Investor Spotlight: Trevor Rechnitz, Vanterra Ventures

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0:53Success equals results minus expectations. An expectation setting is oftentimes an overlooked and important part of the founder and investor relationship. And so setting proper expectations around growth, around margin, around new products, around exit, around, you know, what you're looking to kind of get out of the next year or two years or like making sure that overall your timelines and vision are aligned with your investors, right? Like defining expectations and success, I think, can set you on the right path. And alternatively, if you don't do that, can really like create a lot of misaligned incentives and negative situations.

1:30Hey, everyone. I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm thrilled to be joined by Trevor Rechnitz, principal at Ventera Ventures. Trevor brings deep consumer investing experience built over nearly a decade from sourcing and diligence to partner engagement and post-close value creation. He's got a wealth of knowledge in company evaluation and executional strategy. At Ventera, he helps evaluate and back visionary teams and companies redefining consumer health, digital health, and enabling technologies across branded products and emerging categories.

2:03Vantara Ventures is the venture and growth equity arm of Vantara Capital, partnering with founders to build long-term disruptive businesses in the consumer health ecosystem. In this episode, we dive into honest, practical conversations about the realities of fundraising, not just what looks good on paper, but what truly matters to investors. Trevor breaks down common pitfalls founders encounter and shares lessons from diligence processes, how investors and founders think about capital allocation, and what metrics actually signal durable growth. We talk through LTV to CAC dynamics, how to build investment thesis that resonates with investors, and how to align fundraising strategy with operational execution.

2:41If you want to level up your understanding and investor thinking and set your fundraising and growth strategy up with intention, this episode is for you. Enjoy!

2:54hey everybody welcome back to the startup cpg podcast this is hannah and today i am here with trevor recknitz an investor from vanterra ventures trevor welcome to the show thank you hannah happy to be here we're so excited to have you today i'd love to kick off with getting your formal brief background what your career has been like to date and the path that led you to vanterra Yeah, absolutely. I'll try to keep it brief. I grew up in the Bay Area. I did my undergrad at Northwestern, studied communications and economics. I spent a few years after graduating back in San Francisco doing what's called private equity consulting at a firm called Kurt Solomon, which was a CPG focused consulting firm.

3:33I was on the private equity and strategy team there. So we were doing commercial due diligence on behalf of larger private equity funds as they were looking to invest in the CPG space. So tackling work, market sizing, consumer surveys, expert interviews, revenue growth modeling in all sorts of different categories across CPG, food and beverage, supplements, etc. Ultimately, I moved from Kurt Solomon over to the buy side and started my career in VC at a fund called Circle Up Growth Partners. That was in the fall of 2018. had an amazing time there kind of grew up as an investor there alongside some incredible investors Kiva Dickinson, Allison Ryu, Ryan Callbeck and I actually had looked at a few deals alongside the Ventura team while I was at Circle Up and candidly was just impressed by the process impressed by the team the portfolio and when they were hiring for a VP to help institutionalize their venture platform it was a natural fit life was also kind of taking me to New York at the time.

4:27So I moved out here to New York in spring of 2021 and started at Vanterra. Amazing background. You've got a deep foot into the diligence space and I'm sure spent a lot of time with a lot of different companies throughout that journey. Indeed. I'd love to also get a firm overview of Vanterra, including, you know, criteria, mandate, differentiation, check size, stage focus, and also kind of where you sit on the VC to growth to PE spectrum. Yeah, for sure. So we are a venture to growth equity fund. We're investing in the future of consumer health. It's a$6 trillion category. It's growing 10 % year over year.

5:06It's a massive, massive space. So to kind of distill it down, we've split consumer health into three core categories. Products, services, and tech is what we're calling them. In products, we focus on categories like supplements, functional food and beverage, pet health, beauty and personal care, amongst others. And services, some examples, digital healthcare, health diagnostics, personalized medicine, even some asset-light four-wall services businesses. And then in the technology category, categories like picks and shovels, kind of enablement technology, and some healthcare infrastructure as well.

5:39So relatively broad set of business models and categories all under consumer health. From a stage standpoint, we write our initial checks into seed and series A rounds. For follow-on checks, we can go a little bit later than that into kind of more growth-y series B, series C rounds. Check sizes for us range from$1 to$10 million, the ability to upsize through LP Co-Invest as well. And yeah, we closed our second fund in Q1 of last year. That's a$100 million fund, and that puts our total AUM at about$175 million. And then from a differentiation standpoint, I'll mention a few different things. The first thing is being a sector specialist.

6:15So we spend all of our time in consumer health, we feel like that allows us to drive differentiated deal flow, to compound knowledge over time, ask the founders the right questions, kind of dig into key risks of these deals relatively quickly. And then also to build in depth capabilities to add value after investing, right? So the more time you spend in a particular category, the better you get at helping founders in that particular category. The second piece is being concentrated and taking a high conviction approach to venture. We'll likely have about 15 or so companies per fund. That's a bit smaller than traditional VC.

6:44So we're doing deep work on each of these companies before we invest. Kind of the opposite of a spray and pray venture mentality, right? More of a private equity approach to venture where we have a rigorous due diligence process. We're rolling up our sleeves after we invest, targeting capital efficiency and profitability in these businesses. The last part of your question, not to ramble here, but where we sit in VC and growth. That makes sense to chat about? Yeah. I know you kind of are flirting with touching on it already, but give it to me. Yeah, yeah. So I'll kind of split the market into four buckets, the way we think about it.

7:16The first is kind of angel and pre-seed, right? Which is initial founder rounds. You know, there's product risk, there's tech risk, there's business model risk. A lot is unproven. From an investment standpoint, that sort of demands that you're taking a lot of swings and it's candidly a higher failure rate and it's a bit too early for us. So we board those rounds. The second bucket is venture and that's seed in series A. the risk kind of shifts to more scaling and execution risk. There's still opportunity for big returns, but the businesses are kind of at an inflection point, right? Have proven out DTC, but going into retail as an example.

7:47And this is really where we're comfortable, where the bulk of the dollars from our fund will be deployed. The third is growth, kind of series B and C rounds. We'll look at these rounds from a follow-on or co-investment standpoint, but less so from an initial round standpoint. And then the fourth is later stage VC, which is a bit beyond our purview, lower return profile, higher valuations, It's a bit too late for us. Beautiful breakdown and very crisply stated. I can see the old consultant in you. A lot of buckets, a lot of frameworks. These are the three things I'm going to tell you. Very helpful.

8:21Great way to explain it. One thing you mentioned earlier on in your intro that I just wanted to double click and kind of give an explanation of is you mentioned that you could write, follow on or lean into bigger checks with LP Co-Invest. Could you explain what that means for anyone that may be unfamiliar with it? Yeah, absolutely. So as a venture fund, we obviously have LPs. Those are the investors that make up the majority of our fund, right? Those LPs obviously trust us to invest capital, but also like to scale up their own, scale up additional investment into certain portfolio companies that they have conviction in or that they are particularly passionate about.

8:57So typically how it works is we'll invest relatively early in these businesses as those businesses de-risk and become profitable over time and are a bit closer to liquidity or an outcome and raising bigger rounds, we'll invite our LPs to invest alongside us. So as an example, in a business called MixLab, which is a tech-enabled pet pharmacy, it's our biggest position in our second fund. We've invested a decent amount out of the fund, but have invested almost double that in LP co-invest. And so it's a benefit to our LPs to get access to these types of deals. And obviously a benefit to us as well to be able to scale up our position.

9:29For companies that might get an LP co-invest check, is their experience as a portfolio company any different from any of your other portfolio companies? No. All of our checks we're writing with the intent to spend a meaningful amount of time with each company. Obviously, as time goes and as positions either grow or don't grow, obviously time allocation shifts. So typically the ones that get LP co-invest are the ones we're spending the most time with. But I wouldn't say treatment's any different. Super helpful. Thank you for clicking on that with me. Can you touch on maybe common mistakes founders make in fundraising or diligence processes as they go through it with you?

10:09Maybe like a diligence process overview and key things that you think people should anchor on or focus on that maybe people don't always get right or fully understand. Yeah, for sure. So it probably makes sense to just start with an overview of the diligence process. And then I can go through like what our expectations are and from there, like what founders, what some do well and what some don't. The diligence overview for Antera. So it takes about three weeks, combination of data requests and management team time that ultimately we're using to try to get comfortable with the key risks that we've identified and ultimately determine what the right valuation for the company is.

10:49That diligence process typically starts with the first meeting, right? In those first meetings, my hope is that the founder is able to articulate the problem being solved and what makes the solution unique and more compelling than other incumbent and emerging solutions. Broadly speaking, like differentiation in a way that matters to consumers is a signal of enduring value. And so being able to communicate that on an intro call is massively important. In addition to being able to communicate the broader vision for the business, near term and long term growth levers, etc. I would say mistakes that founders make, especially on the intro call.

11:22And intro calls sort of set the tone for the broader diligence process, whether the team, the investment team internally is excited about continuing the process, etc. There's a couple. One is getting defensive about risks almost, as opposed to attacking risks head on. So don't be shy about the risks. VCs are hopefully if they're smart are going to identify them anyway. So being honest and hoping about them, sometimes saying, I don't know, this is something we're actively thinking through, like invite the investor in as a partner and don't be shy about the risks of your business. Attack them head on and have the honest conversation.

11:54The second is, you know, make sure you know your numbers cold. There are certain numbers that investors are going to want to know. I think over time, as you like pitch a bunch of them, you'll figure out what those are. But things like channel mix or AOV and LTV to CAC or retention, obviously revenue, gross margin, burn, etc. over the last few months and how they've trended over the last few years, etc. You need to know those cold and you need to understand how those like fit the broader narrative that you're trying to discuss. I think, Certainly it's a yellow, if not a red flag, if I'm on a call and someone's a bit shaky on their numbers.

12:25So that's another one. I would say that the third is make sure that you're also spending a bit of time interviewing the VC too. I love when founders are asking questions that make it very clear that they're looking for a partner, asking about your background, asking about who you would add value, what your initial perspective on the opportunity is. Again, turn it into a little bit more of a conversation versus just like a full kind of like deck walkthrough. it. That's really helpful. And kind of on the flip side, what gets you really excited about an intro call? Like, you know, it's 30 minutes essentially where someone's kind of giving you the quick high level overview of themselves and their company.

13:03What's like an A plus version of that? Yeah, it's hard to like really put your finger on. A lot of A pluses look different than one another. But like one thing they typically all have in common is it's just a really strong articulation of the problem and solution and why that founder is the right one and maybe only one who is in position to solve the problem. That's sort of like the most compelling start to all. You know, the A plus pitches is like, there's a massive problem. Here's my solution. Here's kind of the founder market fit or the reason why like I'm the right person. And the solution I've created is the right solution to solve that problem.

13:36So I think communicating that, keeping that very tight is a really, really good way to start your pitch. The second thing I would say is do your homework. a lot of founders are. And so when someone shows up and like knows about our fun, knows about our portfolio, knows some of the questions to ask, understands what we look for to a degree, like why they might make sense in our portfolio, etc. Like that goes a long, long way, I think, on these intro calls and other people are doing it. So I would certainly try to do that as well. And then the third is a bit more tactical, but the right like cadence of information sharing is actually really important and helps you stand out as well.

14:08So sharing a deck and a blurb beforehand, following up after having a data ring put together, etc. Just like being there with the right information at the right time goes a long way too. Could you give an example of a portfolio company that you all work with that you feel like had a really great example answer or thesis behind the problem solution founder fit that you're describing? Yeah, Chad Janis, who's the founder of Grooms, had a really impressive initial pitch. Basically that he grew up and his grandma would make him like green smoothies, but those smoothies are difficult to make and sometimes didn't have like an amazing taste, but he wanted kind of the same like whole fruits and veggies and vitamins that he would get from those shakes, but in a convenient format.

14:53And so he'll created Grooms, obviously comprehensive daily nutrition gummies. From a background standpoint, he was a former investor at a fund called Summit Partners and so had unique insight into a lot of these high growth CBG businesses and how they were built just from a fundamental standpoint. and so unique solution to a big problem and really really kind of special background and perfect background to on why he's the right person to solve it yeah i think that's really helpful color uh for other founders to understand how to kind of position their background it's not like you're looking for someone necessarily i mean i'm sure it would be a great bonus for someone who's like 15 years exactly in the power lane of exactly what they've done before and doing this but it can be a lot of different backgrounds that seem impressive as long as it makes sense and shows a lot of rigor and hustle, it sounds like, an ability to see a vision execute diligently behind that vision on the founder side.

15:46Yeah, it's so true. From a founder framework standpoint, like obviously domain operating expertise and experience is a criteria that is great to have. And we certainly use that in our framework. But what we care more about is, you know, are you high horsepower? Are you a good capital allocator? Have you shown or do we believe in your ability to hire and retain top talent? Do you have passion and personal experience that's like associated with this product or idea? Do you have a partnership mindset I was talking about before? Are you responsive to diligence requests? And maybe most importantly, do we believe that you're a quick learner and you're a fast operator?

16:20And if there's a problem that you're going to be able to understand and adapt to it. So obviously having a direct background in these things is great, but it's certainly not necessary. Yeah. And going back to your earlier your point when you mentioned, you know, the first meeting, you want to invite the investor and be realistic about the risks. I'm sure also like have some sort of mitigation plan for them. But it sounds that's kind of dovetailing off of this same comment that you just made, where it's someone collaborative who's risk on, but also learning, growing and ambitious to develop their own perspective as well.

16:55Yeah, for sure. And I think there's like there's a ton of value in any job of just like knowing what you don't know, kind of approaching things with an open mind that there's probably people out there that are much, much better at solving that particular problem than you might be. And sometimes the best skill is to like convince them to come work alongside you, right? I think that's another area where Chad's just totally spiked is team building, selling the vision, building a winning culture and being able to just attract the best, right? And now he's just got an incredible team around him. Super helpful.

17:25And thank you for the examples. you know you've worked with all these founders you've worked with a lot of businesses in your portfolio and over time if you could tell founders or operators one piece of advice maybe some key learnings from where you've seen companies go down the road right or wrong or just in general what would it be and why do you think it's important yeah i'll give two um bonus yeah one kind of higher level and one tactical so the higher level one and it's like a framework that I use in my job in life all the time is that like success equals results minus expectations. And expectation setting is oftentimes an overlooked and important part of the like founder and investor relationship.

18:08And so setting proper expectations around growth, around margin, around new products, around exit, around what you're looking to kind of get out of the next year or two years, or like making sure that overall your timelines and vision are aligned with your investors, right? Defining expectations and success I think can set you on the right path. And alternatively, if you don't do that, can really create a lot of misaligned incentives and negative situations. So I would say that's my higher level one that I want to get across. And the second one is very tactful and shout out to Ben Zeises who turned me on to this one, but I think it's very true, is to send consistent investor updates.

18:45It holds you accountable. And it's honestly, it's such a scalable form of communication with investors of one-to-many communication that in terms of ROI on time, It's just kind of a no-brainer. And it's one of the most correlated variables to success that I see. One of the things that a lot of the home run businesses in our portfolio have in common is that from an early, early stage, they've sent consistent investor updates. That's really helpful. What should an investor update consist of for you? Or, you know, what are the typical formats of ones you see in terms of length, content? Is it monthly?

19:20Is there a lot of business changes between investor updates? could you give a little bit more color and guidance on that for any founder that wants to get started or develop that a little further yeah and for anyone that's interested i'm happy to send templates too but there's no one size fits all honestly it's always different generally they like all include some kind of high level metrics right how did the month go and usually monthly is the right cadence honestly how did the month go from a top line standpoint how did it go from a margin bottom line standpoint what are kind of the top three or four kpis that your business is tracking?

19:53Is it repeat purchase? Is it Amazon reviews? Is it like whatever those are that you've established with your investor base and board to kind of give a high level update on those? And then just kind of cue like, hey, like what's gone, what hasn't? And like, what do I need help on? Right? Like that's generally like what's in every single one is, hey, here are my asks. If anyone knows a buyer at Costco or if anyone knows like the best SEO agency or whatever it might be. Again, like one to many of putting those asks out there is, is I think a really scalable way to spend your time. Yeah, that's really helpful.

20:24And I feel like sometimes I think people can be a little shy about making asks because you're not sure like, is this supposed to be like buttoned up where everything I'm saying is amazing? Or is this supposed to be more realistic where I'm just having like an honest update about my business and I can be vulnerable? And I think a lot of founders kind of grapple with that or in general can be anxious about fully disclosing some aspects of their business or talking extensively about what they're worried about or what they're working on for fear of being judged if they're trying to get a fundraise done.

20:57So I think it's really helpful perspective and color to see how you're thinking about it and what you're receptive to and that questions are good and identifying risks might also be a positive for a founder to do as well because it shows they're thinking about things in a critical way. Yeah, I agree. I mean, I might bias towards honesty, maybe a little bit more than is helpful. But again, like one takeaway is just, and this is actually a decent signal for founders as they're going through an investment processes, you should gravitate towards the investors who are willing to have the hard conversations.

21:35You should gravitate towards the ones who are like open to hearing and understanding what's not going right with the business. I think generally speaking, our median hold time is five years, maybe as long as 10 years, right? So to think that there won't be really difficult times is just kind of a joke, right? And oftentimes when you're fundraising, things are going well, and when you're closing around, everyone's happy. But hopefully, like throughout the investment process, there is a hard conversation or two to have around valuation or around risk or whatever that is. So you at least can get a sense.

22:06So speaking personally, I love it when founders or are you kind of mentioning things that are not going well in their investor updates so that I have an honest view and it's kind of like if everything's rosy my feelers are up of what are you hiding like what's in there for me to find versus that that diligence muscle coming out yeah it's true seeking for the gremlins and truth finding I think that's great advice and touches on I think how important to your earlier points as well how important it is to find the right fit have the same expectations in your business, not from just a numerical standpoint and a performance standpoint, but also from a relationship dynamic and experiential standpoint as well.

22:47So I think that that's great commentary and great color. We'll be right back. Are you going to crush it on Amazon this year? It's such an important channel, but it's so hard to do alone. And most agencies are a total ripoff. We can't afford$5 ,000 a month than a commission on our sales. They just don't get it. That's why I love our partners at Daybreak. They are full service, meaning they do the creative work, the listings, the logistics, and of course all the ads, all with the most reasonable retainer out there. I work with them personally. I'm so grateful we have such a good partner to recommend out to you, our community.

23:20They do evaluate your product first to see if it might be a fit. So if you want them to have a look, email them startupcpg at daybreak.agency and they'll do a free audit for you. Good luck, everyone.