all the way through business school.

3:39I was always coming up with something. And I'd say 90 % of them went nowhere, but I had a lot of fun and I learned a lot along the way. I went to business school to actually get a little bit more structure around what I was doing and learned some more technical skills around marketing and finance and all that kind of stuff. Graduated with my MBA from Warden, but did not want to follow that traditional path at all going into corporate or branding or Wall Street. And instead, somehow I ended up in video games. I became a producer really early on at Activision. I think I was like employee number 48 or something like that.

4:17And then so I produced some games, I directed some games, and then ultimately I broke away from Activision. I started my own video game studio here in L.A. called Pandemic Studios. Obviously the name did not age well with the real pandemic many years later, but I had a really fun time building up that whole studio. It had a really great run. And, you know, we released games like Star Wars Battlefront and Mercenaries and all these kind of big open world, you know, blow things up games. I had the good fortune of selling that to Electronic Arts, you know, many years later. Stayed a couple of years on at EA, but I didn't love the big, you know, company public culture vibe there.

4:59So I left. And then a couple of years later, I met my now life partner, Rosie, and we started a CPG brand called Sugarfina. So it was a gourmet candy brand. And we were a little bit ahead of our time then because candy was pretty commoditized. You'd walk into a candy store and your experience was shoveling candy from a plastic bin away by the pound and putting it in a plastic bag. And there was nothing special about it. And we realized or we thought at the time that there might be an opportunity to kind of create a more high-end experience. And so we traveled the world a little bit, discovered all these amazing artisan candy makers around the world.

5:37that didn't know how to bring their products to market in the U.S. And so we did exclusive deals with them to sell them under the brand Sugarfina. And we created this really beautiful bespoke packaging system. And the business just took off like crazy. We opened up around 50 stores around the world. We were in wholesale and big department stores and gift stores and grocery. You know, we had our own online site and the business kind of grew like crazy. We were barely holding on for most of the time we were there. And just before the real pandemic, we sold the company to a local family office. And now I find myself running a venture capital fund, which I can tell you more about if you like.

6:20Hannah Dittman:Yeah, wow. What a colorful, interesting background you have. I'm very familiar with Sugarfina. I used to go to the store out here in San Francisco. Such a beautiful gifting experience also. and the video game adventure sounds like it was a ton of fun and a super creative journey. And the lemonade stands, they do get us all. And to this day, I stop every time I see a lemonade stand and I got to buy whatever they're spelling. Yeah. Yeah. Fuel some young entrepreneurs journey and rise into the ecosystem. I love that. Yeah. I would love to dive into OpenSky and learn a little bit more about what you all are doing there.

6:56Hannah Dittman:your mandate, differentiation, stage focus, and check size, and all the nitty-gritty details that I'm sure all of our listeners would be eager to know. Okay. Yeah, no, I'm happy to jump in. I actually started by creating my family office at the beginning when I first sold my video games company, and I got a lot of practice as an angel investor. So it's called Pure Imagination Brands, and I have around 50 investments in CPG and the technology that supports those CPG brands. And then along the way, I met my partner who became my future partner at OpenSky, Josh Payne. And at some point, we started investing together, kind of sharing our own thesis and doing overlapping investments.

7:38And we both found ourselves at a kind of inflection point in our careers. And we decided to take it up a notch and start our own firm, which was OpenSky. And OpenSky, its focus is on early stage consumer brands, a lot in food and bed, health and wellness, lifestyle, things like that. And then the technology that they use to thrive online. So e-commerce tech enablement. So around 50-50 there. We focus on pre-seed, seed, and a little opportunistic A. Our check size is around$100 ,000 to$200 ,000 for fund one. And we had a relatively small fund one. It was around$5 million, and we're actually fully deployed.

8:20We wrote our last check a few weeks ago, and now we've started fundraising for Fund 2. And the big change there is just we just want to write bigger checks. Instead of, you know,$100 ,000 to$200 ,000, we want to put more capital to work. So we hope to be starting with a$500 ,000 check, and that fund will be$25 million.

8:40Hannah Dittman:Oh, my gosh. Congratulations. That's a really exciting time for you all. and awesome that you've had the success and gotten the capital put to work and done your job, part of your job as an investor. I think so. Yeah, I feel good about it. You know, I'd love to take a second just to kind of like dive in because this is so opportunistic to understand a little bit more about the fund dynamics and how this all works. So you said fund one was$5 million fully deployed, meaning that you have invested all of the money in fund one and therefore now need to go raise more money, which equals fund two. And fund two, you're hoping to raise$25 million, which is awesome.

9:19Hannah Dittman:That's a really big increase. How does this work on the investor side? What are you thinking about as you're going through the fundraising journey that maybe might be some parallels for founders going through a similar experience with their own companies? Actually, that's a great question. There are a lot of parallels there. So one of the things that I look for in founders of the companies we invest in is someone who can tell a great story. And so you have to be a great storyteller to attract the right team members, to keep your team engaged, to attract investors, to get the consumers of your products as a part of your brand community.

9:52And it's the same thing at a fund. We need to tell a great story. So for fund one, our story is, look, our thesis was that because we were former operators ourselves, that we would be able to get access to deals that maybe other VCs wouldn't be able to. And we'd be able to get more attractive terms and get inside there. And that was true. And we're able to tell that story. And a great founder needs to have a focus on KPIs. So how is their product doing? What's their velocity? How are they showing momentum? And same thing for us. We were able to talk about the fact that we returned capital in year two, which is really rare for a fund, that our KPIs are great.

10:30You know, we're at roughly a 2.5 MOIC, a multiple on investment, on invested capital. Roughly 50 % of our investments, we were able to secure additional advisor shares. So we were able to show that our experience as former operators actually created a really great advantage for the LPs in our fund. And, you know, we were able to show that we had experience here. We had a good understanding of our sectors and subject matter expertise. So a lot of similar things that we look in, you know, for founders or the companies that we're investing in.

11:03Hannah Dittman:That's super helpful. And kudos to you on the great stats and the successful run on Fund One. That sounds amazing. And it seems like you guys have really proved out a lot of your thesis and what you're driving towards. I'm really excited to see Fund Two come together for you shortly here and excited to see the brands that make up that ecosystem as well. You know, having been on the operating side, going through a sale of your own company multiple times, you know, you've had a lot of deep experience on kind of all the different sides of the table. If you could give the understanding to founders or operators, what do you wish more of them knew or understood about the fundraising or funding process?

11:47Hannah Dittman:What do you think is kind of a knowledge gap that you might be able to fill for them? So much to talk about there to unpack. I mean, on the valuation side, it really is more of an art than a science. And, you know, I see some founders struggling with it. You look at the competition, what are other competitors, you know, raising at? There are some established multiples like in CPG or in our other sector, tech, you know, commerce enablement. You know, you can look for guidance. It's good in your early fundraising to kind of send up some trial balloons with some early investors and see how they react.

12:22Your revenue projections or the revenue you've already secured will be a part of that factor in terms of how investors respond. And, you know, how clear and confident you can be in your unfair advantages that you're bringing to the table as a founder. Like, we're willing to give a more experienced founder who has done this before, you know, a little bit more room on valuation. because we have more confidence that they'll be able to execute properly, you know, versus a first-time founder. But one thing I wish more founders were a little bit more thoughtful on is don't get stuck on the valuation.

12:55Don't get too locked in on, I have to keep my dilution as low as possible, and hence the valuation as high as possible, because that you can run into trouble later that on your next round when you try to raise money, if all your KPIs haven't kind of kept up to support that higher valuation, you're at risk of not funding your next round or having a down round, which can be, you know, a lot of trouble. You know, your focus should be getting enough runway and building a cap table that really adds value. It's not just about a check and money, but finding the right investors who are going to help you get to that next milestone.

13:33Hannah Dittman:That's really helpful advice. I'd love to double-click on something you mentioned there, which is raising a down round and the idea of not hyper-focusing on the fundraiser in, but thinking of the broader picture down the road. A down round would be that your valuation isn't up and to the right anymore. It's going downwards. And maybe your business is still a healthy business and doing well, but valuations can still go downwards. As an investor, kind of putting on the investor hat, what does a down round signal and why do you think that's not such a great thing. Yeah, downrounds could really trap you then in a downward cycle.

14:10You know, look, sometimes downrounds just happen. You know, you've set the right valuation on the first round, you hit a couple of bumps in the road, you need more time, or something big in the sector changed and you're pivoting, reacting to it. And it doesn't necessarily send a horrible signal to investors. But sometimes, and I see this happen too often, and founders will set themselves up to fail later because even though everything's going well, they just don't grow into their valuation. So pre-launch, anything's possible. You can tell the story how I'm going to have$10 million of revenues, all these great things are going to happen.

14:49And then you're such a great storyteller, you convince people to go in for that higher valuation. But you could have had a really reasonable run up to this next round, but a couple of things didn't quite lock in. You had a little bit more testing and learning that you anticipated. Inevitably, something is going to happen. And all of a sudden, investors like me are doing the math on the previous round, and now you're forced to come up with a higher round, not to have a down round, and it's not adding up. And so the negative signal that sends to us is that, you know, you weren't strategic enough when you were putting that together and that maybe something is wrong.

15:28And there is something that we quite haven't found yet and uncovered yet. And it just creates that unsettling feeling in investors. It's called a stink, but it's a little bit of a cloud that's hanging over you now. And sometimes that's self-inflicted is all I'm saying versus grounded in the reality. Some of the best companies I've invested in have been a little bit softer on their valuation every round through. So it feels like investors are right on target or they're great at getting a good deal, a fair deal relative to the risk there. And then those rounds close super fast, less distraction for those founders.

16:08Everyone is happy and they can keep moving up to the right. Which is why I caution, don't put too much emphasis on getting that top, top, top valuation at the very beginning.

16:18Hannah Dittman:That's so well explained and articulated and makes a ton of sense. And, you know, it's like real estate. The value of a house is kind of how you're thinking about valuing a business. And just because the first time the house hit the market, it was sold for X, Y, and Z, doesn't mean that the next time the house hits the market, it's the same market or the structure of the house is the same and all the things. So I think what you said about having a business that supports evaluation and making sure that that's realistic and reasonable is really helpful, especially in the early days, like you're saying, as an early stage investor, where a lot of it is theoretical or vision driven, making sure that you're in line with the rest of the market.

16:59Hannah Dittman:And obviously there's ways you can look at benchmarks of where early stage deals are going and kind of be in line with what others might expect as an average valuation. But if I'm a really early stage business, what are some of the ways I can start thinking about this to wrap my head around maybe numbers if I don't have a ton of numbers going on in my business yet? Well, again, that's where it's more of the art and the science. That's where you're then comparing it to, you know, what other competitors in the space are valuing it at. And look, you have a little bit of a range there, a little bit, but it's just don't stretch it.

17:32Because if you're stretching it, it just means you're going to have to work even harder. It's going to take even longer to close the round. You're going to be even more distracted. And also, you might turn away the very investors that are going to help you propel you to that next round of the one after, which is the value-add investors, the strategic ones, the ones that can help you open up the doors, give you that critical advice when you need it. You don't want to be pushing those people away. And you don't want to start your first day once you close that round in a race to your life. It's going to create too much artificial pressure on getting to that next level of KPIs that will justify that higher evaluation earlier.

18:14And sometimes that's not the right journey you want to be on. For example, one big piece of advice I have for founders that maybe they don't hear enough is slow it down a little bit. I don't want you to come out of the gate and on the first day be in Costco sometimes with a CPG brand. That's not the right first step, even though that will maybe juice your numbers at the beginning. That's not how you test and learn. I would rather take it a little bit slower, test and learn, really understand where your capital is best spent on the growth marketing side, how best to communicate with your customers, give yourself a little bit of room on adjusting your pricing strategy and things like that.

18:56Just give yourself room to breathe and learn. But if you're right out of the gate having to prove that valuation and you know you're running on a runway in a year, you can't focus on that. And then you're growing too fast. You're making mistakes. And you are shutting yourself off to some of the critical signals that might be coming from your customers or your channels. You just might miss them if you're moving too quickly. Sometimes that pressure to get the highest valuation and the lowest dilution is not good for you in the long run.

19:28Hannah Dittman:That's so well said and such an important point, I think, to make. In CBG, there's a saying brick by brick, and I think that's kind of what it's talking about. And there's other complications other than just chasing the valuation when you take on a little too much too quickly, too. I mean, if you can't support a retailer from a team, inventory, logistics standpoint, I mean, you can really burn a retailer bridge. and that's hard to come back from. You can burn through cash. That's hard to come back from. Like there's a lot of ways you can really nuke yourself in some really challenging ways by going too quick.

20:04Hannah Dittman:But all that can really happen if you're going too slow is it might be a little bit more work to get another fundraise done or you might need to prove out some more growth at some point. The risk side of doing it right step-by-step I feel like is a lot lower than taking on too much too quick. I think so. And the other thing too is, you know, make sure you're raising whatever you think you need to raise, raise it a little bit more because you're always going to need that extra runway. You never know. Well, you should anticipate things are going to go wrong. You're going to have to learn. You're going to have to pivot a little bit.

20:41Things are going to take longer. Things are going to be a little bit more expensive at the beginning and prepare for that and give yourself the runway and give yourself the runway to grow into the right KPIs sustainably so that you can do that next, you know, fundraise, you know, versus a race.

20:56Hannah Dittman:Great. Well said. You know, you've invested in 50 plus, I don't even know how many brands from angel all the way through a fund and have worked with a lot of brands yourself. If you could think about patterns or similarities you've noticed in the ones that have really become from successful companies that you've worked with. What do you think the commonalities have been in those companies? I'd say for the successful companies, the things I've seen as a theme, a lot of this actually I have to speak to is about the founder. You know, having a founder with the right experience, having a founder that is a great problem solver, who doesn't panic when things go wrong, because literally every day, you're going to be bounced between highs and lows, highs and lows, highs and lows, and they're going to have a hundred problems they're going to have to solve at once.

21:43So I've seen successful companies are the ones led by founders who are good under fire, are calm, are great problem solvers, are optimistic because you kind of have to keep that optimism level up. I'd say storytelling, like I mentioned before, super important, their ability to keep people engaged and moving along with them. Again, founders who bring an unfair advantage to the table, maybe through their experience or they've done this before in some capacity. Other things I think are really important for successful companies are building a moat around a key point of differentiation and allowing themselves to really stand out.

22:24I'd say brands and founders who are really authentic, who can build a community around their brand, a lot of people can come up with a product, but maybe struggle with keeping their customers really engaged. Customers have so many choices of where to go right now. And having that kind of authentic story, connecting your customers in a way where they choose to be a part of your brand because it makes them feel something, that's great. Like Liquid Death is a great example. Tons of water brands out there. Lots of great waters, all different forms and factors. But liquid death makes me feel a certain way.

23:04It makes me feel cool when I'm at a bar or a party or a social event or whatever when I don't want to have a drink. I feel like a little bit of a rock star.

23:13Hannah Dittman:Yeah, we're badass when we're drinking liquid death. Yeah, yeah, that's right. But the brands that are successful make you feel that. Manscaped makes you feel about this really cool kind of cheeky brand. Vacation. You know, there's so many great sunscreen brands out there, but they have this great 1980s, you know, DJ-inspired pool vibe, you know, from Miami. And it's just, it feels fun. It feels cool to be a part of their brand. Those are the brands I look for and who are successful. And one last point, which is a really big point for me, the brands who find a way to be a must-have versus a nice-to-have.