Is food a good bet? An investor perspective
Next delegates heard from Nick McCoy, co-founder of boutique investment bank Whipstitch Capital, who said many big food companies are now "trying to figure out how to incubate small companies" as part of their investment and innovation strategies.
Building disruptive new brands in-house is costly and time-consuming, and making minority investments in fast-growing companies at an early stage in their development (rather than waiting until they are much bigger and buying them out-right) made more sense strategically, he added.
As for what investors are looking for from small brands, it's the obvious things such as a strong management team; proof you have spent your capital wisely and that fresh funds will be devoted to growing the business, not plugging gaps; and respectable gross margins, he said.
But they also like to see that you have gone "deep, not wide" in that you have proved you can drive velocity and build a real buzz around your business in a limited region or channel, and can then replicate this in other markets, rather than spreading yourself too thinly and generating all your growth from distribution gains rather than strong velocity.
Picture: Nick McCoy (right) with Whipstitch Capital co-founder Mike Burgmaier (left).
