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Investing in challenger brands

Bread & Jam Festival 2.0 Day One

Since 2016 the Bread & Jam Festival has been the “go to” event for anyone wanting to start or grow a food or drink business. Their annual conference for challenger brands pulls together the biggest names in food and drink, from successful entrepreneurs to high-street retailers and industry investors. And, in spite of the turmoil caused by COVID-19, this year is no different.

Kicking off the event was an interview with Giles Brook, CEO of the coconut water market leader Vita Coco. And what a way to start. The vastly knowledgeable entrepreneur and investor talked through the key factors he looks for before investing in a business, what he thinks makes a great entrepreneur and how niche is too niche.

Investing in the best challenger brands

It’s been a tumultuous time for business, people have changed their buying habits and the food industry has experienced disruption, thus shaking up the retail market as we know it. However, small challenger brands have an advantage over their larger counterparts. They are nimble, and so during the time some companies have struggled with the evolving economic climate, these brands have pivoted and thrived.

Is it a good time to launch?

“If you can pivot your business and spend 80% of your time developing the grocery and direct to consumer channel, if you can get those pumping nicely and you have an IP in your particular segment then it’s a great time to launch as currently people have a lot more at-home digital-time,” says Giles.

He goes on to explain how, if your concept is cleverly thought through, it’s actually a great and exciting time to launch. Investors are quickly trying to reshape their portfolios, putting themselves where they think the strengths will be in the ‘new normal.’

“No matter pressure or stage make sure you’re smiling the whole time. It’s unrelenting and high pressure but you’re doing it because you believe in it. Step back and have perspective, even if your business fails I applaud you as you’ve gone after your dream.”

What makes a great entrepreneur

Some entrepreneurs choose to launch a company with a friend or business partner(s), so they need to decide which model works the best for them, are they going into the business in the right model – single or a team. If single, they need to have the ability to surround themselves with exceptional people who can help them run it, an effective advisory network.

What Giles looks for in an investment

  • The macro trends and what’s popular across the pond in the U.S.
  • Longevity and scalability
  • The entrepreneur - are they someone that he can connect with (within 90 seconds he’ll know)
  • Gross margin rate – the ability to generate cash
  • Intellectual properties – trademarks and patency’s

Giles also emphasizes the importance of ambition, and whether the entrepreneurs aspirations match up with the investor. Are you willing to be opportunistic, visionary, and be able to fully immerse yourself in the business, going hard to reach your goals? He also requires them to listen to advice, take criticism, and be happy to roll their sleeves up whilst staying humble. Investors also doesn’t want you to burn out, often entrepreneurs throw 100% at their company, working day and night to make it work. However Giles is adamant that there needs to be a work/life balance as it is important that you find some release from the pressures of running a company.

How does the investment start?

It’s difficult to know where to begin when sourcing investment; who to approach, and how. Giles has found that over 70% of companies searching for financial help have come to him, the rest he has gone out and found. However, he wants to get involved in more businesses and is on the lookout for the next innovative products.

How niche is too niche?

It all depends on the founders ambitions correlating with the ambitions of the investor. For Giles, he would only get involved with companies with the trajectory of £10-20 million upwards. With a plan to raise money, grow and exit, he has no interest in a long-term lifestyle business. He goes on to say that traditionally, big companies will not look to buy smaller companies, but that world seems to be changing at the moment as there is greater access to business incubators.

Key takeaway

Giles signs off the interview with his one piece of advice, “No matter pressure or stage make sure you’re smiling the whole time. It’s unrelenting and high pressure but you’re doing it because you believe in it. Step back and have perspective, even if your business fails I applaud you as you’ve gone after your dream.”

Bread & Jam came about through the shared vision of two food founders, Jason Gibb & Tara Mei, passionate about shaking up the way the food and drink industry works. Every year, 16,000 food and drink brands emerge into the UK market and yet, 90% of them don't make it past their first year of trading. Bread & Jam is a celebration of the food and drink industry's entrepreneurial spirit. There are many reasons for a food business to cease trading but the absence of opportunity, information and industry support should no longer one of them.

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