The Startup CPG Podcast

Salle Jian
30% to 50% of Gen Zs and millennials are either abstaining or drinking less. And so what is now the alternative for them? And so we're looking into those categories and figuring out. So those are some of the ways that we think about where we invest and how we invest. And then we also invest anywhere from early stage to growth stage to really stage agnostic. It's really about the opportunity that we're seeing and the right team and the right product, the right market potential for us.

00:39
Daniel Scharff
Hello, CPG ers. We have a real treat for you today. With the help of Sally Jen from Diageo Ventures, we compiled a star studded beverage investor panel. It was originally a webinar, but the content is so good that I wanted to publish it as a podcast so that everybody could hear from four of the most active venture funds around, across beverage, Bev, AlK, non alK, all of it. The guests ranged from corporate vc's to self started funds. And we talked about what they invest in, the trends and opportunities they're seeing, and how to get on their radar and contact them.

01:12
Daniel Scharff
In addition to Sally, who's the head of North America at Diageo Ventures, we have Alex Malamatinas, who's the founder and managing partner of Melitas Ventures, Brandon Jan, who's partner and co founder of Conviviality Ventures, which is Pernod Ricard's venture arm, and Connor McKenna, VP of portfolio management for Pronghorn. Enjoy and stay tuned at the end to hear quick pitches from some brands in our community. All right. All right, so welcome everybody to startup CPG's first beverage investor panel. These are really some of the most relevant investors in the space, and I'm just going to kick us right off and pass to Sally. Sally, again, thank you so much for helping us put together this all star group of panelists here.

01:54
Daniel Scharff
Sally, do you mind maybe just getting us started by introducing yourself and telling us about the work that you do at Diageo and then hopefully even just a couple of investments that you guys have made that maybe our community would have heard about?

02:06
Salle Jian
Sure. Yeah. So, hi all, I'm Sally. Jan and I'm with Diageo. And Diageo is one of the world's largest alcohol conglomerates and we own about 200 brands, many of which I'm sure you have heard of and also enjoyed. They are such as Cas, Amigos, Don Julio, Kettle, Smirnoff, Guinness, Johnnie Walker, Tanqueray, Bullet, and the list goes on and on. And I'm representing Diageo from the venture capital side of the business. And so you may or may not know, some corporates have their own venture capital teams. And within Diageo, we've actually had this venture capital team for over a decade investing very strategically on behalf of Diageo into brands and sometimes into technology startups, more on the partnership side as well.

02:58
Salle Jian
And we invest very strategically, meaning we invest in beverage brands that are going to either become the next generation of diageos core portfolio companies, more are in spaces where we really want to tap into and see a lot of market potential. So some of the examples of brands you may have heard of are, for example, Seedlip. Seedlip is actually a non alk spirit. It was one of the first in that category. It's a captain leader in the category. We invested early on and have a team that called Distill Ventures that help support the brand grow throughout many years to a point where they hit various milestones that Diageo was able to then acquire the brand and now it is a Diageo internal brand. Yeah, thanks for having me.

03:50
Connor McKenna
All right.

03:50
Daniel Scharff
That, my impression is that the seed lip one was like, started the avalanche of all the brilliance, getting really interested in the non alk space. I was working on a non alcohol. Look at that. All right, this is interesting. So that's a pretty epic one. Does that sound about right?

04:05
Salle Jian
Yeah, it's a very, I think, exemplary brand that we invest in that's outside of Diageo's typical categories, but also created a whole new category and helped us enter into a different market that we now play in, which is non Alc.

04:22
Daniel Scharff
All right, awesome. Thanks, Sally. Im just going to go down the list as I have them ordered in the invite here. So Alex, Im going to come to you next. Do you mind doing a similar intro?

04:30
Alex Malamatinas
Absolutely. Hi everybody. Im Alex. Im the founder of Melitas Ventures. We are a New York based venture capital fund that invests innovative emerging consumer companies with a focus on food and beverage. Some of the companies weve invested in early on include Alipop, Lemon, perfect dose, Mudwater, and kin euphorics. I think Kin started shortly after seedlips success or seedlips exit to Diageo. So its been exciting to be involved in the nanot space. I think theres been a lot of innovation since and still a lot of growth left in the category. So weve been around for just over six years. We were now team of nine, including our advisors.

05:18
Alex Malamatinas
We have really experienced throughout the entire chain, so were typically able to help with everything from production, supply chain, retail execution, distribution all the way through to exit and were typically investing seat Series A and following on from there.

05:36
Daniel Scharff
Trey, thats a pretty amazing track record and I see a lot of those nice beverages behind you. Did you start this because there was a specific beverage you wanted to invest in or you just started and then happened to get all of that like amazing deal flow and make all those right choices or like what was the inception like when you were growing your fund?

05:52
Alex Malamatinas
Yeah, good question. I guess it comes back full circle. So I grew up in a CBG household. My father was actually CEO of Smirnoff in the nineties and Diageo executive board. So I sort of grew up exposed to brands and broader industry and as I was investing in the publicly traded companies I just became fascinated with all the innovation that was happening in the early stage and I just always enjoyed working with founders. And so yeah, in sort of early 2018 I realized there was an opportunity to set up a fund in the space. Kenny was actually one of my early investments and then we just sort of grew from there.

06:32
Daniel Scharff
Okay, cool. Brandon, I'm coming to you.

06:34
Brandon Yahn
Yeah. So I lead Aldi ventures in the US, which is corporate venture group. So I guess you're hearing a trend of both corporate venture and adjacent Bev alk style investors here. But partner Ricard, for those that don't know, we own brands like absolute Jameson, Glenn Levitt amongst others. We created a venture group nearly seven years ago now to invest broadly into what we call the conveniality space, which initially was meant more as a, let's say an extension beyond alcohol into experience, entertainment, hospitality. So let's say adjacent businesses. We have a handful of investments within that category and then say we made our first beverage investment probably about four years ago, and focusing specifically on the non out category or really products that to be drank in the social occasion. So kind of still around this idea of shared experience.

07:26
Brandon Yahn
The first investment we made was in liquid death relatively early on. So that's been amazing to see that journey over the past four years or so. And really that was with the idea that it's still, it's really kind of, the brand is designed in a lot of ways to be drank in social occasion. Obviously the relationship they have with Live nation, you see at live events and music events and things like that. And then over the course of the last few years, we've pushed more into non alk, the category itself. So within that we have investment in GiA, the aperitif non ALC aperitif brand, as well as a company called AF Drinks, which makes non out cocktails in a can. Just growing pretty well across the US right now. It's a New Zealand based company. Originally we have a couple of other beverage investments.

08:07
Brandon Yahn
So Sanzo probably is one that's also pretty well known. Asian flavored sparkling water brand. And yeah. So for us, investing both kind of beverage consumer brand side and some of the other stuff. But of course, today I'll focus more on the beverage aspect of what we do.

08:21
Daniel Scharff
Brandon, with that liquid death one, just because so many of us are familiar with their journey, what stage do they get on your guys radar and what were the signs for you that made it a yes?

08:32
Brandon Yahn
I actually saw it towards the beginning. We actually passed on it the first time we saw it. Obviously the brand is very unique. It's great to see that it's a mainstream brand now. But you can imagine early on with the name liquid death, it was a bit polarizing to a lot of people. The design with the kind of the skull and the branding wasn't. I wouldn't call it mainstream. Then we stayed in touch with the team. We saw they originally got into Whole Foods. It was one of their early retailers. And then they also got 711 on the convenience channel. And we started the beginning of some velocity data or some of those, and they had a really strong DTC data at the time as well as merch and other things that were being sold.

09:09
Brandon Yahn
So we got a sense not only that there seemed to be a really strong brand and kind of fans of the brand on the DTC merge side, but also retailers, when they did pick it up, was performing very well, just in a very limited amount at that time. And that was enough signal for us to say, okay, we think there's something here. So we invested and then clearly more retailers became more open to it once they saw kind of the pull, really, from consumers for the brand.

09:33
Daniel Scharff
All right, amazing. Great. Thank you. Okay, Connor, I am coming to you. Same question. Please intro yourself.

09:38
Connor McKenna
Yeah, bring it on home. Thank you so much for having me today and happy Friday to everyone. Thanks for joining the panel. Connor McKenna. I'm the vp of portfolio management for Pronghorn. We are a standalone company that's seeking to build a scalable and repeatable template for how to effectively diversify any industry. We're starting with Cus spirits, we're starting with the black community, and we have a two pronged approach. So I'll talk about the venture side for most of what we're talking about today, obviously. But one side of the house, we're all about trying to build a template for how you can again effectively diversify an industry. And that starts first and foremost with employment. We think every industry should reflect the consumer base it serves.

10:13
Connor McKenna
And when we started and officially launched in 2022, and at that time, while black Americans were 12% of the consumer base of us spirits, the community was only 8% of the workforce and 2% of the executives. So a clear mismatch in terms of who is participating and who's driving the industry. One side of the business is all about creating pro rata representation in the workforce that's working with the diageos and the Pernots and the southerns and the targets of the world across the three tiers. Its developing HR commitments and strategies and plans, and also building a talent pipeline with HBCUs and existing talent and adjacent industries where I spend most of my time is spurring the entrepreneurial pipeline. So on the other side of our business, were looking to make minority equity investments in black owned spirit companies.

10:54
Connor McKenna
Our main number is over our ten year horizon. We want to make 57 investments and weve so far publicly announced 25 of those. Just wrapping up our second year, which has been really exciting. And we look to provide a suite of services thats really focused on capital network and know how every check that we write. We also are looking to perform supercharging services on behalf of the brands, as well as making sure that this industry, that I'm sure everyone is on this call today, can relate to. I think it's the only industry out there that has two constitutional amendments named after it. It's heavily complex and regulated and can be opaque at times. So we're looking to provide that network and know how to support founders on their journeys in our two years thus far.

11:30
Connor McKenna
I think some of the names that come at the top of my head, and this is hard, I'm sure everyone had the same issue of, you know, how do you pick your favorite baby? But ten to one realm was our first initial investment, which is a New York focused brand, which is starting to scale across the US and internationally. We've also done some more recently investment in a tech agency actually called Event Noir. So that's also helping drive more broader, 360 degree support for the community and access for the portfolio companies.

11:56
Daniel Scharff
All right, amazing. And Conor, what are the challenges for you in making sure that all of the black owned spirits brands and everybody out there know about you and are getting in touch with you?

12:06
Connor McKenna
Oh, great question. Well, thank you so much for having me here today. This is certainly helping in events like this. Yeah, I think I'm blessed with the team that we work with. Our co founders, dsms Aaron Harris and Dan Sanborn have been in the industry for decades and the network behind us. I mentioned we are a separate and standalone company, but Diageo is our anchor investor and we've just been very lucky with the level of talent that's decided to join us from day one. And so it's been like building any, it's like started building your spirits brand, right?

12:32
Alex Malamatinas
Like you start by showing up the.

12:33
Connor McKenna
Conferences and you start putting the work out there and you kind of prove who you are and what you say you're going to do and you start doing what you said you're going to do, which I think was really important for us as well. So, yeah, man, I think it's taking time again. We're two years into our ten year fun horizon, but I think we've really proud of the work we've done thus far and excited meeting new founders out there that are doing interesting work.

12:51
Daniel Scharff
All right, fantastic. And yes, I definitely am always excited to see your team at all of the trade shows. So. Okay, coming back around the horn here. Sally, back to you. Do you mind just starting to talk a little bit about what are some of the trends that you're seeing overall in beverage and what do you think are the biggest opportunities from a beverage standpoint or what you guys would like to be investing in?

13:12
Salle Jian
I mentioned earlier, the non alk is something that we're looking at. Non Alk and low Alk and the trends are out there. It's one of the quick, fastest growing categories in beverage at the moment. We, besides C Lip, we also have invested in ritual zero proof, which is an active current portfolio company. And they're quite different than C Lip. They're actually like a one to one swap with spirits. So they have five skus and each one is an alternative for gin, tequila, brown whiskey and aperitif. So we really like these opportunities. In the low alk side, we have Omay, which is a plum liqueur, and then a couple others as well. And with Diageo, we're very intentional about where we invest and very focused on where we invest as well.

14:01
Salle Jian
We are investing based on a lot of insights that we glean from internal resources and external resources and really understanding what are the market trends and where are the trends going and the research and analytics are out there that 30% to 50% of Gen zs and millennials are either abstaining or drinking less. And so what is now the alternative for them? And so we're looking into those categories and figuring out what would they order? Instead of a margarita at the bar, will they order a ritual margarita? And so those are some of the ways that we think about where we invest and how we invest, and then we also invest anywhere from early stage to growth stage. So really stage agnostic. It's really about the opportunity that we're seeing the right team and the right product, the right market potential for us.

14:54
Daniel Scharff
And so how far do you think you'll end up going away from stuff that's really branded as an alcohol substitute? Like, okay, right now I'm drinking this lovely leisure hydration drink which has electrolytes and stuff. And for me I might order that in a bar if it's actually there and available as an alternative, like drink something hydrating instead of something that's dehydrating, like an alcohol drink. Sometimes I expect to see a lot more of these kind of companies showing up in bars over the next couple years. So you said basically stuff that people would order as opposed to alcohol. But how far do you think you would go away from stuff that's branded that way?

15:27
Speaker 6
Yeah.

15:27
Salle Jian
So the example you're giving is what we consider a soft drink. So we wouldn't move gravitate too far into that space like the tea or energy drink like that. Those are not really within the wheelhouse because we are looking for brands that are going to bring synergies together, Diageo plus the brands. And if it's too far from where we play, we won't be able to take advantage of the same resources and route to market. That is amazing about having Diageo as your anchor or strategic investor.

16:00
Daniel Scharff
Perfect. Okay, great. Alex, coming to you, same question. Just overall trends in beverage that youre seeing biggest opportunities, you think out there for beverage companies and also for you guys as a fund.

16:11
Alex Malamatinas
Great. Yeah. So I think firstly at a high level, I mean, consumers are generally looking for clean, functional drinks without sacrificing on taste. And I think sort of more specifically in terms of trends within that, I guess the first one im a little biased, but I think were still in the early innings of gut health and more specifically prebiotic soda. We see Ollipop being one of the leaders in the space and were seeing a ton of innovation. And so I think consumers increasingly waking up to the importance of gut health and healthy soda. I think another one id point out is functional drinks within that adaptogens growing in awareness. King being one of the early players there adaptogens being natural and generally healthy and being able to shape ones mental state. I think beyond that energy has traditionally been tough market to break into.

17:09
Alex Malamatinas
Novel. Monster and Red Bull have done very well there but I think theres certainly room for clean energy drinks. I know theres some brands that have been popping up so excited to see more there. And then I guess one other id point out is the potential for shelf stable wellness shots. We are early investors in dose which I think has done a great job addressing different neat states. There have been several shop brands over the years and I think some have been challenged by, you know, the fact that they haven't been shelf stable. And so the ability to be shelf stable and sort offer consumers a great tasting product that is addressing certain needs. I think there's great potential there and.

17:54
Daniel Scharff
I know retailers love those products too because they're small on the shelf and they're expensive. And so if you're talking about dollars per square inch on the shelf, that's kind of hard to beat. Okay brandon I'm coming back to you for the same question. So what are the trends you're seeing right now in beverage? Big opportunities for you guys and beverages out there.

18:14
Connor McKenna
Yeah.

18:14
Brandon Yahn
So for us as strategic investor, probably similar to the diazo side, not out is obviously a big trend that we see and that we pay attention to. I think there's a broader trend obviously around health and wellness that everybody is aware of. We see non alk is one leg of that health and wellness side more from probably an indulgence point of view where you're not necessarily drinking non alk products because you're looking for specific functionality, but you're looking for just something you can sip on. Maybe while you're out socially with other people or even at home. There's an alternative to maybe having a glass of wine at night, maybe you have non out cocktail or whatever it might be. So definitely non ALC. We think we see the trends anywhere from older people moderating to younger people not drinking at all.

18:56
Brandon Yahn
So we think that there's a lot to come still within this market then I think others, even within Nanoc or even outside of that, we're looking at unique flavor profiles or I think there's a broader interest around international flavors coming into the US. Its something that we feel like is of interest with our investment in Sanzo as an example. Then I think there could be, I think functional benefits, again coming more from alcohol corporate. But what are other alternatives that people are looking more for? The alternative to the alcohol effect were not investing actively as a company into the cannabis space. But I think thats an interesting area to follow, even though its not something were actively doing just from a corporate perspective. And then I think others, I think was also maybe mentioned or that you mentioned around just hydration.

19:39
Brandon Yahn
I think also, again, kind of thinking about the opposite effects of alcohol in some way, or I think there's just seemingly a bigger trend around hydrating drinks or just making sure. And again, that still falls into kind of the health and wellness category. That's even something that we've seen, again, within the portfolio, like liquid death. Having powder hydration packs is kind of one of their brand extensions. And I think there's a variety of brands now doing stuff within that. And to your point, earlier around retail space, powder packs in particular, again, small amount of shelf space, relatively high price, easy to ship, high gross margin. So I think that's also an interesting category overall as far as trends.

20:16
Daniel Scharff
All right. Yeah, I love the hydration set for me. So interesting. Like, I like to host parties here in LA and what I've noticed is when I have people over, it could be a Friday night, whatever. Half the people actually aren't drinking when I do it. And I'm really interested to see what drinks they choose. I'm very lucky because a lot of these awesome brands in the community end up sending in products for our shelfies program, for our team to try. And so I always have them out in the fridge. It looks like Erewhon in my fridge. And just seeing. Okay, so you're not drinking. What are you choosing? And just the split between. Yeah, I actually would like non alcohol mocktail, something like that. There are some cool options and then just all of the people looking to.

20:52
Daniel Scharff
Yeah, no, I just want a sparkling water. Like, you know, what do you have in there? Or some people who want something kind of indulgent because it's like, I would be drinking, so I want something kind of indulgent. That's fun. I'm at a party, so maybe it could have a little sugar, but maybe something fun, like some adaptogen, stuff like that. So I should keep velocity data my fridge. All right, Connor, I'm coming to you. Same question. What are the trends? What are the opportunities?

21:15
Connor McKenna
Yeah, well, I just gotta. Yes. In your story real quick, I'm no marketer, but I love micro experiments at home parties and realizing I bought way too much of one thing and not nearly enough of the other, so. Right on the same page there. Well, so I think, yeah, echo, everyone. What everyone's saying here right. I think there's categories, trends and there's consumer trends. Regardless their needs, whatever the idea we're looking at is whatever category or price point it falls in, there needs to be a compelling story behind it that's gonna resonate with the consumers of today and tomorrow. I think that as table stakes, even if you're in the laboratory perfectly building this, you know, the right agave category at the right price point in the right markets, right. That things that are built in the lab still may not resonate.

21:51
Connor McKenna
So it's all about making sure there's an authentic story to be told. That being said, we would be silly to ignore some of the fast growing categories that's driving more consumer choices. So we us focus specifically on the spirits base. We do look at agave, we do look at whiskey, we do look at rtds heavily. And then from the consumer side of things, you know, I think we see consumers are more and more prioritizing convenience that's just in terms of packaging, but also an accessibility and occasions some considered luxury. And obviously that the health and well being that everyone has spoken robustly about today already. But I think we look for authentically purpose driven brands as well.

22:23
Daniel Scharff
Right?

22:23
Connor McKenna
So folks who have a mission that's more about just selling cases to consumers, but also trying to create a story, trying to support stories out there that aren't being told or are being supported appropriately. The future from a consumer lens, I think the future is heading in one direction and that future is colorful, right? The multicultural consumer is going to continue to grow in importance and brands are being created every day that speak to occasions that wouldnt personally occur to me that I just love diving into and love learning more about. I think one thing we saw out of the pandemic was just an explosion of entrepreneurship. Im sure everyone on the call can relate to that.

22:52
Connor McKenna
But I do think underrepresented founders have been leading the charge there and creating really meaningful new choices where consumers that are meeting consumers where they are empowering brands that just not only amazing liquid and amazing packaging, meeting these kind of everly evolving consumer occasions. And that's my summary for this. And maybe it sounded a little bit like a soapbox moment, but I see these new consumption occasions and these new meaningful roles that brands can play in consumers lives is building a bigger table in the spirits world. It's strengthening and making us giving the industry a much more robust future.

23:25
Daniel Scharff
I love hearing that Connor, especially the point just around founder mission and how much that matters to people. And it just really makes me wonder also if there's some data out there, about four of these brands that have taken off recently, where you would say it's really like founder and mission forward, what do consumers really know about that? Because, you know, for me, there are some brands, let's take like Sanzo. My impression is that consumers know a little bit of the story of Sanzo who buy it or something like liquid death. You know, it's not just like a can or a bottle that somebody sees on a shelf and buys it. Like, they do have some kind of awareness of the brand and its story. But I would be really interested to learn more about, like, what percentage of consumers is that?

24:02
Daniel Scharff
Where did they hear that story? Is it because they're learning about it mainly on TikTok and Instagram or their friends heard about it and they liked the story, so they told them like, oh, hey, you should buy that one. So I would love to dig into that more, but a topic for another day, but one I agree is just super important. The story matters a lot to buyers, and they're the ones who get you on shelf, where then the story can matter also to a lot of consumers when you don't only just try to make that happen direct to consumer. So, okay, I, Sally, I'm going to come back around to you with my next question, which is, how do brands then get on your radar?

24:35
Daniel Scharff
I think it's just tough, I think in general, to get in touch with VC's overall, and we know how you guys get just an onslaught of requests all the time. So how do brands actually do that successfully? What are specifically the ways that you see them reaching you and how do you do it? Well, what needs to be in that message to make you pretty interested in that company?

24:57
Salle Jian
Sure, we have several ways, handful of ways. The best is always, of course, warm intro from someone who does know me or my colleagues or some of the partners I work with, because that's just already like a vetting for us to know that, okay, they are in touch with some folks in the industry already that we already know. That's always the best way. But we also have, I mentioned at very beginning that we have an organization called Distill Ventures. Theyre independent of Diageo, but theyre exclusive to working with Diageo. And theyre a 30 person team that really amplifies the work of Diageo Ventures, which is about a three person team. And they have a dedicated search function in distill ventures. They have an application on their website, distillventures.com. And everyone who puts in an application, they review each application.

25:52
Salle Jian
So that's another way to directly get in touch. And even if we may not be a fit for us, I know the team is really helpful and really generous with speaking or replying or even offering other resources that aren't. Did you resources. So that's another option. And then we, our teams, we are out at trade shows and conferences and do these webinars and all kinds of events, virtual and in person, where we have a presence. And I have met a lot of companies directly with that in person exposure as well. But when you're approaching one of us, make sure that you make a good impression. You are actually pitching something that's relevant for us, because right out of the gate, if it's not relevant, is not a good use of your time or ours, and we most likely won't respond.

26:47
Salle Jian
So doing your own research and diligence just as much as approaching an investor is really important, and delivering a information to them that's relevant for them is also very important for them.

27:00
Daniel Scharff
Oh, right. And I really like the point about the warm intro also. And, you know, I see that work really well. And in my experience, I think it's not just about like, hey, can I find somebody who knows Sally that can introduce me, but rather, like, find out who people are who love your brand, and really, when they send that note, it's going to be one that is like, hey, you need to check this out. This is an amazing brand. Right? So maybe, like, less destination focus and more, like, figure out who are your super fans that are well connected, and figuring out who they can introduce you to. What do you, is that you think that's kind of on track, Sally?

27:32
Speaker 6
Yeah, for sure.

27:32
Salle Jian
And be intentional about who the introduction is, too, as well. Even if it's a super fan, if they're making an introduction that's not relevant, it's awesome. A connection that they could have otherwise used, probably for someone else to juju, too, that was relevant.

27:46
Daniel Scharff
Yes, I agree with that. And hopefully this webinar will help some of us figure out which ones will be relevant. So thank you again to you guys, and then, Sally. Follow up question on that, then. So, okay, let's say I have gotten a warm intro, or I've gotten through distilled ventures. Now I'm on your radar, and I'm getting the big chance to pitch you guys what's really going to make the difference? Do you have a couple things that you always look for? Is it just, is it the data you just want to see a really nice brand story. What do you think is the most important for the pitch?

28:14
Salle Jian
Definitely interested in your track record. So if you have been selling to see the kind of traction that you've already gained for your brand, whether it's the velocity and how you've approached your consumer or brand strategy, if you have a strong team, that's always something to showcase to us, something that's differentiated about your product and what you're building, but also a mask market, addressable market, then those are all things that we look for. We also have diageos portfolio has many luxury brands, so they're typically brands with healthy gross margin profiles and healthy economics. So that's really important for us. Maybe you're not there as a series A or seed company to the extent that Diadrio companies are, but you have a path or you've identified how you can get there and become a really good fit for our longer term portfolio.

29:14
Speaker 7
Trey.

29:14
Daniel Scharff
And do you have like a minimum where you would really start talking to somebody or consider that investment, whether it's a revenue or distribution size, there's not really a minimum.

29:22
Salle Jian
It's just because every category is also different, too. So we will benchmark it against the category that the brand is in. So if it's a whiskey brand and the whiskey market has been growing 5%, let's just, for example, your brand has been growing 20% year over year, then we'll really want to dial in. What, what is why you're outsized to success versus others in your competitive landscape? Because we do look at like dozens of companies in every category every year. And so how are we going to pick out the one standout whiskey or the one stand out? A couple each year. Right. So it's that those are things. Anything you can kind of showcase that. This is like, different. This is going to be a great growth story and a great brand for our Tiju portfolio. Those are all.

30:07
Salle Jian
And it's a lot to think about, but we assess things holistically against what stage you are, what type of funding you need. So it's not like you have to have everything figured out, but having, like, strategic plan is very important.

30:21
Daniel Scharff
Fantastic. All right, Alex, coming to you. Same question. How are brands really getting in touch with Alex these days? What are the ways and, you know, what are the smart things that they're saying to get you interested? Yeah.

30:33
Alex Malamatinas
So I think, I mean, firstly, as a group, right, each one of us, partners, operators, advisors, we all have our respective networks, so we're each receiving a daily basis, maybe a deal or two. And so we're sharing that within the group. And then if there's something compelling there, somebody on the team will take the initial call meeting, and then it sort of evolves or doesn't evolve from there. I think beyond that, we have allies and friends within the broader industry, and I find that sometimes angel investors can be really helpful. There are some prolific angel investors in the space that pride themselves on being first check in, and they'll give us a call and say, you should really speak to this company, or have you heard of this brand? And so that's kind of another source.

31:22
Alex Malamatinas
I think some of the best deals we've seen are from founders and usually founders of companies that we've already invested in, sort of addressing what you and Sally were talking about. I mean, these are very warm intros. Typically, it's coming from people we respect, and we're always very honored when founders are connecting us to other founders. So we're seeing some incredible deal flow there. And then, as Sally mentioned, I mean, we go to all the big conferences in the space, panels like these. We're founders will reach out to us on that. The best way is probably emailing our info@malitasventures.com. Email address. We're always scanning that for new deals. In terms of what sticks out to us, I mean, I think theres sort of the broader themes, some of which we touched on earlier that at any given point in time were focused on.

32:17
Alex Malamatinas
And so if we find interesting companies within those spaces, that definitely catches our attention. And then theres certain criteria that we look for, right. Sort of not going into all of them now, but broadly speaking, qualitative, right. The founder, the team, and then on the quantitative side, the traction, right. Whether its sort of the sales velocity, initial sales velocity data and repeat purchase rates, and then in terms of what makes a great pitch, I guess to simplify it because all pitches are different, I think a pitch thats both distinctive and authentic at the same time. I think we all hear and come across many similar opportunities. So when you come across a founder thats pitching something thats truly distinctive and authentic, so its convincing you that the founder is able to execute on this vision. And then ultimately the proofs in the pudding.

33:14
Alex Malamatinas
We all try all these products, and at the end of the day, it comes down to a great tasting product and or a product thats addressing a certain customer need.

33:25
Daniel Scharff
Very helpful. It sounds like in terms of the stage that theyre at, do you want them to be at the point where like, yeah, you have some data you have some initial velocity data, you have some traction, or would you look at something even before they launched if it was the perfect founder and idea? Where do you typically want to see people?

33:41
Alex Malamatinas
Yeah, so I'm happy to speak to anyone as early as them having an idea. Right. Because some of the most successful founders and brands, like the things can move very quickly and it's always just great to kind of hear the vision, talk with the founder and then sort of watch it evolve and try to be helpful in the process. Realistically, we're going to invest as melitas as a fund is, where there's that initial product market fit and initial revenue traction. But again, for many brands, that can happen very quickly.

34:13
Daniel Scharff
All right, amazing. Okay, Brandon, I am coming to you. Same question. How are brands getting on your radar and saying smart things to get you to respond and want to talk to them?

34:24
Brandon Yahn
Yeah, so we do a lot of our own research. We almost prefer that we reach out to brands rather than they reach out to us. So if we have categories that we think are particularly interesting, we'll do our own kind of analysis or research into category and kind of create our own list of potential target companies. Having said that, we're not. We don't find everything on our own research and we're always open minded to other things that we know. Maybe we don't see it at first look so similar to the others. We rely on our networks. So whether that be through other investors, through our founders that we work with, or other kind of trusted sources, we tend to have a fairly unique thesis in some ways. So, you know, people within our network know the type of stuff we're looking for.

35:03
Brandon Yahn
They tend to send us relevant deal flow and that's what we can rely on. I would say every once in a while I might respond to a cold email, but I think over time is, I don't know. As we've been around longer, my inbox gets bigger and bigger every day and it's kind of hard to kind of get through it just on what I need to do every day. So I would like to say I'm still open to that, but it can be difficult just to kind of manage the inbound or dissess out. Is this the right fit for what we're looking for? This is why I said kind of upfront, we almost prefer to do our own research and reach out on our own. And we're a relatively small team, so we can only handle so much.

35:38
Brandon Yahn
Again, kind of inbound, but yeah, I'd say similar to others, it's network driven or it's our own research.

35:43
Daniel Scharff
All right, amazing. Okay, so don't call us, we'll call you, but maybe try to also call us and maybe we'll pick up. Okay, Connor, round the horn back to you. So same questions. How are brands getting on the pronghorn call list?

35:57
Connor McKenna
Yeah, great question. I mean, we're out here, right? We, you'll find us at all the major conferences. You can add to our website, www.pronghorn.com. It's not, and for better or worse, our investment thesis. We're not looking at thousands of brands, we're looking at a couple hundred brands. And I think we've done, we spent a lot of our time building relationships with our community of founders early on and whether, I just want to echo a couple of the points I heard before, like from Sally, doing your homework and making a good first impression is super important. But combine that with what Alex said is don't wait until it's perfect and you think you're finally ready for us, right? Like spend your time talking to these investors and understanding what do they care about.

36:35
Connor McKenna
The last thing you want to do is be out of cash and then start reaching out to investors and saying, hey, do you like what I've built?

36:41
Daniel Scharff
Right?

36:41
Connor McKenna
You want to figure out what are they looking for asking all these questions. So that way you're building a relationship along the way. I'm sure Alex is going to be happier to talk to you when you're at the series a level when you've been speaking each other for the past two years, right? Like there's a history to that relationship. So I think just button up. Thats great advice out there. And for us this is a little thing, but have your digital footprint, right. If youre an early stage brand, especially in the alcohol world, data is really difficult to come across and so often the only free diligence we can do for conversations is going to your website and go into your socials. And so you dont need 100,000 followers and great engagement type metrics.

37:15
Connor McKenna
But just having clear content, cohesive feel, I think thats just really important table stakes these days. And keep going for the pitch question as well.

37:23
Daniel Scharff
Yeah, yeah, go for it.

37:24
Connor McKenna
So I think founders often get conflicting advice here. I think raising money is a balancing act of irrational confidence. Like sure, I can beat the market. And then there's also that humility. Component of coachability is a concept I think most funds will agree with. So it's a really tough balance. You got two conflicting ideas there but my take is don't overcomplicate it. Any investment is ultimately a relationship with that fund. And when youre respected and the conversation is flowing well, it means your balance of realism and optimism is being appreciated. So I wouldnt overthink it too much in those day to day meetings. And obviously no investors are alike, right? So everyone has their own different model. Theyre going to be looking for different KPI's. But you heard the big ones here, right? You need healthy, gross margins in this business.

38:04
Connor McKenna
And I think most investors would rather see a case study of success versus a track record of mediocrity. And so my translation of that is going deep in one market and really accelerating your learnings in the early days. So you were building when you're talking to investors, it's not, hey, I have 100 cases in five different markets and I'm looking to grow between those and figure out where I'm going to pop. It's I have 500 cases in one market. Here's what I've tested and I've learned, here's what the data is telling me is the types of accounts that I succeed in the shelf place, I succeed in the ROI and my marketing activities, I'm ready to go, just give me the keys. And it's all green lights for me kind of thing.

38:39
Connor McKenna
So I think that is something that most investors are going to appreciate, those kind of data driven choices. But really it boils down to us. Great story, great founder, ready to tell that story. A vision, strategy and tactics that we are aligned with spiritually. There's no one way to grow a brand, but we certainly have our thoughts and feelings on most effective money and money spent and we want to make sure that we're going to be partners along that journey. I actually heard this recently from one of my colleagues. I think this is a great way to help you stand out on a pitch. This is speaking truly to the spirits world where we have this three tier system, right, where it's suppliers, distributors and retailers.

39:13
Connor McKenna
We love when people talk about this fourth tier and that fourth tier is that journey from retailer to consumer. So if youre able to bring really insightful data and activation strategies and just results of how that fourth tier is a combination of the brand, of the distributor and the retailer, all working together with sampling activities, with activations, with point of sale materials, all those things. I think founders can really stand out when they realize it is this four tier cohesive ecosystem that really doesnt stop at any individual level. You have to play a role across and im conscious of time. So the last thing ill say is I love when I learned something in a pitch. Right? We all know data in this industry is tricky to navigate.

39:51
Connor McKenna
So when a founder comes to us with a unique market insight, or unique market insight and a product and a strategy and a team thats ready to attack its incredibly exciting. So my way of saying dont assume that investors are sitting here knowing all the answers and have all the insights and are just picking the winners. Wed love to learn. It should be that two way conversation.

40:09
Daniel Scharff
I love it. Yes. Great way to engage people, peak their curiosity. So speaking of pitches. So thank you guys for all those incredible comments and insights. I definitely learned a lot. I thought it'd be fun if maybe we just try to do a couple quick pitches from some of these amazing brands that are in our audience. So what I'd like to do is if somebody wants to hop on stage, maybe raise your hand, you can put the chat like what your brand is too. And I'm just going to try to, basically what I'd like to do is 32nd pitches. And so, you know, you don't have to say like you're fundraising x amount or whatever, really just come up and maybe just give your brands overall quick 32nd pitch. I am going to cut you off if it goes over.

40:43
Daniel Scharff
So if you're looking at me, you'll see me kind of wave when you have about 10 seconds left. So if you want to just kind of jump up and do your pitch and then maybe at the end, I'll just ask some of our lovely guests here if they want to call out something interesting that they learned or just, you know, maybe an observation they had about one of the pitches. We'll try to circle back to those. So if you've raised your hand, I will promote you to panelists and then you can come on and just hop right into it and we'll try to get through a couple of these. So thank you, guys. We should have the first ones joining in. Just a second here. All right, let's check out some of the quick pitches we got from beverage founders.

41:16
Daniel Scharff
Okay, we've got our first one. Hey. All right, so why don't marianne, if you want to start, and then Scott can go after that and you've got 30 seconds. Go for it.

41:26
Speaker 6
Good afternoon, everybody. Daniel from South Africa as well. Everybody, this is a beanless coffee made from upcycled figs. It is the water footprint of coffee. It is one third the price of coffee and it's one 13th the carbon footprint of coffee. One single ingredient upcycled figs that's won awards at several coffee shop festivals. Thank you very much.

41:46
Daniel Scharff
Oh, I was giving you the ten second warnings.

41:48
Speaker 6
Oh, sorry.

41:49
Daniel Scharff
I wave is 10 seconds. I might be distracted. Yeah, finish it.

41:51
Speaker 6
So it's one single ingredient, just figs. It's very healthy for you people with stomach issues. And the story is my spouse wanted to find a way to drink more of his favorite coffee because he had stomach issues. And figs makes it easier to consume coffee.

42:05
Daniel Scharff
All right, thank you, arianne. Okay, Scott, I am coming to you next. Thank you.

42:10
Connor McKenna
Hey, team. Hey, panel. Good to meet. Thanks for taking the time today. Representing recoup is a ginger based hydration drink with prebiotics for gut health. I'm here representing my wife who's co founder and her partner. We are just relaunching in a sparkling can format and seeing really great traction. We're just in Erewhon and Jimbo's on the west coast, Wegmans on the east coast. So we got into the innovation set with sprouts nationally and were rock certified, which is really cool and natural retailers especially are seeing a lot of traction with that regenerative organic. So really exciting for the hydration and gut health space.

42:46
Daniel Scharff
Alright, great. Thank you so much, Scott. Okay, and if you're joining as a panelist, just keep your video on because that'll help me remember whose turn it is to go next. Okay, so, Olivia, I'm going to come to you next. 30 seconds.

42:59
Speaker 6
Thanks, Danielle.

43:00
Speaker 8
Hi, everyone.

43:00
Speaker 6
I'm Olivia Chen, co founder of Twirl Milk tea. And we make a line of canned milk teas. We have four skews and we have also single serve boba topping. We're about 1500 locations. The boba milk tea is a really growing industry. It's 3.7 billion. It's the number one drink that's by millennials and Gen Z. And tea is the number two drink in the world. Number one is water. And so we're really excited where we are. Our boba toppings are in spring and nationwide, and then we're in select whole foods whalemen central market.

43:31
Connor McKenna
Yeah.

43:31
Speaker 6
And then our, we're very sustainable. So we are eliminating 6 million boba cups single use globally. And in the US, 1 million boba users are drinking. And so the big prime, huge industry and our number one seller is UBLt.

43:46
Daniel Scharff
All right, thank you, Olivia. Okay, Eric, I'm going to come to you next and then to Rachel. Awesome.

43:51
Speaker 9
So I'm, oh, I might have to do the right ground. I'm Eric with 22 salutes. Spirits and coffee. We are a veteran minority and woman owned spirits and coffee brand. We were created as a social enterprise to fund mental health and suicide prevention programs for our veterans and first responders. Our products are sold in major retailers like Kroger, Total Wine, Hannaford Market, C suites like Murphy's USA, also like country stores. We work with mid states, places like that on our coffee side. So not everyone could do alcohol. Our bourbon, we do multiple products. Our bourbon, super unique because we're the only fig vanilla bourbon on the market, period. We also have some coffee that we smoke with a Texas mesquite wood, another super unique to the retail market.

44:36
Speaker 9
And so our brand goes out of our way to bring out unique products to really drive a unique cause.

44:42
Daniel Scharff
All right, great, Eric. Thank you. Okay, I'm coming next to Rachel. Fun fact about Rachel, she actually had product at one of our very first startup, CPG events, back when it was called SFCPG. I think in 2019 or 2020, that helps a lot.

44:56
Speaker 8
Okay. Hey, everyone. Daniel, thanks a lot for promoting me. My name is Rachel Martin and my winery is Oceano wines. I've been producing wine for over 20 years as a great grower and wine producer. I launched Oceano Zero non alcoholic, ultra premium wine October of last year. We'll be launching with Heb this fall. We make chardonnay and Pinot noir and launching a low alcohol symbol as well. So low sugar, delicious tasting. The biggest complaint we hear about non alcoholic wine is that it really doesn't taste like wine and it's not very good. It's super sugary. So our wine is considered to be the highest quality non alcoholic wine in the market. Thank you very much.

45:42
Daniel Scharff
I love it. And I'll share, by the way, if you have a blur on or a screen background and you want to show a product, but it works if you just put it in front of yourself. This is what I've learned that after using. Right, there you go. The Oceano label is so good. I love that wine. I want to make sure everyone gets to see it. Okay. Thank you, Rachel. Rohan, I'm coming to you and then to Nikita.

46:01
Speaker 7
Hi, everyone. My name is Rohan. I'm one of the co founders of Imezi Rum. We are an afro botanical rum distilled entirely in Rwanda. This is us right now. We are only available in Rwanda, but we've won five international medals in the six months since launch, including silver, the global rum and Kashasa masters. What's really special about us is that we are a cane juice rum that is infused with six central african botanicals, half of which are indigenous to Rwanda. We really think we could be the first premium, contemporary, premium brand that is afrocentric, really thoughtfully inspired by central african terroir. We pay sugarcane farmers here triple to five times the commodity price of sugarcane, and see ourselves essentially converting gin drinkers into rum explorers by positioning ourselves as a botanical rum. Cheers.

46:53
Daniel Scharff
All right, great. Thank you, Rohan. Okay, Nikita, I'm coming to you next and then to Juan.

46:59
Speaker 6
Hi, everyone. Good to connect with all of you today. So I'm the founder and owner of naturally Chai, which is a family chai product. This idea came up a couple of years ago when I was pregnant with my son, actually, to sell my grandmother's family Chai recipe. The reason we decided to do it, or I decided to do it was it's just really cool to share traditional recipe with other people who are looking for that authentic flavor of indian tea. My blend has no sugar. There's a lot of health benefits to chai because of all the spices in the blend that people don't know about. So a lot of people have appreciated learning about that. And a fun fact about chai is that chai actually translates to chi in Hindi. So you don't need to call it chai tea.

47:36
Speaker 6
You can just call it chai. I started selling at a couple of retail stores here locally in Monterey in California, and I'm hoping to try and grow it to branch out. A lot of coffee shops have expressed interest in carrying the product, so I'm trying to find a way to make it a cold, like a cold brew that's shelf staple that I can sell at retail at other coffee shops. But right now, it's just me, and so starting out and trying to grow it, and it's just been really fun sharing it with the community at pop up events, and.

48:05
Daniel Scharff
Yeah. All right. Thank you so much, Nikita. Juan, I'm coming to you. And then to Lex.

48:09
Brandon Yahn
Hey, everybody. Juan giraldo, and I'm co founder and CEO of Waku. We are the new generation of tea. We basically bring pop and fan to the traditional ready to drink tea category. Same fruity, refreshing, sweet taste, but with only three to 4 grams of sugar, 25 to 30 calories, and 6 grams of prebiotic fiber. To maximize for gut health benefits or focused on the northeast, we have more than doubled the average velocity of our category, and we're top two in the northeast. And we're currently fundraising to support the expansion into more Whole Foods regions.

48:43
Daniel Scharff
All right, great. Thank you. Okay, Lex, my friend, coming to you.

48:47
Speaker 8
Happy Friday, everybody. My name is Xo two xs, and I am the co founder of Weather, which is a fabulous non alcoholic cocktail that I co founded with my sister. Rinna Pruitt is an amazing mixologist. She literally a certified specialist of spirits. So she rudimentary shit, y'all. But the whole summer, alcohol started causing her pain, poor gut issues.

49:11
Speaker 6
And when she couldn't find mock test.

49:13
Speaker 8
That she injured, we couldn't get rubble. And as we like to say about living a mocktail, it's a holiday and route and we are really excited to launch for this upcoming dry January 2025. Thank you all so much.

49:26
Daniel Scharff
All right. Thank you, Lex. Okay, last one here. Christina, I am coming to you.

49:30
Speaker 8
Hi, everyone. I'm Christina Cowan. I am the co founder of all Phenom. We are a sparkling, functional, organic beverage, and we're looking to elevate the space with clean, organic, unique blends serving mind, body, and gut in every can. We have both a lightly energized and a non caffeinated version. And we combine pre and probiotic functional mushrooms, adaptogens, nootropics and organic fruits, botanicals and vitamins. We've bootstrapped and are growing. We're growing here in southern California, Arowana and lazy acres, Bristol Farm Armstrong. We're just expanding into Texas with central market, and we've been really excited about the responses. Consumers are looking for cleaner, healthier options that are really serving their whole body with functionality. We worked with adaptor path on all the blends and are really excited to help elevate what's going on within the space.

50:19
Daniel Scharff
All right. And you forgot to say startup CPG shelfing.

50:22
Speaker 8
We want to start up CPG shelfing, guys.

50:24
Daniel Scharff
Most importantly, come on, let's go.

50:27
Brandon Yahn
Yeah.

50:27
Daniel Scharff
These big, beautiful trophies. I always keep one here on my desk. Yeah, it takes up a lot of room on, honestly. Okay, Christina, thank you so much. Thank you to all the brands. I'm sorry I couldn't get to everybody. We wanted to get as many in as we could, and then. So I guess, lastly, I would just ask any of the investors on the panel, if you guys, I don't know if you have any comments or just thoughts about any of the pitches that you heard or just words of encouragement or something someone said that you liked or a particular brand that you wanted to mention. It'd be cool if they contacted you or anything like that. No particular order. Connor's off mute, so maybe I'll start with you.

50:57
Connor McKenna
I just thank you, everyone, for sharing your ideas. By far the best part about my job is hearing these things. And so congrats on all the success today and best of luck in the future endeavors. Well, one piece of feedback, I think one with two things I didn't hear consistently was the size of the market or the opportunity you're attacking and your background or your ability to uniquely, outside of the product itself, your ability to be the winner in that category.

51:20
Daniel Scharff
I love that highlighting, like strength of the founder that I know you guys care a lot about. And yes, hard to get everything in 30 seconds, but that sounds like some of the most important stuff. I mean, Connor, also just best way for people to follow up with you. Would that be like LinkedIn or email?

51:33
Connor McKenna
Yeah, yeah, please. LinkedIn. I think it's Connor McKenna at Pronghorn. Easy enough.

51:38
Daniel Scharff
Okay, cool. So anyone want to go next?

51:42
Brandon Yahn
Maybe Alex?

51:43
Alex Malamatinas
Yeah, happy to go. Yeah, no, great to hear all the pitches and thanks for being so succinct. It's great to get exposed to so many founders in such a short space of time. You're all doing really interesting things. And, yeah, one small piece of feedback I'd add, and again, I realize you only had a few seconds there, but maybe highlighting one or two numbers, so, you know, sort of pointing to kind of sales growth, whether it's like percentage growth or sales velocities or. I know that generally gets investors excited. And yeah, as far as reaching me, I mean, LinkedIn works, although it's probably not the most effective channel. Again, just mentioning our email address, which is info@melitasventures.com dot.

52:21
Daniel Scharff
Fantastic. Okay, Brandon, I'll come to you next and then end up with Sally.

52:26
Brandon Yahn
Yeah, so I think echoing the others, always interesting to see different types of entrepreneurship going on. Just, even just in the beverage industry, there's so much and so many kind of unique and interesting ideas. Love the idea of kind of taking an ingredient that's seen for one thing, and being used now for other purposes. A lot of you guys, I think, also were hitting on a lot of the trends that we talked about earlier. So that's also good to see. In general, I'd say. Yeah, similar, I think, to Alex's point. Always good to hear some level traction if you have it already. Understood. If you're just launching the product, you may not have that yet. And then getting in touch with me. It's a bit of a long email address. It's Brandon dot Janot ricard.com.

53:07
Daniel Scharff
Okay, Sally, coming back to you to finish up.

53:10
Salle Jian
The ones that stuck with me were the ones that had a personal story and a unique product, the ones that I found hard to follow, or when you had too many products that you were jamming into the 20 seconds. And I like to hear about the tractions, the stores and then if numbers are available, to add numbers in there, because this is a group of investors after all, and we're all looking at numbers all day long, and that's important.

53:39
Connor McKenna
Yeah.

53:40
Salle Jian
And for reach out, you can reach out to me on LinkedIn as well. Just know that we met at the start of CPG webinar, which I actually have seen several inbounds already. So keep going.

53:51
Daniel Scharff
Yeah, that's what you all should mean. Great. Yeah. I just want to thank everybody again. So Alex and Brandon and Connor and, you know, Sally, especially because you made the whole panel possible by pulling all of your friends in. And this has just been incredibly illuminating to me. I feel like this has been a very special place, getting to hear from each of you who represent different and incredibly important investors in this ecosystem. So thanks a lot to all of. I hope we'll see all of you at an upcoming in person event as well, and hope that everybody got something really useful out of this. All right, bye everybody. See you on the startup CPG Slack all right, everybody, thank you so much for listening.

54:32
Daniel Scharff
If you enjoyed the podcast today, it would really help us out if you can leave a five star review on Apple Podcasts or Spotify. I am Daniel Scharff. I'm the host and founder of startup CPG. Please feel free to reach out or add me on LinkedIn. If you're a potential sponsor that would like to appear on the podcast, please email partnershipstartupcpg.com and reminder to all of you out there, we would love to have you join the community. You can sign up at our website, startupcpg.com to learn about our webinars events and Slack channel. If you enjoyed today's music, you can check out my band, it's the super fantastics on Spotify music. On behalf of the entire startup CPG team, thank you so much for listening and your support. See you next time.