Hello, everybody.
I am Melissa Travers, Director of Community here at BevNET & NOSH.
I am with my co-host Jackie Brugliera, Director of Marketing and co-host of Taste Radio.
Jackie, that was really something, and let me tell you something, I know this is going to be shocking for everybody, but I can't sing a lick.
I thought that was pretty good though.
I mean, we were warming up our vocal cords, we're getting ready for the first episode of Community Call the Podcast, but this isn't your first rodeo, Melissa.
This is far from my first rodeo.
This might be the 35th rodeo or so.
We are very excited to announce to you that we are turning our Community Calls into podcasts.
So we've been doing Community Call for about seven, eight months now.
We have a bunch of recordings on bevnet.com/communitycall.
But we also understand that people are busy, may not have time to watch a video in the middle of the day.
So we are turning our Community Calls into podcasts.
We've got a ton of content coming your way.
And our episode number one is the chat that we did with Kiva Dickinson and Chuck Cotter about what investment looks like today.
And I think that makes sense.
That's why I was thinking about money because we're talking about money today.
We are certainly talking about money.
These are the money, the money people.
And I thought they did such a great job breaking down what is going on in the investment landscape right now.
And I certainly, you know, we hear that it's difficult, but I also was encouraged by so many of the things that they talked about.
They talked about the good news about raising right now and talked a little bit about how some of the information we're getting in the doom and gloom category is kind of focused on tech, whereas food and beverage is in, you know, a bit better shape.
They also talked about what investors are looking for.
Kiva broke it down into the fact that investors are looking for efficiency and outliers.
And then he goes on to describe exactly how founders and brands can become an outlier.
Yeah, so the great news is there's still money and there's still companies fundraising and raising capital in the food and beverage and CPG space.
And if you're not talking about money right now, you should be, because the best time to talk about, you know, raising capital is when you don't need it.
So this episode is definitely relevant to anyone in the CPG space.
Absolutely.
Chuck Cotter and Kiva Dickinson also did such a great job of giving clear, concise and detailed information.
Kiva also likened the due diligence process to a house inspection, talked about what's tripping up deals right now, and also talked about how to not have your deal tripped up, tripped up, which I just tripped my own self up.
So no tripping up after you listen to this.
Yeah, and there's a lot of great questions that were coming in during that a lot of participation.
A lot of people have questions about fundraising right now, which is understandable.
Everyone has questions in this current economy.
And having that direct access to people that have done it before and are seeing it firsthand is just invaluable.
We got a lot of folks hopping onto this Zoom call.
As you mentioned, we got some great questions from the audience.
Ben from CanAid asked Kiva what he's looking for in board seats during a deal.
And then Adam Bent from Scout had a great question about how to structure rounds right now in such a competitive environment.
And both of them got some great answers there.
And if you want to jump on to a future call and get your questions answered live and with an audience, no pressure.
But you can do that.
Head to bevnet.com/communitycall.
And you can see all of the future episodes that are planned that are going to be live.
And you can register and just jump into the Zoom call and it's free.
Join us on Zoom, ask your questions.
Great place to get exposure.
We want to see you there and we want to hear from you.
We want to make sure that all of this content is as relevant as possible.
And the best way to do that is to have all of you in our BevNET and NOSH community involved in the process.
And if you can't catch us live, you'll catch us here.
So continue tuning in and make sure you subscribe and rate our podcast.
Because as we are getting going, that is the best way to help us expand our reach and reach other people in the food and beverage space.
And as Jackie mentioned, we are going to have these podcasts coming at you fast and furious using the content we already have from our existing community calls.
So stay tuned for those.
And without further ado, we would like to introduce the first episode of Community Call, the podcast with Kiva Dickinson of Selva Ventures and Chuck Cotter of Holland & Hart talking about the state of investment right now.
Enjoy.
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Let us know.
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So let's dive right into this.
Thank you so much, Kiva and Chuck, for joining us today.
Why don't we just get right into it?
Please tell us what is happening in the fundraising environment right now, and how are the two of you working together?
I would say it's definitely slowed down.
Over the past two years, we have seen rates go up, interest rates go up pretty substantially, which has changed how much risk appetite investors have across the ecosystem.
And while consumer products companies have performed significantly better than a number of technology companies have over the past year and a half or so, there are still less capital sources in the ecosystem right now.
We raise capital from investors to invest specifically in consumer brands.
But there are a number of investors who invest in consumer brands who are angel investors, family offices, generalist investors, who have a lot of incentive to slow down during times like these.
And so if nothing else, the market has been slow and that has shifted some of the power away from founders who are raising capital.
Similarly, I'm seeing there are a few rounds getting done.
There's still a lot getting done, by the way.
And so as we're telling you, it's not the glorious sunshine of two years ago.
I don't want people to think it's also terrible either.
But definitely fewer rounds getting done, more investor favorable terms on most of the rounds getting done, fully different composition of things, which maybe we could get into a little more later, more insider rounds where existing investors are keeping the company's capital going.
And for earlier stage brands, I think Kiva hit maybe the most important thing, which is angels don't have like a pot of money that can only be invested in consumer brands, right?
They can lock it up and earn interest in a savings account.
They can buy real estate.
They can do whatever they want to do with it.
And that's where I'm seeing the most drastic change is a lot of angels are not not investing.
And can you explain how the two of you work together?
When do you engage with each other and how are you kind of blocking and tackling all of the work and inquiries and deals that you're seeing come across your desks every day?
So when we are approaching an investment with a company and reach the point where it's time to potentially put forth a term sheet, we at that time call Chuck and his team.
And Chuck leads what we think of as the best food and beverage practice within the ecosystem.
So not only is he an expert in general corporate law, but he also knows all of the kind of quirks around what it means to grow and eventually sell an emerging consumer brand.
And so while we are often prior to a term sheet signing, taking the lead on most things in due diligence, meaning evaluating the financials, evaluating the unit economics, spending time with the founder to see if we have vision and alignment and ultimately pricing the deal.
Once we sign the term sheet, we typically hand things over to Chuck's team to lead diligence from there.
And Chuck, you could probably share some of what that would entail.
You asked how do we work together?
You can see it's with joy, but it is basically when Kiva and team come to us, they've already vetted that's a person they're interested in partnering with and they vetted the business.
So the two things we're doing are at the front end, thinking through with Kiva and team, how should the deal look and be structured?
Like what's the type of security we should be buying?
What are the rights we should have?
And his team is very sophisticated, so they've done most of that thinking already.
And then after that, it's looking into the, of course, there are the investment documents and so on that you're putting together, but it's looking into the company and making sure it is what Kiva and team think it is.
And that's a key takeaway, I think, for the brands is by the time you've gotten an investor and interested in giving you a term sheet, make sure you are what they think you are.
We're trying to identify for Kiva and team red flags, yellow flags that they may not have seen doing business diligence and partner diligence.
How are these negotiations looking different now versus a year ago or three years ago?
First of all, I would say investors are more willing to walk.
So there was a period of time there, I don't know whether we'd call it three years, four years, whatever, where a lot of my investor clients were like, Chuck, we just got to get this deal because there are 20 other funds circling at the same time who will often take very founder favorable terms and valuations.
There's both a perception and a reality that there are fewer capital alternatives for most of these companies.
And there's more pressure on the investors to pick their investments wisely.
Kiva could probably tell you if he's feeling it, but I certainly think LPs are putting some pressure on a lot of their funds to pick investments wisely and get good deals when they can.
So investors are willing to walk because there are more deals out there for them and less competition, it seems like.
When an investor walks away, what's going to make them walk?
What are you seeing as being sort of deal breakers right now?
From my perspective, I would say two different stages of walking when I say that.
One is we're pretty interested, but we never got to a term sheet because you just didn't hit enough of the buckets.
And maybe two or three years ago, if you checked three or four boxes, we still would have done the deal, but now you need to check all four.
And then there's post term sheet stage.
There was a while where if you had assigned term sheet, it was as good as gold that you were going to get a deal done.
And that's certainly still the majority of the time, right?
People want to finish a deal that they've signed a term sheet on.
But if an investor sees a red flag in diligence right now, they are far more likely to say, you know what, we just can't do this deal.
I would probably think about that concept as you're selling a house and what happens before you ultimately sign an exclusive agreement.
If there's something that comes up in an inspection, not only is the buyer going to walk away, but there is going to be tension in the market that may make it harder to sell that house afterwards.
And so what we're finding is any little topic that comes up.
And we see this not just when we're investing in a company, but when one of our companies is looking to raise their next round from somebody else.
Every little topic that comes up prior to signing term sheet or post-signing term sheet is just met with a different level of anxiety and a higher willingness to say it's the onus of the founder to just fix this for us before we ultimately invest.
So because of the current state of things, bargaining leverage is kind of heavily tilted in the investor's favor, whereas that may not necessarily have been as much the case.
We had someone write in and say they're raising a seed round, but they're being told they need to be at a million in revenue, but they're going to use that capital in order to scale to that point.
What can you tell us about the best time for a brand to raise in this current state?
I have always believed that brands need to figure out ways to do more with less.
I'm constantly in these conversations where a founder has an incredible story, an incredible idea, and they're looking for somebody to give them the capital necessary to go prove that they can hit that million dollar mark and raise more capital.
It's a chicken egg problem.
And what we see is just a very, very wide pyramid of companies below a certain size that ultimately are working their way down to get to the point where we can ultimately get the conviction and get the comfort to invest in them.
I would basically say that investors now more than ever are looking for efficiency and they're looking for outliers.
And so that frustration that is felt around reaching a million before you can get that capital needed.
I would just say that the efficiency that you can show to reach that million dollars is what the investor is looking for as proof, not just the million dollars itself.
And finding a way to manufacture that is how you become an outlier and how you reach the levels that many of these investors will get excited about, giving the terms that are attractive to you.
And capital was so free in our space for so long that the truth is there were probably a lot of businesses started that could not have existed but for the abundance of angel and VC money.
And the scrappiness, I love that word because I love seeing it, the scrappiness that you see from folks who can get to a million with just the money that they can get from non-professional investors is huge.
And by the way, I have no illusions about how hard that still is, right?
Nobody's saying that's easy.
The days where I would even go one step earlier than Kiva, the days where someone will show up and say, got this awesome product, need 500,000 from Angels to get it in its first store, right?
Like that just, you're going to have a really hard time finding that right now.
What are the main criteria you're looking for now and what metrics are you looking for?
So I think we have always wanted to see real problems being solved for consumers that show up in the unit economics and P&L of one of our companies.
So yes, we want to see revenue growth, but one of the metrics that we lean on that we often don't talk about with companies is we compare annual revenue to the amount of capital that has been raised and deployed to create that revenue, meaning if two companies have raised or two companies are at $5 million in sales and have been around for the same period of time, but one of them has raised $5 million of capital and one of them has raised $1 million of capital, that company that's raised $1 million of capital is a lot more interesting to us.
And so that metric has always been part of our calculus, but it's more important than ever as we recognize that it might not be as easy to access the capital markets next time and the next investors and future acquirers of these companies are going to be really focused on efficiency rather than growth.
As we've unpacked how to get that efficiency, we found the two magic numbers to be gross margin and repeat purchase.
Gross margin meaning really fully loaded, like all variable costs necessary to get the product ultimately in the hands of the consumer.
And repeat purchase can be online repeat purchase or it can be in-store velocity.
But we're basically finding with no exception that if efficiency is possible, it comes through high gross margins, high repeat purchase.
And so we're really looking more than ever for companies that check those two boxes in a really big way.
Yeah, and I would add this is not just like a mutual high five show between me and Kiva.
But if you look at the, sorry, the brands that they've invested in giving how early they invest, the number of like his hit rate is incredibly high.
And you guys can just go to their website.
You can see that.
But it's because they look at things like this.
I would add just to qualitative criteria because we obviously don't look at the quantitative criteria like Kiva and team do.
But it's things that we vet in clients we want to work with.
But we also see funds vet in the people they want to work with, especially earlier stage, which is you just have to deliver a sense of professionalism, trust and confidence, right?
And in any meaningful partner you're going to have that they trust your follow through, they trust your scrappiness.
I'll just keep using that word.
And they trust that you have high EQ to be able to work with people, listen to what they have to say and still have your own point of view.
And Chuck, to your point, brands need to be more buttoned up than ever when they're coming to you.
What are some of those key factors that you need to see all taken care of when they're coming to you?
Like, is there sort of a quick list that brands can keep in mind?
Yeah, the stage of, gosh, you better have this right.
It expands depending on how farther along the brand is, right?
So, you know, if you're an earlier stage brand, it's pretty, I have a pretty limited subset, which is, do the people you think own the business actually own it?
Does the business actually own the IP you think it owns, including trademarks, right?
Because at the end of the day, a lot of the value here is in the brand for most of these companies, which is trademark.
Have they just signed any catastrophically bad agreements like manufacturing agreements or licensing or whatever?
That's the relatively earlier stage brands.
As you get farther and farther along, the importance of things, which maybe you could have overlooked early, becomes bigger, right?
But when we are saying brands should be buttoned up, the business goal of that is basically to say, we want to minimize deal risk and minimize time between reaching a deal with an investor and getting that money in your bank account.
And the more buttoned up you are by the time you reach a deal with an investor, the less likely an investor walks and the more compressed the time will be before the money hits your bank account.
What does buttoned up look like for you, Kiva?
When Chuck and I work together, I'll be very, very explicit as to what it's like when we sign a term sheet.
When we sign a term sheet, we do not want to walk away because we want to be able to say to every company that we give a term sheet to for the history of Selva Ventures, that when we sign a term sheet, it's etched in stone and we are intending to close.
We want to have that reputation.
And so far, we've got a thousand on that.
And so when we go to Chuck, every single push that we have is, can we possibly accept this?
Meaning a trademark issue comes up.
We want to be able to satisfy the agreement that we made.
And Chuck is there to protect us, to say, this is too far.
You need something here.
You need a protection to make sure that this trademark issue, this cease and desist they've received, this thing that they said that they implied they own, that they said that they own, is just a bridge too far.
You can't do this or this agreement that they've signed may come back to haunt them one day.
So what I have come to do whenever possible is basically before we sign a term sheet, say to the founder, what am I going to see when I look behind the curtain?
And they can walk through what are the trademark issues that they may have?
What are the co-manufacturing issues that they may have?
What are the random lawsuits that they've received across time?
We tend to be pretty understanding when those are brought up in the right way.
But when they're sprung on us after we've signed a term sheet, after the implication has been that things behind the curtain are clean, that's when it tends to get a little bit more messy.
So I think what Chuck's recommending, and I wholeheartedly agree with, is all that stuff you're waiting to like spring on the investor after they've signed a term sheet, try to collect them, clean them up, control the message, and bring it up front so that they don't sign a term sheet with you without knowing all of that.
Great advice.
And that touches on due diligence as well.
Sara Cossagrande has a question.
What are some of the red flags that come up for you when you're in that due diligence process?
We named some of them.
Recently, what else has been coming up that is making you shy away from possible partnerships that may not have been as much of an issue a year, you know, a few years ago?
I mean, I could throw out some.
There's debt you never disclosed that you expect to be repaid.
There's a co-founder who disappeared two years ago who owns 30% of the company still.
There's a co-manufacturing agreement that you can't terminate for 10 years at terrible pricing that's exclusive.
There's these sorts of things.
And by the way, even when we note them as yellow or red flags, as Kiva was saying, that doesn't mean you can't come up with a collaborative solution around them.
But you have more trust and confidence from the investor and Investors Council if you have been proactive in helping identify and solve those issues rather than waiting for us to do it.
I think it's worth saying, and I would echo everything Chuck said.
I mean, I'd say those plus trademark is probably what we're always looking for.
It's worth being more explicit to say that when we invest in a company between like zero and $10 million in sales, what are we really investing in?
We're investing in people.
We're investing in IP, meaning a word, a logo, a mark that is recognizable to consumers and retailers.
And we're investing in an ability for that to scale, which comes through their co-manufacturing network or self-manufacturing network.
So sometimes it can feel a little bit unfair that we're like drilling into trademark so hard.
We often see a company will receive a cease and desist on their trademark from some random other partner, and their counsel will tell them you're totally fine to operate.
But our counsel will then tell them this is going to get in the way if you one day want to sell the company to a private equity firm or a strategic.
And that conversation tends to be pretty tough because we say like we're in part investing in you to believe that one day we can get our money out.
Our money can get out a lot of different ways, but if our money absolutely can't get out via a strategic because you don't own your trademark, the company is just worth less in that time.
It's not worth zero, but it's worth less.
And namely, if we have that conversation after we've signed a term sheet, it's worth less than the number that we put on the term sheet.
You mentioned ability to scale is certainly something that you're looking for.
That can be hard to prove.
How does a brand prove that to you?
What metrics are you looking for?
I'd say it's less metrics for us and more about the capabilities of the team.
And so most of what we're evaluating in their ability to scale comes before term sheet.
When we're just spending time with the team, seeing who's on the team.
Have they shown an ability to problem solve?
Did they previously come from roles at other companies that provided some experience in manufacturing and supply chain?
Once we get to handing things off to Chuck, it's less about evaluating the metrics around whether they can scale and more about like, if there is some major thing, whether it's a flawed agreement or a lawsuit or some issue with their FDA approval, that might get in the way.
Ray has a question, Ray Latif, what kind of IP is most attractive to early stage investors right now?
You should all have a trademark, right?
We keep talking about that or a portfolio of trademarks.
It's not particularly common for there to be patentable IP for consumer brands.
There are certainly a handful of them that we have to have patentable IP, and that can be of value.
You have trade secrets, which are IP that you don't register, right?
That you just protect through confidentiality agreements.
The most key trade secrets you have are probably your recipes or product formulations.
Yeah, those are really the three buckets of IP.
To me, just with pattern recognition around what's going to impact an exit to what Kiva said, it's just the strength and scope of your trademark rights.
I would just to give a real life example to it, like if Kellogg's is buying RX bar, part of the reason that they're doing that is to be able to go create RX overnight outs and RX cereal and other different things in that way.
So like what your trademark portfolio is today is very different from the future value of the trademark portfolio to an acquirer.
It's all about potential.
Exactly.
We have a question from Eloy.
Are EDIL loans looked at negatively from your perspective, you know, in terms of red flags?
What do you think about that?
I haven't know.
I mean, presuming that you obtain the loans correctly, I've not seen an investor really bulk at it because they tend to be very low interest, maybe even forgivable, depending on because I'm speaking more broadly about the type of loans we see, not just EDIL.
I haven't seen that be a major issue.
Got another question from Adam Bent from Scout.
How do you recommend founders structure their rounds right now under the current fundraising environment where it's more favorable for investors than the companies with less activity?
And obviously there's more competition for dollars from other brands right now.
When we're advising brands, first of all, I'd like to level set.
So I always like to straight talk our brands.
I like to level set with just because it was a historically high valuation market three or four years ago doesn't make the current market bad, right?
First of all, there are still lots of lots of probably exaggeration, plenty of deals getting done at those really good outlier values still.
Then there are a lot of deals getting done at solid valuations relative to your business and your business potential.
For founders, I mean, there's always the give and take between raise the least you can to get to the next valuation and collection point versus will capital be there when you want to raise it next time?
And are you willing to assume all the risks that you didn't execute perfectly to plan because then the capital may not be on better terms when you want to go raise it.
And you guys have to decide that risk reward for yourself, but certainly you can maximize your returns by not over raising.
Yeah, I would just say as a founder, you have two points of leverage.
One is the ability to walk away and two is the presence of another bidder.
So if you have the ability to walk away, that means you're not out of cash tomorrow, needing any last dollar rescue financing.
And if you have another bidder, that means you're pushing to this.
If you have bidder B, then you can push to bidder A, like how much do you really want it?
Because I can go with this deal over here.
And so we tell our brands, funnel folks through a process where you can cement a lead investor that will matter and will start the clock for other investors to catch up to and do whatever you can to avoid running out of cash during this process, where all leverage goes away.
That comes from starting your process earlier than necessary and burning less along the way.
Is there anything else that comes to mind that brands can do to protect themselves?
You know exactly what it's like on the investor side of the table.
What would your advice to brands be right now so they can protect themselves in a tight market?
I would draw a distinction real quick that I think is important to draw.
Sometimes when founders say protect the brand, they mean protect the founder.
And those are two different things.
So sorry Kiva to jump in front of the answer you're probably about to give.
But I think that's an important distinction for founders to remember.
Is there is a difference between protecting yourself and protecting the brand?
Yeah, I would say face reality sooner than it feels obvious.
The companies in our portfolio that did the best in 2022 accepted that they may need to raise capital earlier than they expected at terms that were not optimal.
They maybe reduced costs earlier than expected.
If you reduce costs a month or two before you're out of cash, you really can't move the needle.
They cut off certain channels that were proving to be less economically feasible than they were in the past at the expense of top line growth.
For a lot of folks, that has been D to C, but in certain situations, it's certain retailers that are just really expensive to operate in.
And it's frankly getting really, really good advice.
Like, have a good lawyer that can navigate and ultimately get you to close and listen to that lawyer.
If you have angels who have been in the game, either as founders or later stage investors, lean on them and be willing to hear hard truths.
Because if you can make it through times like these, then you can make it through any time and you'll be in a big position of advantage coming out of a difficult macro environment when others are hobbling and you have a position of strength.
Understood.
Makes perfect sense.
We have a question from Ben from CanAid.
Do you typically require taking a board seat or multiple board seats when making an investment?
I can speak to us specifically, Chuck, and probably we speak to what he's seeing in the market.
When we are a lead investor in a seat or series A round, we do ask to be in the board room, whether we are a voting member of the board, depends on the situation of the company and who else is around the table and what our role is vis-a-vis those people.
I would tend to say that during 2019 through 2021, there would at times be feedback from founders when they raised capital that they did not want anybody joining the board or they did not want there to be a board.
And I would say those were very much red flags.
A board member is rarely able to stand in the way of the founders operating the business in a way that makes sense.
And so the thought that board members from the outside should not be in the room, should not have a voice at the table, even a non-controlling seat at the table, just tended to lead me to ask the question back to founders, well, what are you trying to hide?
Like, what do you not want me to weigh in on?
And I feel like things are swinging away from that direction now, but Chuck could probably give a better opinion on that.
He sees more different types of deals than I did.
Yeah, I mean, our lead investors always want a board seat, sometimes too, if it's a really big round.
By really big round, I mean, they're getting $30, $40, $50 million.
The key is not whether you give them a board seat or not, although if a round is small enough, I will counsel our brands, don't give them a board seat, but that's in the hundreds of thousands, not the millions.
The key thing to remember is what is the size of the board and how many seats do the founders get?
Because, for example, for your seed round, you give your seed lead a board seat, but the founders retain two, you still win every board vote, right?
If then you go to your Series A round, you add a seat for your Series A lead, you increase the board to five, and the founders keep three seats, right?
That's typically how we see it.
Excellent.
We have another question from Robert Clayton Hill.
He wants to know, what's the best way to cover costs if a brand gets an expected or unexpected chain authorization?
So basically, over committing, are extra funds typically available to cover this kind of activity?
Yes, yes.
And frankly, coming with good news like a chain authorization is a great way to spark a good productive conversation and interest from an investor.
So I would say those kinds of news are a great time to raise capital and be thoughtful about how much is really needed and be thoughtful about whether it can be equity, debt or both.
But definitely yes.
Sounds like a good time to be raising money.
Holly Corrales wants to know how much weight do you put into a brand's existing press coverage when exploring potential partnerships?
I think all brands are sort of looking at their bottom line right now and looking where to put their money.
Yeah, I don't think we would put much weight into coverage that's not translating to financial results.
In short, I think press is valuable.
It builds long term brand equity and brand awareness.
And all those things are really important, but it's really an input, one of many inputs that can achieve those things.
And we need to see it show up on the scoreboard in some way.
We are running out of time here.
We have time for maybe just a couple more questions.
You know, we sort of zoomed in a bit, but big picture.
We've got a question from Saul.
When you're looking at a new brand, what excites you as a first impression?
You know, sort of like a high level question to understand what green lights a brand in your mind when you're meeting them for the first time.
It's the combination of a problem that is big enough to matter, yet is still unsolved and a founder that appears to be that kind of X factor capable of solving that problem and creating an outlier outcome.
And so often I say that is often we get too far into the meat of a deck or a pitch without really cementing why the problem matters and how big could it be and why this solution is so different.
So I tend to say like spend all the time answering that one question until the investor really gets it and then move on to the rest.
Another question.
Are you seeing a slow down in funding for safes also?
Yeah, I would say yes, because it tends to be more angel money.
And maybe if I could say one big final point on this stuff, it's harder to get money, especially if you're earlier stage.
But I don't want people to think there's been like a seismic shift.
The deals that are getting done are marginally better for investors.
When you find the money, they're not radically better, but it is harder to find the money when you're an early stage brand.
That's a safe stage.
We've heard sort of about what the difficulty is right now.
What's the good news?
Maybe let's close with a piece of advice from each of you.
What's your best advice for brands right now as they're raising and doing everything they can to head into these conversations and negotiations in a positive way?
I think the good news is that the dark cloud over the venture capital industry is often confused in its application between technology and consumer products.
There are a lot of things that are hurting the technology venture market that get written about as venture in general, that don't actually affect consumer.
If you want to look at the stock prices of many of the fast-growing technology companies over the past 18 months and compare those to the stock price performance of basically all 25 plus big CPG publicly traded companies, you'll see a drastic difference.
Technology is down 50 to 80 percent per company.
Late stage CPG is flat to up.
These are companies that perform particularly well during downturns.
People do not stop grocery shopping during downturns, and the inflationary pressure that has affected or has been worried to affect many of these companies has actually not been as problematic as many folks expected.
So I think there is a real opportunity to educate the investors that you speak to that not only is CPG in a healthier place than technology, but the outlook for CPG is really positive during the next six months to three years.
And this should be a very attractive place to be deploying capital into early stage, fast growing companies.
Great advice.
And I would just say broadly, the type of products that are being created by these types of entrepreneurs in the consumer space are the things more and more people want.
And it is better if you have to pick it to raise money and build a business when it's hard to raise money and exit it when it's on its upswing than to raise when it's easy, but have to sell when it's on a downswing.
So I know it's hard, but there's a lot of brightness.
Great stuff, gentlemen.
Kiva Dickinson from Selva Ventures, Chuck Cotter from Holland & Hart.
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