The Month End Podcast

Episode Fifteen: Elizabeth Edwards • H Venture Partners

October 19, 2021 Elizabeth Edwards Season 1 Episode 15
The Month End Podcast
Episode Fifteen: Elizabeth Edwards • H Venture Partners
Show Notes Transcript Chapter Markers

The Month End provides emerging inventory based brands real life knowledge in the accounting, finance, and operational world. Our guests are not only similar brand founders and owners, but key stakeholders and contributors to the industry. Each episode provides a glimpse into the vast experience and insight from its guest’s unique background in a casual, conversational tone.


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In episode fifteen, Accountfully's Managing Partner, Brad Ebenhoeh sits down with Founder and Managing Partner of H Venture Partners, Elizabeth Edwards. She gives us a view into the world of investing in, and growing science-based consumer brands.  She takes us through the journey of what an investor looks for in the future success of a CPG brand and how to get the most out of the relationship.  Don't miss this in depth discussion and advice session from a keen investor focused specifically in the CPG space.  


SHOW NOTES and VIDEO RECORDING:  http://www.accountfully.com/podcast​​

 

The H Venture Partners Website:  http://www.h.ventures 


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Brad Ebenhoeh:

Welcome to the month and CPG community chat amongst them will provide emerging CPG brands real life knowledge into the accounting, finance and operational worlds. Our guests will be key stakeholders from those same brands, as well as other key contributors to the industry, all of which have vast experiences and insights that we'll share with the audience. Welcome to Episode 15 of the month and today we have Elizabeth Edwards from h Venture Partners, how you and Elizabeth?

Elizabeth Edwards:

Great, great, thanks for having me.

Brad Ebenhoeh:

Excited to have you on. So Elizabeth is the managing partner of H Venture Partners. It's a seed venture in early growth equity fund that invest in next generation consumer brands headquartered in the Midwest, the great state of Ohio, in Cincinnati, Ohio. Elizabeth, give us a little more

background about yourself:

what you do, what H Ventures is, and then we'll we'll get into it.

Elizabeth Edwards:

Yeah, sure. So I've been a venture capital investor for 17 years investing all over North America, always from my hometown of Cincinnati, Ohio, which many VCs find hard to believe, but it's true. And the last seven years, I've spent totally focused on consumer. So joined a firm that was focused on consumer because that's actually how I started my career, I was working in strategy consulting, with big clients like Johnson and Johnson on big brands like Tylenol. Totally intrigued by the science of all of these amazing brands and the entrepreneurs developing technologies and putting them out there in the world. So got into venture capital investing versus a generalist, but then seven years ago decided to focus on consumer. The first consumer deal that we did at my old firm was Peloton which turned out to be pretty, pretty validating. In terms of the thesis, I don't know if we'll ever see one of those again, but but a lot of direct to consumer brands like Freshly - so spent a lot of time investing in 19 consumer brands before starting this firm four years ago, to really double down on consumer and specifically focus on a couple areas that I would say are pretty under invested. So consumers pretty under invested only about 3% of venture capital dollars go to consumer brands. But here at H Venture Partners, we like to focus on science based consumer brands that are better for human health, better for the environment environment, so they're incorporating a lot of technologies that are, you know, making products safer, from you know, skincare to haircare, food, beverage, more sustainable things like packaging and apparel, in keeping things out of the landfill, or avoiding the use of harsh chemicals. And so our portfolio, we have about 10 portfolio companies all over North America, and a lot of really diverse founding teams, which we're really excited about. So that's another key focus area for us. Right now, 100% of our portfolio is led by diverse teams. And so our firm a little bit different than most I would say, you know what this consumer focus, but our capital comes from retired executives of consumer and retail. So people that actually know quite a bit about food, beverage, apparel, personal care, beauty, Fem care, baby care, fabric care, home care, all the cares.

Brad Ebenhoeh:

Awesome. That's a great background. Definitely. I mean, Cincinnati is like the Silicon Valley of the Midwest isn't?

Elizabeth Edwards:

It is it is well, so it's so funny that you say that because it's about a quarter of the size of San Francisco. And I like to say if you're in San Francisco, your neighbor probably designed the UX for Doordash. Yeah, but here in Cincinnati, my neighbor's literally I'm landlocked by people that work for Procter and Gamble, Kroger, or a big brand selling into Kroger. And then on the other side of the street, they're all of these branding people, you know; package design. So it is very much a consumer and retail driven town.

Brad Ebenhoeh:

Yes, it definitely is definitely, what is "H Venture" mean?

Elizabeth Edwards:

So h stands for human. Because when I think of myself, I actually don't think of myself as a consumer. It's kind of a weird word. You know, we're not just these, you know, robots that buy stuff and throw it in a landfill we're people with jobs to jobs to do and, and these fundamental human needs. So we really focus on those consumer essentials.

Brad Ebenhoeh:

Yeah, definitely the whole experience around products, whether it's tech products or consumer products is like highly focused, and I think it's, I think it's, it's exciting times, you know, crazy times to live right now. But at the same time, it's exciting in terms of just the technology and progression any type of consumer brand, any tech that exists in terms of this living as a human, so excited to chat further on this. So at the end of the day, I guess we move forward here, like responsible investing, like in terms of the brands you look for, like, what are the sizes of the brands that you're investing in from, like a top line revenue perspective or, you know, length of in business, just kind of give me some back?

Elizabeth Edwards:

Yeah, so it's a pretty big range. So you know, we are geographically agnostic, we're investing everywhere from New York, San Francisco, LA - everywhere in between, we have, you know, if investments in Canada... From a, but then we're hyper focused on this consumer sector, and particularly consumer packaged goods. In terms of stage, we look across a pretty broad range of stage. And that we'll invest in companies that are pre revenue to zero revenue, all the way to 50 million in revenue, although that's a bit more rare, I would say the sweet spot is that zero to 10. Because what we find is, once companies get to that 10 to $15 million mark, in revenue, they start to become strategic acquisition targets for those big consumer companies. And so we want to play in that space where we are helping with their retail strategy, innovation pipeline, you know, IP strategy, supply chain, all of those things that are really the building blocks of that business, and helping to scale that business in a capital efficient way, before then selling it, you know, 2,3,4,5, sometimes 10 years from now.

Brad Ebenhoeh:

Definitely, what specifics - So you mentioned a bunch of support services that H Venture brings like, what do you think is kind of like you maybe your one, two, or top three kind of support services are really how you help or not even maybe for H Venture, but just for any kind of CPG brand looking for, you know, a partner/ investment partner? Like, what should they be looking for in terms of how you can help them?

Elizabeth Edwards:

Yeah, I, I advise startups to really look for those investors that are complimentary to them. So if you've got a great finance background, maybe you don't need to double down on that, maybe, you know, you need a marketing strategist. So I think it really depends on the brand, the management team and where their strengths and weaknesses are, as a management team, as a board. Typically, we're investing in companies where we're not the only investor, you know, we're likely if we're leading the round, which we do about half the time, we're bringing on investors that are complimentary to us, that would be particularly well suited for that opportunity. So great example, for investing in a beauty brand. Now, we have 10 other VCs that we work with on beauty that are domain experts, that that's really what they're focused on. Same thing for food or beverage. And so I think the most important thing that startups really should focus on when they're raising capital, is domain expertise. It's so painful, as a CEO, as a management team, when you've raised capital from folks that have a big say, in your business, ultimately, then today, you're, you're asking them for support through a bridge round, or what have you. And if there is, you know, if there's not alignment, around the boardroom table, around what needs to happen for that company, it can be really tough. And so domain expertise really helps with that, because then CEO and the management team have a great sounding board, and people that know their category, right? Are saying like, 'Hey, you know, you're kind of a premium priced beverage, this is where I think you should be focused, you know, in retail, like these types of partners are, I really think you need to double down your efforts at this particular retailer and create some case studies'. And so those are the types of people that you want to be talking to versus somebody that's like, you know, an ex racecar driver. Just like yeah, you know, I really liked your soda. So you know, I'll throw 500,000 at it, um, you know, I think that can be a really dangerous proposition. So yeah,

Brad Ebenhoeh:

Maybe use him as an influencer? Not a ...

Elizabeth Edwards:

Right. Exactly.

Brad Ebenhoeh:

Yeah, definitely. I mean, you know, in terms of us having a big client base in CPG. I understand the nuances and the domain expertise that comes into that just from what we do from a support accounting and kind of finance support systems so a front end though in terms of the strategy, the retail strategy, the sales channel strategy, etc. It's so important I think within that and then talking about that is there specific sales channels strategies or you know sales channels you like? You know - retail distribution Amazon, direct to consumer, kind of can you give us a little background on a strategy around that or what you'd like to see in brands?

Elizabeth Edwards:

So the the channel strategy varies widely by category and in brand and it's driven very much by you know, what, what is the offering, who are they targeting? You know, is this a premium product, is this a mass stage or a mass product? One big evolution that I've seen over the last seven years being focused on this base is the direct to consumer business model has become much more expensive over the last seven years and and so that's made it tough, if not impossible, for many brands that would have scaled pretty well in a direct to consumer context maybe back in 2014, to do so today, and that's because the cost of Facebook and Instagram and Google Ads has gone up about 300% each year over the past 10 years. So that's 30,000% so if you think like basically you know, Katie Ledecky - a gold medal you know, winning swimmer. If she was in an environment like that, in order to get a Gold she would need to get like three times better you know every single time so it makes it you know really tough for digital marketers for brands that are strictly direct to consumer the ones that tend to survive and thrive in that context have generally very high average order values and high LTBs so you know the 100 bucks that you might spend to acquire that customer you can you know make that bet your profitable first purchase you know for that direct to consumer brand and maybe there's you know a tail hopefully there's a tale of there's a you know, a repeat purchase there. So that - that has changed quite a bit. Today we look at direct to consumer for the vast majority of brands as a test-and-learn, but do not scale because you know, for most brands spending money on Facebook is like throwing money into a dumpster fire and so that's that's really tough. We love omni channel consumer brands so where you're kind of diversifying your mix a bit - showing up on Amazon, if that makes sense. We've seen a lot of brands do really well on Amazon especially if they're fundamentally like changing the category they can you know, Amazon is a place where people have their checkbooks out or their credit cards out they're ready to purchase whatever it is - and and so that can be great, and then traditional retail. Still the vast majority of you know food beverage grocery is bought in a bricks and mortar grocery store. And and so we can't forget about those great partners. One, you know, stumbling block that we've seen some some startups trip over is that they can be more broadly distributed too quickly, where they're almost you know, they just have so many different retail partners it's like, 'Oh my god What day is it? Is it Wednesday? Like where are we supposed to have something to them like oh gosh, we've got a line review coming up' and and there's not enough focus or concentration on making that partnership with that first, second, third, fourth, retail partner really successful and going deep with them. So you know, lots of lots of landmines I think no matter what channel you choose, but to do so thoughtfully, carefully right really understand the needs of your customer understand like the unit economics of that channel, you know pricing all of that before you go in.

Brad Ebenhoeh:

Yeah no, I think you know, we see majority of our clients are omni channel. Clearly the last 18 months is completely hyper skyrocketed DtoC with what's been going on in the world. You know, from a, you know, we recommend to our brand clients to like, Hey, we need to make sure that we have, you know, a segmentation of your P&L. You know by channel because literally the the bottom line on Amazon or direct to consumer and Shopify is completely different strategy and literally economic you know economic different than what's in distribution or retail so having that segmented is key and you also have to include product costs you know fulfillment, freight costs - freight huge now in terms of the b2c world as well on top of the the advertising but um, you know, it's interesting, but it's doable, but you have to have data to make good decisions and all that type of stuff. So, um, and I don't think omni channel is slowing down at all. And clearly it's not, it's just understanding your strategy within each channel, and then kind of, you know, reporting against it, and see how you're doing so good to know on that. Do you have a favorite channel?

Elizabeth Edwards:

Do I have a favorite channel?

Brad Ebenhoeh:

Like for your clients? Or again, it just depends

Elizabeth Edwards:

No, no, I mean, these for each brand, you know, there are different partners or different channels that are just going to Yeah, I can't, I can't say that I have a favorite. I love the exposure of Amazon, I love the the customer insight that you get from direct to consumer, you know, being able to launch and be like, 'Oh, this flavor is not working out' find that out, you know, pretty early. But then I also love the fact that, you know, retailers can be such strong partners in the innovation pipeline. You know, when you're coming to that buyer with ideas for the product line, they know their shopper. So it's great to have that sounding board to say, 'Alright, here's what we're thinking, I think, you know, this would be really cool'. Or, you know, 'we're testing them on our site. And for them to go, 'dude, that is like, way too expensive for grocery', you know. So, yeah, couldn't nail down a favorite though.

Brad Ebenhoeh:

Gotcha. All right, I'm gonna throw go through like a kind of a roleplay situation here. So I'm a million and a half dollar top line. Progressive alcohol, non alcohol brand. Let's say it's wine. Moving forward, you know, and, and, and the my business is growing, I'm selling direct to consumer, because it's nonalcoholic and my website, I'm developing relationships with some regional distributors. I'm looking to raise money. So how do I create that relationship with you? What are you looking for from a deliverable reporting modeling standpoint? Can you kind of walk me through kind of your request list or kind of process with that?

Elizabeth Edwards:

Yeah, so we generally start with a screening call, where we're trying to understand the management team and their experience, the brand and that unique value proposition. The market size, I think, for this particular brand, that would be something that I'd really be focused on is, you know, what is the market size for non-alcoholic wine? And then we're talking about things like the moats that they're building around this brand. So that could be you know, patents, some other intellectual property strategy, maybe a supply chain moat. And then finally, you know, we're looking at the other investors either currently around the table or, you know, other investors that they might be thinking of, or talking to. So we have a couple litmus tests, though, that we look at even before we talk to a brand, and the three big litmus tests for me, Well, you know, there's one that's not part three, we're just Are you a CPG brand Or not? The other day, I literally got a pitch from a guy in Portugal who's got a Tesla dealership, and they're selling a triple net lease property and I'm like, okay, not North America, not CPG but sounds lovely.

Brad Ebenhoeh:

Yes. Best wishes.

Elizabeth Edwards:

And I've been dying to get a Portugal so but you know, is this a consumer brand, right? And so then the litmus test are, is this a billion dollar category or not? So that's the bare minimum, we love to see categories that are like $50 million categories, that could be baby diapers, you know, beauty products, hair care, fabric care, you know, food is like 12 trillion. So definitely, you know, well over a billion, but, but then we're looking at the unit economics of that company, so might be a big category. Give a example Dawn Dish Soap dish soap, billion dollar category. However, they don't meet the second most asked widget. Is there a pathway to have $1,000 lifetime spend on this product or on this brand? I'm not gonna spend $1,000 in my lifetime on dish soap, I will spend $1,000 in my lifetime on beauty products, haircare products, wine, you know, baby diapers, feminine care products. So actually the vast majority of things, but I will not spend $1,000 in my lifetime on dish soap, pregnancy tests, right? So they're like lots of different things that don't meet that basic threshold. That's particular to us. I don't think if you talk to other consumer VCs or they're focused on that, in fact, they know that they're not. So it's just an idiosyncrasy of mine. And then the last is a pathway to a 50% gross margin. There are a lot of categories that that that's really the trouble - pet food. excellent example, man, what a tough category to, you know, to eke out a margin. So it really, you know, those those three litmus tests, we might see a fantastic brand fantastic management team, and we're going Oh, gee whiz, like, I don't know, if this is gonna be, you know, a billion dollar brand, the market, you know, the, the category alone is only $500 million. And so those are the things that that we look for. And then we get into very category specific KPIs.

Brad Ebenhoeh:

The the number that, first of all, it's, I love the concept of moats. That's, that's very interesting. But the 50% gross margin, you know, like, you know, raise my antennas here.

Elizabeth Edwards:

It's a pathway because,

Brad Ebenhoeh:

yep, yep

Elizabeth Edwards:

firms that are doing a million in revenue, I don't care, like, I mean, now, you definitely don't have that.

Brad Ebenhoeh:

But it's a good target for them to understand as they're strategizing the next five years, or three years or two years, hey, this is where I need to get. And I think that's a having that as a idea in your head really helps you understanding your pricing your cost structure, how you can, you know, minimize your costs in your supply chain in the future, and things like that. Well, good. So let's say that we, you know, move forward and you invested in us like, what are some recommendations from, you know, like, being a great kind of having good relationships with your investors, or leveraging them? And like, you know, give me an example, maybe a great relationship, and maybe one that didn't go very well? And maybe, yeah, I think that's a sometimes for the new folks who are just creating this cool, creative brand, they raise money, they're like, Well, what do I have to? Like? Do I have to report to them? Or like, is there How can you you know, make that a great relationship, I guess, for all parties?

Elizabeth Edwards:

Update your investors constantly, I think a monthly update is a great one, even if it's a short one. The worst relationships that I've had, over the course of doing this for 17 years are the firm's that can't or don't, and usually it's those are related. They don't report because they can't, they don't have a handle on their numbers, which is really concerning. And those are, you know, they're they're really super early stage, you probably have a product person and a creative person. And they're, they're making great stuff, they're, they're really focused on selling, and they're so focused on selling that they don't necessarily see the value of keeping a handle on - on the numbers, they tend to be pretty cash focused. And sometimes cache myopic, where, you know, they don't see the bus that's coming, right? They're like, Oh, it's great. We just, we just landed 500 Walmart's and great. Are you sure that you've got the cash to support a customer like that? And by the way, what are the payment terms? And what are the payment terms on the other side? So so that tends to be a big problem. And we see you know, you kind of split the finance and accounting function, where it's like, you know, there's there's the accounting side, which is counting what happened, and then there's the strategic forward looking, you know, KPI driven strategist and that CFO or VP of finance, who's going to help you pull the levers of the business and raise capital because they can tell the story in numbers, not just in vision?

Brad Ebenhoeh:

Yeah.

Elizabeth Edwards:

And so those, you know, we've we've literally added, you know, over the years, like different investment roles, you know, just based based on things that we've learned with prior investments and, and one of those is having a strong VP of finance or CFO if you don't have them, getting them, you know, on board with that round. So a lot of times you have folks that are engaged, you know, with outsourced, firms like yours, where, you know, you've got that great partner who can really help the management team, pull the levers of those businesses, but the way that I think, the way that I think a lot of the best startups engage with their investors, they are crisp, they are clear. And their dashboard is like one or two pages, there is a one page strategy document, which is like, here are the three big things that we're focused on, very organized, boom, boom, boom, here are the KPIs, you know, that, that are really driving, you know, or this is the way that we're measuring, you know, our success against this strategic framework, and then having constantly, you know, a dashboard that's reporting on those metrics. And a lot of those have to do with, you know, again, unit economics. So, so that those can be great tools. And I think the the investors that are constantly updated, even when the updates are bad, are more likely to invest in future rounds, because they're up to speed. They're not surprised by bad news, like the worst thing I've seen startups do is like stuffs unraveling, and they're like, Oh, crap, this is not good. And investors are calling how're things going? They're like, good, good, good. Yep, no problems, we're great. We're gonna be raising another round soon. And they're not necessarily bringing them along for this term, because they're gonna figure it out, you know, when once they, you know, get into due diligence for that follow on round. And so kind of being straight up like, Well, here's a new update, the store that we just opened is closed because of COVID. So we're not going to get any revenue this year. So here's what we're doing in response to that, you know, to that happening, so, and these things happen, hopefully not, you know, more COVID-like events, but these things do happen to every startup.

Brad Ebenhoeh:

Ya no, I think communication is key in any relationship, whether it's business or personal. And that's what, you know, I recommend everybody I talked to on top of that, I think, you know, you're harping on unit economics, unit economics, unit economics, which is 100% the case, I do think for the listeners out there, understanding the difference in accounting, and finance is huge, right? In order to really be good at finance and looking forward, you need to have a good baseline understanding of where you're at and what's going on. So implementing and having that infrastructure is super key step one, step two is really looking forward and but having a good information deck and data to make you know that that projection. So you're talking about unit economics - outside of that, like two other things I want to talk about number one is cash.

Elizabeth Edwards:

Yeah.

Brad Ebenhoeh:

What do you think about cash? Like how do you how do you visualize cash? Or like, what do you what do you tell your, your, you know, your, your portfolio companies about cash, what they should think about cash? anything realated.

Elizabeth Edwards:

Yeah, so I mean, cash is king, it's, it's the gas in the tank, we are focused on capital efficiency for these CPG brands. And it's for good reason, if you look at, I'll pick on Procter and Gamble, since they're right down the street, but but they're not the only one that does this. You know, if you look at Procter and Gamble, and their recent acquisitions, those acquisitions like Native or I know actually Billy didn't go through. But Native is a great example. Or This is El, those are companies that were extremely capital efficient. And they were bought at really, really high multiples, because they had gotten to the point where they had proven just enough, you know, maybe they get to 10 million in revenue, they prove that customers love this, there's a heck of a lot of loyalty here. And for every dollar that investors have invested, in this brand, it's turned into, you know, 10x revenue. And that suggests to a strategic acquirer that they didn't have to buy, you know, this kind of awareness. They didn't have to, you know, discount to get this kind of loyalty, like this brand is really strong. And if we put it through our sales channels, we're gonna experience a similar return on investment. And so it went up you know, one of the things that that comes up pretty early on in the screening process as we're talking to brands are going alright, where are you right now in terms of ARR and And where are you in terms of funds raised to date. And so there's kind of this equation that I do in my mind where I'm like, Alright, your run rate is, you know, whatever, it's 2 million, and you've raised 5 million, but but you've got 3 million in the bank. So you've used 2 million to get 2 million, that's actually that's okay. Because you know, that there are, there are sort of, like all of those one time starting costs and fixed costs, and that you know, that wonky SG&A, where it's like, we've got a bunch of people, you know, for our first, you know, selling our first few bars of soap, like, it's not going to be great. But then, as you know, companies progress in two years, you know, 2,3,4, depending on how quickly they are growing, you know, that equation becomes more and more and more and more important to see that capital efficiency to see that you're building a business where there's, there's a sustainable business, you know, at the base of this, even though you're growing really fast, like there's something lasting and worthwhile here.

Brad Ebenhoeh:

Interesting, yes, capital efficiency, I think it's a term that keeps getting you know, similar to unit economics, you hear it everywhere now, but really understanding what that means is, is a good thing. Inventory, inventory and supply chain, how can CPG brands leverage that as a core competency, as a comparative advantage, or a competitive advantage, against you know, their, their competition?

Elizabeth Edwards:

Yeah, and I think that I'm gonna acknowledge that startups right now I have more supply chain challenges than than I've ever seen before. I mean, I'm not that old, but I've been around for a while. And, you know, the, the shipping and distribution costs the, the lead times for things like, you know, bottle caps, and, you know, primary packaging, secondary packaging, raw ingredients, you know, getting things filled, but then, you know, actually making sure that things are shipped out on time to customers, you know, there we've had a lot of warehouse delays in this country. So and, you know, a lot of that was brought on by COVID. A lot of that was brought on by, you know, big surge in eCommerce. And so, you know, we're, we're aware that if you look at industrial real estate, like warehouses are doing just fine. So it's tough, and yet, brands need to really be thinking about where they are making their product. Is there any duplication, replication and the supply chain backup plans, right? You know, backup suppliers have for, for different components. But what I'm saying is just in general, people have more cash tied up in inventory right now, because they have to, because some of the lead times for these you know, like, particularly packaging anything coming from China. You know, it's tough. I was just talking to a company the other day, though, that uses saffron saffron, has all of these wonderful health benefits. Guess where most of the saffron in the world is produced? Afghanistan. So just like you know, there are a lot of when you're when you're talking about natural ingredients, there can be a lot of another one is Psyllium Husk. Psyllium Husk is used in products like Metamucil, because it's just a fantastic natural fiber made in India. India is just slammed right now with with COVID. So these are things that I think, you know, a lot of CPG firms before COVID didn't have to worry about so much. And now they have to worry about that much more, which which becomes a cash problem, right? It's something that almost only can be solved with more cash.

Brad Ebenhoeh:

Yeah, the global supply chain situation with COVID, with Afghanistan, terrorism, wars with the Suez Canal issue, like it is completely complex, it's unknown. So I guess as best as you can think it through that backup plans and be very agile and responsive and as good as you can be. What I guess the last question before we kind of wrap it up here, what do you recommend is like the number one hire or relationship to bring on for an emerging brand, so, you know, like, from a function standpoint or an outsource capacity or anything like that, like, you know, what would be your response to that?

Elizabeth Edwards:

Oh, and possible, it really depends on again, it depends on the stage and, and the category. But I, you know, I go back to, you know, universally, you've got to have a handle on the numbers. I don't care what, what category you're in, I see, you know, a lot of a lot of food and beverage brands, if if retail sales is not the background of the founding team, you know, the one or two founders, that's something that you need pretty early on. You need somebody who knows how to pitch to retailers and how to serve those customers, because they are such big partners and the growth, you know, and development of a brand.

Brad Ebenhoeh:

Yeah, that makes sense. All right, moving on to the kind of final question I have on all our podcasts here is, you know, one do one don't just kind of overall advice to CPG kind of startups and the listeners here. So what would be your one piece of recommendation or one do for the brands out

Elizabeth Edwards:

I would talk to customers before you launch, there? I would get you know, consumers, you know, trying things, tasting things, reacting to messaging, you know, doing consumer insight, interviews, primary interviews, the more that you can research the category and really know, the consumers and the retailers in that category before you launch, the better. I know that, you know, a lot of people have this like sort of like Steve Jobs, Henry Ford, you know, approach or like, you know, I know I know more than you know, then the consumer knows that I, I don't know, I mean, Apple, Apple actually did quite a bit of consumer testing before they launched the iPhone. And Henry Ford was kind of flippant, when, when they're like, I'll tell him what color they want. It's black, but look at how many colors they have now. So I really do I put a lot of stock in consumer insight, you know, pricing. Oh my god, the number of companies that I've seen that have like never tested out pricing or don't have like a real solid rationale. There's like yeah, we're premium. Yeah, but why? Yeah,

Brad Ebenhoeh:

Yeah, absolutely. You're not a big believer in that if you build it, they will come.

Elizabeth Edwards:

No.

Brad Ebenhoeh:

Yeah, I think yeah. So then what is the one

Elizabeth Edwards:

The one don't - don't get over your SKUs too don't? early. I think you know, entrepreneurs are not the world's most patient people. And that is a great Yeah, well being impatient for growth and change and all of those things is wonderful. One of the challenges that's particular to consumer especially as you think about retail is that you know, just because you want to go to Target and even if Target really wants you, doesn't mean that they're ready for you next month. You know, there are category resets that happen on a certain schedule and I have seen some entrepreneurs choose now versus best. Where it's well this other retailer can take me now but yeah, you said though that and I believe you that like an exclusive at a target is best even though you're gonna have to wait you know, for a period of time. So I think that you know, sometimes patience in this business can be a virtue.

Brad Ebenhoeh:

That's tough to hear.

Elizabeth Edwards:

I know

Brad Ebenhoeh:

Well, good. Good. Great, great information. great analogy here Elizabeth really enjoyed the chat is there anything that I missed any other peda inside anything else or do we touch on a lot of the the points you'd like to discuss?

Elizabeth Edwards:

Man you really covered it I love this you know, a lot of times you know what we're talking all marketing all the time, and you know, if you want to stay in business, it comes back to the numbers - so I really appreciate you having me on I love this stuff.

Brad Ebenhoeh:

Well, yeah, I appreciate you being on and yeah, we're we have a cool branding as an accounting firm, but again, I don't have the right brain you have other people do that. So I like focusing on the left brain the, the numbers aspect, so Elizabeth Edwards from H Venture Partners, where can we find you? How can we reach out like, how can we connect with you?

Elizabeth Edwards:

Yeah, so our website has a ton of information for founders, check it out. There are all kinds of, you know, webinars and podcasts and whatnot. And so you can see some of the folks that are involved as advisors, you know, and in our firm, check us out at www dot H dot ventures. And if you're raising capital, you can go to the "Pitch Us" tab and it guides you through exactly the things that we're that we're going to ask on that first call. And so, throw your pitch deck up there, and we'll schedule a call.

Brad Ebenhoeh:

Awesome, awesome. Elizabeth, thanks again for your time. Again, this was Episode 15 of the month at podcast with Elizabeth Edwards from Ventures. Elizabeth, have a goo day. Thanks again

Elizabeth Edwards:

Thank you.

Elizabeth Edwards bio and background on H Ventures
When Elizabeth decides to focus on consumer and her first big win - Peloton
Why she focuses on consumer
Why Ohio is the Silicon Valley of the Midwest
What "H" Ventures means
The type of brands Elizabeth seeks out - top line rev, length in business, etc.
How H Ventures supports the brands they invest in - an example scenario
Elizabeth's take on sales channel strategy and what she likes to see in brands
Why Elizabeth can't nail down a favorite sales channel
A walkthrough of the H Ventures investing process with a new brand
The three litmus tests for potential investments
Profit margin goals for companies seeking investment from H Ventures
How to maintain a good relationship with an investor and where knowing the difference between accounting and finance play a role in this
Why having a solid CFO or VP of finance - whether in house or outsourced is key from the investor's perspective
Brad's take on unit economics and the accounting vs finance aspect of the business
Elizabeth's take on cash/cash flow, and capital efficiency
Supply chain and inventory management, and more thoughts on how CPG brands struggle now more than ever - and how to help combat it
Brad's take on supply chain challenges and a few solutions
Why knowing your numbers is so important
Elizabeth's CPG "do" for companies seeking to set themselves up well for investment and launch success
Elizabeth's CPG business "don't"
Where to go for more info on H Ventures, and explore their resources