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November 2023 FirstLook Brands
Highlights from our November box, Founder Pro Tips, and more...
FirstLook
March 17, 2024
Welcome to our 41 new subscribers since our last newsletter. I'll do my best to keep this fun, light, and informative.
S̄wạs̄dī! (“Hi/Hello” in Thai)
Happy St. Patricks Day and welcome back to another consistently inconsistent newsletter. Before we dive in, would you be willing to help me out and forward this newsletter to one friend? #SharingIsCaring
Funding News 🤑
Meepo, from our recent December boxes, raised $50,000 from a FirstLook angel! This makes TWO brands now from the December box who raised from our intros. Even I’m impressed as December is traditionally a tough month to raise.
Ready for a Blunt Take? 🎯
One of my goals this year is to be more blunt. So let’s be blunt. For so long I’ve been puzzled when a VC firm passes on joining FirstLook. Not those with a narrow focus or who invest later stage, but for everyone else who is a fit.
For starters, an investor membership is $99/month and is a tax write-off. I’m no Google or Amazon tax lawyer, but why pay the IRS when you could get FirstLook boxes instead? This seems like a no brainer, but let’s keep going.
“But Brian, we don’t pay for deal flow.” - a VC firm
The short answer is VCs do, and it’s actually a lot. Let’s unpack this.
I spent the last few months talking with VCs to understand how, where, and why they spend money. Their biggest expense is team which can include analysts, associates, principals, partners, and venture partners. Not every firm has each of these roles, but regardless everyone spends time generating deal flow for the firm.
Associates a common role regardless of firm size. Through asking many folks in the space, it’s safe to say associates spend about 33% to 50% of their time sourcing deals. Their average salary is between $100,000-$150,000.
A firm with two associates thus spends on the low end $66,000/year on deal flow (33% of $200K). On the high end $150,000 a year! Some firms give associates carry which further costs partners upon an exit too. FirstLook doesn’t take carry.
I don’t know enough on how Analysts or Principals spend their time, but probably safe to assume it’s at least 10% on deal flow. Analyst salaries range $45,000-$90,000, while Principals are $125,000 - $300,000.
Next are Venture Partners. They’re usually well connected (like me) or industry experts who source deals and or provide guidance. Their compensation is more gray. Sometimes it’s carry, cash in hand (which can be a small % of what the firm invests, or a flat rate), a combo of the two.
Some firms require Venture Partners to buy into the firm while others hand out the title at no cost. For those not buying in, a Venture Partner sourcing deals can be costly.
The second biggest deal flow “cost center” is marketing, travel, dinners, and attending conferences/expos. This is hard to quantify as the variance is wide between firms. Nonetheless, firms fly all over, attend expensive events, stay in nice hotels, host dinners, and spend money on many things for the sake of…deal flow.
So when a firm passes on joining FirstLook I’m not sure if I should feel confused or be upset with myself for failing to demonstrate the value.
The reality is FirstLook’s value prop is so direct I suspect firms pass because of a chip on their shoulder. They feel it’s their duty to generate deal flow and not tap into outsider help. All those expenses mentioned above are ‘insider expenses’. FirstLook would be an ‘outsider expense’.
I highly doubt it’s because firms think FirstLook brands aren’t great. Majority of them have raised from top tier VCs and angels. I’m doing a performance analysis right now, will have more data here in the coming months.
So this begs the next question…should firms get rid of that chip on their shoulder? Macro indicators would suggest ‘Yes’. VC is becoming extremely competitive as it unbundles and transitions from a cottage industry to a legit asset class.
To look at this another way, VC is becoming more competitive similar to Private Equity. Does PE spend money on deal flow? Answer: A lot. Why? Because the best deals are how they make their nut, and if it means getting past the “I handle deal flow myself” chip on their shoulder for the sake of LP returns, then that’s exactly what they do. VC is at an interesting point right now, and as with all things, it’s either adapt or die. It’s not personal, it’s just business.
In sum, everything I laid out above is simply to shed light on how and where VCs spend money which I find interesting, and for investors to maybe think differently and consider joining FirstLook. You get nearly half the benefits of an Associate or Venture Partner, but at an absolute fraction of the cost. I imagine your LPs will appreciate you joining as it’s money well and smartly spent.
On a final note, my friend Austin at Sugar Wood is raising on Republic. BIG fan of him and what he’s building!
To wrap up, here’s Warren Buffett’s favorite VC scoreboard:
Founder Pro Tip of the Month 💡
In your pitch deck the longer you take to unpack traction the more an investor thinks you’re very early.
The traction slide gives investors an anchor on which to base you. If you’re early with little traction, that’s ok! That’s simply the lens you’ll be reviewed. If you’re early but take forever to get to traction, it just becomes annoying imo. All this talking simply delays the inevitable and further boxes you into “this company is way early.”
Instead, get into your traction early even if it’s not significant. That’s OK. Show them you’re out the gates! Investors more so care about how you’re hustling hard and making intelligent, thoughtful decisions early.
Did a friend forward you this and now you want to join?
November Box Brands 🚀
Investors: 46 → Apply Here | Brands: 6 → Apply Here | Intros: 38
Investors interested in learning more about the brands below, please email [email protected]
Bear’s Fruit
Founded by Amy Driscoll + Chris Hill | Site + IG | 📍NYC
One Liner ✍️ — Bear’s Fruit is on a mission to make the best tasting gut health products with ingredients from a garden - not a lab.
What made them stand out: I liked Bear’s Fruit for a handful of reasons, but two really stuck out. First, their “Why Now?” is compelling. Americans are really starting to embrace gut health, which is what Bear’s Fruit solves with their probiotic kombuchas and sparkling waters. I think we’ll see this category grow at a very strong clip. Second, evidence by a strong why now, is Bear’s Fruit becoming the #1 emerging regional gut health drink at both Whole Foods NE (+172% units YoY) and FreshDirect with little to no marketing. Amy and Chris are tapping into something deep here, and the tailwinds are strong.
KUDO
Founded by Ryan Lewis + Brydon Cotter | Site + IG + Video | 📍Provo, Utah
One Liner ✍️ — KUDO Snacks capitalizes on the rapidly growing $9.9B global popcorn market with innovative Protein Popcorn, merging the booming 'Better-for-You' trend with a tasty and transformative snacking experience for increasingly health-conscious consumers.
What made them stand out: Unless you’ve been living under a rock (which honestly is probably quite affordable in this housing market), protein is a BIG focus for consumers, retailers, and thus investors. KUDO’s proprietary way to produce popcorn (a big market) with protein is compelling. Adding fuel to the fire, UFC is a huge partner for them. The fit is perfect imo, and will really grease the rails for retail expansion.
Learning Note: Traditional brands launch, gain traction, then land big partnerships. KUDO did the opposite. They tee’d up big partnerships early which wasn’t cheap, and required some wild networking. But it’s interesting because now they have all the rails in place to grow super quick versus a typical startup that usually grows incrementally. Other examples of this strategy: Prime and SKIMS.
Minu
Founded by Christine Koppinger + Adam Guggenheim + Dr. Meghan Dickman, M.D. | Site + IG + TikTok | 📍LA
One Liner ✍️ — Minu (minerals in the nude) re-imagines skin wellness with dermatologist-designed mineral skincare for all, crafted without compromise.
What made them stand out: Minu is all around strong. The team brings a combined 70+ years of dermatology knowledge, building billion-dollar skincare brands, incubating startups, and formulation experience. The product is made with proprietary technology and the highest quality ingredients (Sephora and Credo buyers say it’s the best sunscreen they have ever tried per Minu). And lastly, they have a well-defined target consumer who is a discerning, engaged, and wellness-oriented millennial that appreciates Minu’s authentic, inclusive, sustainable and minimalist brand. It’s no mystery why Selva Ventures (a FirstLook Investor member!) recently invested in them.
Plant People
Founded by Hudson Davis-Ross + Gabe Kennedy | Site + IG + TikTok |📍Austin
One Liner ✍️ — Plant People creates doctor-formulated, regenerative-organic, plant and mushroom supplements that unlock the potential in people.
What made them stand out: Plant People is another brand with strong tailwinds. Mushrooms are big business as everyone’s realizing their strong medicinal benefits. Plant People managed to create easy and tasty mushroom gummies (which are also having a big moment right now). Overall Plant People had really strong metrics across the board. The foundation and fundamentals were strong. To top things off, Hudson and Gabe are hella talented multi-time founders who understand scale and “getting eyeballs on a brand” as I like to say. I think Plant People will go far!
Tinto
Founded by Anish Patel | Site + IG + TikTok + Founder Vid | 📍LA
One Liner ✍️ — Tinto Amorio creates transparent, organic, design-forward natural wines.
What made them stand out: First, Anish is the best. He’s the type you warm up to the first 30 seconds you meet him. Anish aside, Tinto is unique. They very early landed a great distributor who built the most widely distributed Orange Wine in the U.S, and Tinto is their most recent and current domestic Orange Wine bet. I like their proprietary supply chain too. Tinto converts sustainable wineries to organic to source grapes at a 40% discount and accesses a global grape supply chain to produce in foreign countries at a fraction of domestic costs and during off seasons. Lastly Tinto is selling at 5x industry retail velocity and has found early indication of market viability in Middle America…the holy grail. I hope Anish goes far.
Tooktake
Founded by Leeanna Gantt | Site + IG + TikTok | 📍LA
📸 : @scottamacias
One Liner ✍️ — Tooktake dosage reminder labels are the easiest way for people of all ages to know at a glance if they took or still need to take their medication and supplements.
What made them stand out: I love Tooktake because it’s unsexy, a common sentiment of investors. For starters, Americans love drugs! But seriously, Americans suck down meds at an alarming rate, and there is an unmet need for a better solution to nonadherence. Young folks simply despise these things. Most existing systems/solutions aren’t child-safe, they don’t have directions, safety, refill or expiration info, and “smart” notifications and trackers are easily silenced & ignored and compromise privacy. Tooktake is bringing us back to our roots, but in an easy way so people stick to their regimens with ease. Leanna has quietly bootstrapped to date, but with recent crazy demand from retail pharmacies and insurance companies, things look very promising.
That's a wrap, December box is next. Keep on building my friends.