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Investor Napkin Math, The Silent Killer + M&A 2025
Back-of-the-napkin math investors use that founders should know before they raise, plus a recap of all the M&A activity so far this year.
FirstLook
April 06, 2025
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Yá'át'ééh! (“Hi” in Navajo)
Welcome back. Today we’ll cover two things: A recap of 2025 consumer goods M&A activity, and the quick back-of-a-napkin (BOAN) math investors do when first assessing a deal. But first…
Things have been ripping lately at FirstLook. The brands and deals in our investor boxes since becoming free for brands has been incredible. Our members are getting Tier 1 VC quality deals and meeting others in the group to build their networks. The feedback has been incredible.
If you’re an investor, join our community. Invest in your VC investing career just like you do for your health via a gym membership, shopping via a club membership, and your social life via a country club.
I’m hosting a Members-Only Happy Hour in NYC June 5th. Would love to have you there. Ok, let’s dig in…
Part 1 - Consumer Goods M&A 2025
It’s been an exciting start to 2025 with significant acquisitions across the landscape. Here is a quick recap:
Spindrift to Gryphon Investors PE for $650M
Alani Nu to Celsius for $1.8B
Sour Strips to Hershey’s for $75.5M
Urban Skin Rx to American Exchange Group for ??? - Skincare multiples avg 4-10x rev. Last known rev was $30M in 2021. Let’s assume they’ve doubled to $60M since. Low end of $240M to high end of $600M exit size.
Simple Mills to Flowers Foods for $795M
Geologie to Megalabs for ??? - Geologie 2024 rev estimates are $15-30M. Skincare multiples avg 4-10x rev. Low end of $60M, high end $300M.
Poppi to Pepsi for $1.95B
Mela (a FirstLook brand!) to Calypso for ??? - very little public data available here so let’s go more broad. A young, fast growing bev usually commands a 5-7x multiple premium (versus 1-3X for mature brands like Poppi). If rev was $25M, then $125M to $150M makes sense here.
Lesser Evil to Hershey’s for $750M
Acquisitions the back half of 2024 included Olive & June to Hydro Flask for $240M, Ghost to Celsius for $990M (this was a 60% acquisition meaning Ghost’s valuation was $1.65B), Siete Foods to Pepsi for $1.2B, and ZAO Energy to Molson Coors for ??? (ZOA’s reported $100 million in 2022). Did I miss any others?
It looks like liquidity is flowing back into consumer investor pockets. Love to see it. Let’s hope the second half of 2025 is even better (though hard to tell with these markets)!
Part 2 - Investor Napkin Math
I’m often on calls where a founder gives me high level details on their round and ask, “So what do you think?” I ask a few more questions, then give feedback.
It’s important here for founders to understand the simple math investors use to quickly determine if it’s worth digging deeper on a brand. Instead, many think, “If we’re a runaway smash hit, anyone who invests will make a ton of money!” Generally speaking, yes, investors will make money if a brand is a homerun.
The gap in thinking here: Does the potential ROI outweigh all the risk between now and an exit. Is the ‘juice worth the squeeze’?
Let’s unpack this BOAN math. Keep in mind, every investor is unique, but generally speaking, there are some foundational variables that consistently show in up in quick calculations:
Valuation- the brand’s valuation for the current round an investor may join
Exit Size- how much an investor estimates what the brand could eventually be acquired for
Dilution- how much their equity stake could be watered down from future financing rounds
Risk- what are all the risks a brand could face between now and an exit
Time- how much time will it take for the company to reach an exit/liquidity event
There are an infinite number of subfactors across all those variables, plus additional variables not mentioned, that investors consider when running calculations. Far too exhaustive to cover here, and each investor is different in what they consider.
Let’s run through an example of an angel who rarely exercises their pro-rata rights.
Example: You’re a cookie brand raising $1M at a $10M valuation. This investor estimates that a $400M exit in 6-8 years is most likely. Here’s what the voice in the investor’s head sounds like:
“If I get in at $10M, they exit for $400M, that’s a 40x ROI. But they’re early and will need to raise at least 3 more rounds. Average dilution per round is 20% so my 40x is actually a 20x.
Is a potential 20x worth ALL the risk this brand faces between now and an exit, AND having my money completely locked up for at least 6 years? Idk. Doesn’t feel like it’s worth it. If I’m going to invest early, I want 40-100x baggers. This deal isn’t for me. I'M OUT.”
Woof. That was quick. This investor didn’t even need to dig deeper determine this investment wasn’t for them. The return wasn’t right, and the deck they initially reviewed didn’t feel like enough risk was removed at this point.
So what can a founder control in napkin math?
First, valuation. A brand’s current valuation is usually where investor math goes quickly south. This is why high valuations are essentially suicide for a brand. A sensible valuation greases the wheels for your round to move faster so you can get back to building quicker.
Next, exit size. If a founder can paint a picture that the acquisition could be huge, now the math starts to make sense. The argument for why it would be big needs to make sense though.
Lastly, risk. Founders should think and speak in terms of how they are de-risking their business. This comes in so many forms including team experience, product IP, supply chains, growth strategies, etc. In other words, what are all the unique strengths this startup has that make it more likely to succeed.
Time and dilution are the toughest factors to manipulate. However, sometimes you see founders with a plan on how they’ll exit quicker, or a growth path that needs less future capital (aka less dilution for past investors). These aren’t as common as in many cases it takes time and money to reach a point where acquisition offers start showing up.
In Sum
So why did I explain all this? What’s the point?
First, it’s a good exercise for founders to do before raising. It helps them better understand how investors think, what dilution does, and whether the potential ROI (the juice) is worth the risk at the valuation (the squeeze).
Second, so founders can get ahead of all this when meeting an investor for the first time. On an initial call, have the investor introduce themselves and what investing looks like for them first. What’s an ROI range they aim for? What’s their time horizon? Do they exercise pro rata rights? How do they think of risk? For VCs, must every investment be a potential fund returner? Knowing all this will help founders better craft their pitch when it’s their turn on the call.
Last Second Things
I’m contemplating moving us over to Substack. If having this newsletter come from them is not your jam, please unsubscribe. Otherwise, stay tuned. The FirstLook CPG Industry Master Cal used by 1600+ folks was recently updated with event dates, and I’m now diligencing brands for the May, June, and July investor boxes so if you’re raising, apply here.
Lastly, here is Ashton Kutcher’s favorite VC scoreboard:
Founder Pro Tip 💡
When you’re looped in an email with an investor, always offer to send the calendar invite. Put your ego aside and take charge. Don’t make the investor ask, you’ll already be starting behind the 8 ball before the call even happens as it can be a pet peeve for some.
Did a friend forward you this and now you want to join? Hop a’board
February Box Brands 🚀
❗REMINDER❗: The brands below lag ~2 months behind the present because I need to give FirstLook Investors time to request intros and invest. If you’d like a ‘first look’ and opportunity to invest in rounds before they close, join our community.
Founded by Stacey Rhee |📍LA - Shop / Instagram / Linkedin
How We Met Them: via their signup on FirstLook.vc
One Liner ✍️ — Kitty Up is a feline-focused nutrition company dedicated to science-backed ingredients and formulations that address common cat health concerns, including gut health, urinary tract support, kidney function, allergies, and obesity—promoting longevity and overall well-being.
What Made Them Stand Out: A disproportionate amount of VC dollars have flowed into dog brands over the years despite 1 in 3 homes having a cat. This has left the cat market underserved which is Kitty Up’s opportunity. Their product incorporates innovative ingredients like postbiotics, superoxide dismutase, and phytoplankton, all exclusively designed for cats. Stacey is a strong founder with extensive knowledge of ingredients and manufacturing processes. The brand has enjoyed consistent MoM growth since day one. I can confirm this product works well as my parents cats lap it up SO QUICK!
Request An Intro (Investors Only)
Kunana
Founded by Santiago Stacey + Carlos Gutierrez |📍Toronto - Shop / Instagram
How We Met Them: via their signup on the FirstLook.vc
One Liner ✍️ — We rescue and transform bananas. Our first product is a delicious plant based, upcycled, banana milk.
What Made Them Stand Out: I liked Kunana for 2.5 primary reasons. First, plant-based milks are still a big deal despite a bit of cooling in the space. A lot of people prefer/need it over regular milk beyond just preference.
Second, the challenge with some PB milks is trying to guess how it will taste. Rice milk, hemp milk, macadamia milk, etc. It’s…confusing, which makes driving trial cumbersome. With banana milk, it’s a way easier sell. Everyone knows and loves bananas which makes it exciting to try the product and thus capture conversions.
Lastly, Santiago is already a successful founder having build LiveKuna, a vertically-integrated food company in Ecuador. I’m excited to watch Kunana grow, especially given the sustainability angle that is important for many consumers.
Request An Intro (Investors Only)
March First
Founded by Tucker Matheson |📍NYC - Shop / IG / Linkedin
How We Met Them: via a cold email from Tucker!
One Liner ✍️ — Change the course
What Made Them Stand Out: Golf is hot (Good Good Golf just raised $45M), and it’s becoming an even bigger focus for women. The problem is there are very few clothing brands 100% dedicated for woman on the course. March First is, as Wayne Gretzky once said, “skating to where the puck is going.” They’re seeing the ground swell before everyone else and executing at a rapid pace.
Tucker is also extremely talented. He founded Markacy, a leading marketing and advertising agency specializing in media buying and optimizing digital commerce funnels for mid-market consumer brands. Safe to say, he’s familiar with growing brands!
I’m excited to watch March First grow, this will be a sneaky one until overnight it’s not.
Request An Intro (Investors Only)
Natics
Founded by Zavi Hasnani + Gabby Murray + Ellysa Yagh |📍Miami - Shop / IG / TikTok / Linkedin
How We Met Them: via their signup on the FirstLook.vc
One Liner ✍️ — Natics is redefining personal care for the chaos of college life — delivering honest, high-performing essentials that meet students wherever they are, and empower them to feel clean, confident, and in control.
Discount Code: Use “FirstLook” to get 30% off
What Made Them Stand Out: Skincare is tough, but Natics has two founders that set them WAY apart from others- Gabby Murray and Ellysa Yagho. Both are massive content creators with 12M and 6M TikTok followers, respectively. They’re the celebs of Gen Z which perfectly fits with the customer Natics is targeting. Zavi, the 3rd cofounder, is an absolute beast as well.
Moreover, I really liked Natic’s approach of focusing on college campuses and building the brand there. Natics is early, but they keep selling out of product have the right foundation to build something great. Keep an eye on this one, they could go far.
Request An Intro (Investors Only)
Rosy Soil
Founded by Chad Massura |📍NYC - Shop / IG / TikTok / Linkedin
How We Met Them: via an intro from our bff John Morgan of Pelagic
One Liner ✍️ — We manufacture high-performance soil using captured CO₂
Discount Code: Use “ILoveFirstLook” for 20% site wide
What Made Them Stand Out: I like Rosy because their soil is literally new soil. It’s crafted for the specific needs of plants via a blend of all-natural, renewable ingredients (like biochar!) that optimizes drainage, delivers plant-boosting nutrients, and supports a diverse community of beneficial fungi and microbes. Their soil process is patented, and also great for the planet as it captures CO2. Since inception, they’ve captured 628 tons of CO2 from the atmosphere! The soil space is a sleepy, top heavy category which per my last newsletter makes acquisitions more likely as well.
Chad is a strong, multi-time founder with plenty of experience launching and scaling brands. He’s also done an incredible job building out Rosy’s DTC capabilities along with landing the brand in 1000+ retail doors. Rosy is growing quick and making all the right moves.
Request An Intro (Investors Only)
Tru
Founded by Jack McNamara + Yash Banthia |📍Natick, MA - Shop / IG / TikTok / Linkedin
How We Met Them: via a cold email
One Liner ✍️ — Made with real juice, low calories, and no added sugar, Tru is a venture-backed beverage brand that’s making waves in the enhanced water space as a carbonated complement to VitaminWater.
What Made Them Stand Out: Tru is an all around, buttoned up brand. Their marketing and branding is strong, the product tastes great, and the founders are talented. What really sets them apart is their relationship with Polar Beverages, the largest independent bottler in the U.S. Polar has invested over multiple rounds (including their latest $4.6M raise), brings significant distribution, manufacturing, and warehousing capabilities, and opens doors to key retailers. This is a hella clutch relationship beverage brands dream of.
Other wins by Tru include being selected for the 7/11 Brands with Heart (1 of 26 brands globally / 1 of 6 beverages), launching in Kroger and Costco, and receiving commitments for HEB and Whole Foods. Tru is takingggg overrrrr.
Request An Intro (Investors Only)
That's all she wrote folks. March box is next. Keep those heads down building until then.
