Where We Are Investing Now: Digital Brands

Photo by  Brooke Lark  on  Unsplash

Photo by Brooke Lark on Unsplash

Both of our fund families focus on consumer products.

Social Starts takes the angle of commerce and focuses on Digitally Native Brands based purely on their market characteristics. Joyance focuses on consumer goods derived from deep science with high emotional content.

For us, Digitally Native Brands must deliver a generational opportunity to invest in a massive shift in global consumption habits. They should also tie closely into our ever-deeper focus on Health and Happiness science and the Delightful Moments it can produce.

The Internet has disintermediated everything about consumer goods; from access to raw materials to direct communication with consumers. This new retail reality, combined with an abundant supply of early adapters, provides companies with opportunities to quickly grow revenues and deliver margins once reserved only for software startups. Many attractive companies will be created around this new reality, but many won’t include all the elements for a drama venture outcome. In Digital Brands, we should evaluate many companies, but invest only when completely blown away.

The DNVBs we seek should have these attributes:

·  Sold online primarily; we see omni-channel as an inflection point at the Series A.
·  Can be micro-manufactured and ship well; preferably, but not always, using new tech.
·  Allow for a type of product design or economics not feasible in the traditional channel.
·  Have high customer lifetime value.
·  Deliver high gross margins.
·  Display a strong propensity to be shared via social media or garner earned media.
·  Show product timelessness; are not subject to fast or seasonal product shifts.

The categories we believe have the greatest health and happiness potential and where we should focus right now are:

·   Cosmetics/anti-aging. Ties into our bio focus on longevity, with an emphasis on lab grown cosmetics
·  Food. With a special focus on DNA and biome-based nutrition; lab grown foods.
·  High consumption beverages. Most prominently water; also with a strong focus on innovation in coffee and tea.
·  Supplements/vitamins. Only where derived from deep science and where personalization is front and center.
·  Sexual wellness/contraception. This ties into our bio focus on fem-tech.
·  Underwear and intimate apparel. This also ties into our focus on fem-tech.
·  Baby Care. Includes both services and physical goods.
·  Pet Products. Special emphasis on next-generation pet nutrition.

In addition to the products/services themselves, we will actively seek community, manufacturing and distribution services for these categories. 

We are seeing the emergence of new products manufactured and delivered in new ways. This is what the rising generation worldwide wants. We seek the best entrepreneurs ready to deliver on that desire.

By Managing Partner Mike Edelhart
@MikeEdelhart