The Startup CPG Podcast

Josh Resnick
One of the things that I look for in founders of the companies we invest in is someone who can tell a great story. And so you have to be a great storyteller to attract the right team members, to keep your team engaged, to attract investors, to get the consumers of your products as a part of your brand community. And it's the same thing at a fund. We need to tell a great story and a great founder needs to have a focus on Kpop. So how is their product doing? What's their velocity? You know, how are they showing momentum? And same thing for us. You know, were able to talk about the fact that we returned capital in year two, which is really rare for a fund.

00:46
Hannah Dittman
Hey everyone, I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm joined by Josh Resnick, co founder and general partner at Open Sky Ventures. Josh is a seasoned entrepreneur and investor with deep experience across consumer commerce and venture. Earlier in his career he built and sold multiple companies, including the luxury confections brand Sugarfina, which became one of Fast Company's most innovative retail brands. He's been an active angel investor and LP in the consumer space prior to founding OpenSky, where he's had great success in Fund 1 and is currently raising Fund 2. In this episode, we break down what makes a compelling early stage investment and the founder traits Josh consistently sees in standout companies.

01:29
Hannah Dittman
Using real brand examples, we also unpack how valuations work and why they matter, the risks of trying to scale too quickly, and how investors think about the progression from pre seed to Series A. If you're building a brand, thinking about fundraising, or want a clearer window into how experienced investors evaluate early stage companies, this episode is packed with practical insight. Enjoy. Hey everybody. Welcome back to the Startup CPG podcast. This is Hannah and today I'm thrilled to be here with Josh Reznik of Open Sky Ventures. Josh, welcome to the show.

02:05
Josh Resnick
Thanks Anna. Happy to be here.

02:06
Hannah Dittman
We're happy that you're here as well. I'd love to kick us off with a little bit of a brief background of your journey so far and the path that led you to Open Sky.

02:15
Josh Resnick
Okay, yeah, you got it. Let's see. I grew up in la, Malibu of all places, and I never learned how to surf, which is really weird. But any case, that is what it is. I was an entrepreneur basically since age 8 with a classic lemonade stand and just setting up all these, for some reason, food related businesses and elementary school and middle school and high school and all the way through business school, I was always coming up with something and I'd say 90% of them went nowhere. But I had a lot of fun and I, you know, learned a lot along the way. I went to business school to actually get a little bit more structure around what I was doing and learned some more technical skills around marketing and finance and all that kind of stuff.

02:57
Josh Resnick
Graduated with my MBA from Wharton, but did not want to follow that traditional path at all, going into corporate or branding or Wall Street. And instead, somehow I ended up in video games. I became a producer really early on at Activision. I think I was like employee number 48 or something like that. And then so I produced some games, I directed some games, and then ultimately I broke away from Activision. I started my own video game studio here in LA called Pandemic Studios. Obviously the name did not age well with the real Pandemic many years later, but I had a really fun time building up that whole studio. Had a really great run. You know, we released games like Star Wars Battlefront and Mercenaries and all these kind of big open world, you know, blow things up games.

03:47
Josh Resnick
I had the good fortune of selling that to Electronic Arts, you know, many years later. Stayed a couple years on at ea, but I didn't love the big, you know, company public culture vibe there, so I left. And then a couple years later I met my now life partner Rosie, and we started a CPG brand called Sugarfina. So it was a gourmet candy brand and were a little bit ahead of our time then because candy was pretty commoditized. You'd walk into a candy store and your experience was shoveling candy from a plastic bin away by the pound and putting it in a plastic bag and there was nothing special about it. And we realized, or we thought at the time that there might be an opportunity to kind of create a more high end experience.

04:32
Josh Resnick
And so we traveled the world a little bit, discovered all these amazing artisan candy makers around the world that didn't know how to bring their products to market in the US and so we did exclusive deals with them to sell them under the brand Sugarfina. And we created this really beautiful bespoke packaging system. And the business just took off like crazy. We opened up around 50 stores around the world. We were in wholesale and big department stores and gift stores and grocery, you know, we had our own online site and the business kind of grew like crazy. We were barely holding on for most of the time were there. And just before the real Pandemic we sold the company to a local family office and now I find myself running a venture capital fund, which I can tell you more about if you like.

05:20
Hannah Dittman
Yeah. Wow, what a colorful, interesting background you have. I'm very familiar with Sugarfina. I used to go to the store out here in San Francisco. Such a beautiful gifting experience also. And the video game adventure sounds like it was a ton of fun and a super creative journey. And the lemonade stands, they do get us all.

05:41
Josh Resnick
And to this day, I stop every time I see a lemonade stand and I gotta buy whatever they're selling. Yeah, yeah.

05:46
Hannah Dittman
Fuel some young entrepreneurs journey and rise into the ecosystem. I love that. Yeah, I would love to dive into Open sky and learn a little bit more about what you all are doing there. Your mandate, differentiation, stage focus and check size, and all the nitty gritty details that I'm sure all of our listeners, I would be eager to know.

06:05
Josh Resnick
Okay, yeah, no, I'm happy to jump in. I actually started by creating my family office at the beginning when I first sold my video games company and I got a lot of practice as angel investor. So it's called Pure Imagination Brands. And I have around 50 investments in CPG and the technology that supports those CPG brands. And then along the way, I met my partner who became my future partner at OpenSky, Josh Payne. And at some point we started investing together, kind of sharing our own thesis and doing overlapping investments. And we both found ourselves at a kind of inflection point in our careers and we decided to, you know, take it up a notch and start our own firm, which was OpenSky.

06:47
Josh Resnick
And OpenSky, its focus is on early stage consumer brands, a lot in food and bed health and wellness lifestyle, things like that. And then the technology that they use to thrive online. So e commerce, tech enablement. So around 50 there we focus on pre seed and a little opportunistic A. Our check size is around 100,000 to 200,000 for fund one. And we had a relatively small fund one. It was around $5 million. And we're actually fully deployed. We wrote our last check a few weeks ago and now we've started fundraising for fund two. And that big change there is just we just want to write bigger checks instead of, you know, 100 to 200, we want to put more capital to work. So we hope to be starting with a $500,000 check and that fund will be $25 million.

07:39
Hannah Dittman
Oh my gosh. Congratulations. That's a really exciting time for you all and awesome that you've had the success and gotten the capital put to work and done your job, part of your job as an investor.

07:51
Josh Resnick
Yeah, I feel good about it.

07:52
Hannah Dittman
You know, I'd love to take a second just to kind of like, dive in, because this is so opportunistic to understand a little bit more about the fundamental dynamics and how this all works. So you said Fund 1 was 5 million fully deployed, meaning that you have invested all of the money in fund one and therefore now need to go raise more money, which equals fund two. And fund two, you're hoping to raise 25 million, which is awesome. That's a really big increase. How does this work on the investor side? Like, what are you thinking about as you're going through the fundraising journey? That maybe might be some parallels for founders going through a similar experience with their own companies.

08:32
Josh Resnick
Actually, that's a great question. There are a lot of parallels there. So one of the things that I look for in founders of the companies we invest in is someone who can tell a great story. And so you have to be a great storyteller to attract the right team members, to keep your team engaged, to attract investors, to get the consumers of your products as a part of your brand community. And it's the same thing at a fund. We need to tell a great story. So for Fund one, our story is, look, our thesis was that because were former operators ourselves, that we would be able to get access to deals that maybe other VCs wouldn't be able to, and we'd be able to get more attractive terms and get inside there. And that was true. And we're able to tell that story.

09:13
Josh Resnick
And a great founder needs to have a focus on KPIs. So how is their product doing? What's their velocity? You know, how are they showing momentum? And same thing for us. You know, were able to talk about the fact that we returned capital in year two, which is really rare for a fund, that our KPIs are great. You know, we're at roughly a 2.5 MOIC, a multiple on investment on invested capital, roughly 50% of our investments. We were able to secure additional Advisor shares. So were able to show that our experience as former operators actually created a really great advantage for the LPs in our fund. And, you know, were able to show that we had experience here, we had a good understanding of our sectors and subject matter expertise.

09:56
Josh Resnick
So a lot of similar things that we look in, you know, for founders or the companies that we're investing in, that's super.

10:03
Hannah Dittman
Helpful and kudos to you on the great stats and the successful run on Fund one. That sounds amazing and it seems like you guys have really proved out a lot of your thesis and what you're driving towards. I'm really excited to see Fund 2 come together for you shortly here and excited to see the brands that make up that ecosystem as well. You know, having been on the operating side going through a sale of your own company multiple times, you know, you've had a lot of deep experience on kind of all the different sides of the table. If you could give the understanding to founders or operators, what do you wish more of them knew or understood about the fundraising or funding process? What do you think is kind of a knowledge gap that you might be able to fill for them?

10:52
Josh Resnick
So much to talk about there to unpack. I mean, on the valuation side, it really is more of an art than a science. And you know, I see some founders struggling with it. You look at the competition, what are other competitors you know, raising at? There are some established multiples like in CPG or in our other sector, tech, you know, commerce enablement, you know, you can look for guidance. It's good in your early fundraising to kind of send up some trial balloons with some early investors and see how they react. Your revenue projections or the revenue you've already secured will be a part in that factor in terms of how investors respond and you know, how clear and confident you can be in your unfair advantages that you're bringing to the table as a founder. Like we're willing to give.

11:38
Josh Resnick
A more experienced founder has done this before, you know, a little bit more room on valuation because we have more confidence that they'll be able to execute properly, you know, versus a first time founder. But one thing I wish more founders were a little bit more thoughtful on is don't get stuck on the valuation. Don't get too locked in on. I have to keep my dilution as low as possible and hence the valuation as high as possible because that you can run into trouble later that on your next round when you try to raise money. If all your KPIs haven't kind of kept up to support that higher valuation, you're at risk of not funding your next round or having a down round which can be, you know, a lot of trouble.

12:18
Josh Resnick
You know, your focus should be getting enough Runway and building a cap table that really adds value. It's not just about a check and money, but finding the right investors who are going to help you get to that next milestone.

12:33
Hannah Dittman
That's really Helpful advice. I'd love to double click on something you mentioned there, which is raising a down round and the idea of not hyper focusing on the fundraiser in, but thinking of the broader picture down the road. A down round would be that your valuation isn't up and to the right anymore, it's going downwards. And maybe your business is still a healthy business and doing well, but valuations can still go downwards. As an investor kind of putting on the investor hat what does a down round signal and why do you think that's not such a great thing?

13:05
Josh Resnick
Yeah, down round could really trap you then in a downward cycle. You know, look, sometimes down rounds just happen. You know, you've set the right valuation on the first round, you hit a couple of bumps in the road, you need more time and or something big in the sector changed and you're pivoting, reacting to it. And it doesn't necessarily send a horrible signal to investors. But sometimes when I see this happen too often and founders will set themselves up to fail later because even though everything's going well, they just don't grow into their valuation. So pre launch anything's possible. You know, you can tell the story how I'm going to have $10 million of revenues, all these great things are going to happen and then you're such a great storyteller, you convince people to go in for that higher valuation.

13:54
Josh Resnick
But you could have had a really reasonable run up to this next round but a couple of things didn't quite lock in. You had a little bit more testing and learning that you anticipated inevitably something is going to happen and all of a sudden investors like me are doing the math on the previous round and now you're forced to come up with a higher round, not to have a down round and it's not adding up. And so the negative signal that sends to us is that, you know, you were strategic enough when you were putting that together and that maybe something is wrong and there's something that we quite haven't found yet and uncovered yet and it just creates that unsettling feeling investors.

14:36
Josh Resnick
It's called a stink, but it's a little bit of a cloud that's hanging over you now and sometimes that's self inflicted is all I'm saying. Versus grounded in the reality. Some of the best companies I've invested in have been a little bit softer on their valuation every round through, so it feels like investors are right on target or they're great at getting a, you know, a good deal, a fair deal relative to the risk there and then those rounds close super fast. Less distraction for those founders. Everyone is happy and they can keep moving up to the right. Which is why I caution, don't put too much emphasis on getting that top, top valuation at the very beginning.

15:18
Hannah Dittman
That's so well explained and articulated and makes a ton of sense. And you know, it's like real estate. The value of a house is kind of how you're thinking about valuing a business. And just because the first time the house hit the market it was sold for X, Y and Z doesn't mean that the next time the house hits the market it's the same market or the structure of the house is the same and all the things. So I think what you said about having a business that supports evaluation and making sure that's realistic and reasonable is really helpful, especially in the early days, like you're saying as an early stage investor where a lot of it is theoretical or vision driven, making sure that you're in line with the rest of the market.

15:59
Hannah Dittman
And obviously there's ways you can look at benchmarks of where early stage deals are going and kind of be in line with what others might expect as an average valuation. But if I'm a really early stage business, what are some of the ways I can start thinking about this to wrap my head around? Maybe numbers? If I don't have a ton of numbers going on in my business yet, well, you can.

16:19
Josh Resnick
That's where it's more of the art and the science. That's where you're then comparing it to, you know, what other competitors in the space are valuing it at. And you look, you have a little bit of, you know, a range there, a little bit. But it's just don't stretch it because if you're stretching it just means you're going to have to work even harder. It's going to take even longer to close the round, you're going to be even more distracted. And also you might turn away the very investors that are going to help you propel you to that next round of the one after which is the value add investors, the strategic ones, the ones that can help you open up the doors, give you that critical advice when you need it.

16:55
Josh Resnick
You don't want to be pushing those people away and you don't want to start your first day once you close that round in a race to your life to it's going to create too much artificial pressure on getting to that next level of KPIs that will justify that higher evaluation earlier and sometimes that's not the right journey you want to be on. For example, one big piece of advice I have for founders that, you know, maybe they don't hear enough is slow it down a little bit. I don't want you to come out of the gate and on the first day, be in Costco. Sometimes with the CPG brand, that's not the right first step, even though that will maybe juice your numbers at the beginning. That's not how you test and learn. I would rather take it a little bit slower.

17:42
Josh Resnick
Test and learn. Really understand where your capital is best spent. On the growth marketing side, how best to communicate, you know, with your customers. You know, give yourself a little bit of room on adjusting your pricing strategy and things like that. Just give yourself room to breathe and learn. But if you're right out of the gate having approved that evaluation and you know you're running out of runaway in a year, you can't focus on that. And then you're growing too fast, you're making mistakes, and you are shutting yourself off to some of the critical signals that might be coming from your customers or your channels. You just might miss them if you're moving too quickly. Sometimes that pressure to get the highest valuation and the lowest dilution is not good for you in the long run.

18:28
Hannah Dittman
That's so well said and such an important point I think, to make in cpg. There's a saying brick by brick, and I think that's kind of what it's talking about. And there's other complications other than just chasing the valuation when you take on a little too much too quickly, too. I mean, if you can't support a retailer from a team inventory logistics standpoint, I mean, you can really burn a retailer bridge, and that's hard to come back from. You can burn through cash. That's hard to come back from. Like, there's a lot of ways you can really nuke yourself in some really challenging ways by going too quick.

19:04
Hannah Dittman
But all that can really happen if you're going too slow is it might be a little bit more work to get another fundraise done, or you might need to prove out some more growth at some point. The risk side of doing it right, step by step, I feel like, is a lot lower than taking on too much too quick.

19:23
Josh Resnick
I think so. And the other thing too is, you know, make sure you're raising whatever you think you need to raise it a little bit more, because you're always going to need that extra Runway. You never know. Well, you should anticipate things are to go wrong, you're going to have to learn, you're going to have to pivot a little bit. Things are going to take longer, things are going to be a little bit more expensive at the beginning and prepare for that and give yourself the Runway to grow into the right KPIs sustainably so that you can do that next, you know, fundraise, you know, versus a race.

19:56
Hannah Dittman
Great, well said. You know, you've invested in 50 plus, I don't even know how many brands from angel all the way through a fund and have worked with a lot of brands yourself. If you could think about patterns or similarities you've noticed in the ones that have really become successful companies that you've worked with, what do you think the commonalities have been in those companies?

20:19
Josh Resnick
I'd say for the successful companies, the things I've seen as a theme, a lot of this actually I have to speak to is about the founder. You know, having a founder with the right experience. Having a founder that is a great problem solver who doesn't panic when things go wrong. Because literally every day you're going to be bounced between highs and lows, highs and lows, and you're going to have a hundred problems they're going to have to solve at once. So I've seen successful companies are the ones led by founders who are good under fire, are calm, are great problem solvers, are optimistic, because you kind of have to keep that optimism level up. I'd say storytelling, like I mentioned before, super important. Their ability to keep people engaged and moving along with them.

21:05
Josh Resnick
Again, founders who bring an unfair advantage to the table, maybe through their experience or that done this before in some capacity. Other things I think are really important for successful companies are building a moat around a key point of differentiation and, you know, allowing themselves to really stand out. I'd say brands and founders who are really authentic, who can build a community around their brand. A lot of people can come up with a product, but maybe struggle with keeping their customers really engaged. Customers have so many choices of where to go right now. Having that kind of authentic story, connecting your customers in a way where they choose to be a part of your brand because it makes them feel something that's great. Like liquid death is a great example.

21:57
Josh Resnick
Tons of water brands out there, lots of great waters, all different forms and factors. But liquid death makes me feel a certain way. It makes me feel cool when I'm at a bar or a party or a social event or whatever. When I don't want to have a drink. I feel like a little bit of a rock star.

22:13
Hannah Dittman
Yeah, we're badass when we're drinking liquid death.

22:15
Josh Resnick
Yeah, yeah, that's right. But the brands that are successful make you feel that Manscape makes you feel about this really cool, kind of cheeky brand vacation. You know, there's so many great sunscreen brands out there, but they have this great 1980s, you know, DJ inspired pool vibe, you know, from Miami. And it's just, it feels fun, it feels cool to be a part of their brand. Those are the brands I look for and who are successful. And one last point, which is a really big point for me, the brands who find a way to be a must have versus a nice to have, that's a key part of their success story too.

22:52
Josh Resnick
Because when people need to pull back on their budgets when maybe a recession's coming, you know, a lot of reasons you need them to feel like I need to engage with your product on a regular basis. That's something that we look for at OpenSky is, you know, brands that are an integrated, integral part of people's everyday routines.

23:11
Hannah Dittman
So well said and really important critical points that are hard to explain and get across in cpg. I think unlike tech, you know, there's all these kind of ancillary, emotionally and psychology driven factors going on in consumer products and understanding the frameworks for those of boiling it up to what's really important there and is so important and was really well said. You know, we talked about some brand examples that resonate with consumers.

23:39
Hannah Dittman
I'd love to dive into maybe a founder example of someone that in your portfolio or that you've met along the way that really shined to you and kind of what stood out in their communication or how you were working with them that made you feel strongly that they were a great storyteller and they had a lot of these traits of optimism and all of these things that you're looking for in a founder.

24:00
Josh Resnick
Yeah, I mean, I'm very fortunate and lucky to work with a lot of great founders in my portfolio, both my angel portfolio and OpenSky's portfolio. One that happens to come to mind is Becca at Fishwife. So Fishwife is a premium tin fish company. They have a range from sardines to anchovies to mackerel to salmon to tuna. And she took a very boring category, you know, sunkist and things like that. And reinvigorated with a fun, colorful, playful branding with a really authentic story in terms of her travels to Europe and How she noticed, you know, there was definitely a lot more interesting kind of brands and flavor profiles and things like that in Europe that just didn't exist in the us Somewhat similar to kind of our sugar finish story.

24:48
Josh Resnick
And so what I loved about Becca is one a lot of the things I've already talked about, great traits I look for. She was a great storyteller. You know, she's very authentic. She had very authentic story about what, why she's passionate about this space. She has excellent branding instincts. So she created this beautiful, fun, engaging brand that you want to be a part of. If you're going to choose any other tin fish category, all the rest just look boring compared to what she does. She really understands, you know, product innovation and flavor profiles. And so she always has, you know, great collaborations and, you know, she brings to life some really fun kind of products. What also struck me about her, and this is something we look for in our founders, is she had a very lean DNA, kind of cost DNA for her.

25:33
Josh Resnick
I'm not saying this the right way, but she ran a very lean team. She was a Jane of all trades. She could do a little bit of everything, you know, well enough that she was able to keep her team lean. And every dollar mattered to her. And so when she would make spending decisions, you could just tell how thoughtful they were. Very focused on gross margin and net margin and just the whole pricing strategy around her product. Because it was a premium product, it was going to be more expensive. But I've seen over the years how she's continued to bring that cost down and widen her margins. And she's just very thoughtful about go to market. So she's really creative in terms of, you know, how she brings her brand to life.

26:13
Josh Resnick
Half of a product's success now, I mean, one part of it is the founder. One part of it is having a really well differentiated product you can build a moat around, but easily a third of a product's success is how do you communicate it to your audience so they want to be a part of that brand. So go to market is everything these days.

26:32
Hannah Dittman
So well said. And shout out. Becca sounds like the total package. And like she's just a wicked rock.

26:38
Josh Resnick
Star and she's off like this in terms of her product success.

26:42
Hannah Dittman
I love that. Yeah, I know. I'm a big fan of her brand as well. And it's awesome to see you as an investor be able to speak with so much depth in such a knowledgeable way about someone that you're working with and how critically you're thinking about her and her journey throughout her brand as well. I think it's a huge vote for you as an investor that you're able to have that partnership and understanding in that relationship is clearly built in such a thoughtful and solid way. And I think that makes a big difference as a differentiator for an investor in the space. I think a lot of founders, that's what they're really ultimately looking for, is a real partner who's going to see all aspects of them and their business and be along for the ride in a great way. So.

27:23
Josh Resnick
And thank you so much for acknowledging that. It's so important to us not to just be a check. We want to be really helpful, but we also know how to stay out of a founder's way too. Sometimes you have investors who are like, so eager to be helpful that they are taking time away from you because they're constantly checking in or asking for things. And so we do let our founders lead because we've been on the other side of that. We understand. But when we get an ask from a founder, we jump on it right away. You know, we're such a small boutique firm. You know, we can be really responsive. And that's not said. I don't mean to say that we're not constantly thinking about our founders and how we could be helpful.

28:00
Josh Resnick
You know, the fact that we also invest in this whole technology stack that they use, we find can be super helpful as well. So I'll be proactively reaching out to our founders and saying, hey, we just invested in this new technology to, you know, support your growth on TikTok or Amazon, or to help you have your results surfaced in a prioritized way in searches on LLMs and things like that. And we'll proactively send it to them so that they can be ahead of the curve in terms of integrating this technology into their growth.

28:29
Hannah Dittman
That's really valuable. And especially like you're saying with the LLMs, I feel like the world's moving so quickly and there's a lot of challenges that founders face. Tech is not necessarily your power lane as a CPG founder. And it's helpful to kind of have a little bit of pre truth information on some of that stuff. Knowing who to trust and not wasting money or dollars where you shouldn't. If you maybe could recommend one or two questions for founders to ask investors as they're going through the fundraising, that might help them get a little bit more insight into the people that they might be working with. You know, if you were A founder. What are a couple things you would want to know about an investor or a fund in order to get a sense for what it would be like to work with them?

29:11
Josh Resnick
That's a great question. You know, if I was a founder, one, I would want to check the references. I would say, hey, could you give me a few of your portfolio companies that you think, you know, maybe we're on a similar path or similar journey or there's, you know, something kind of overlap here where I can talk to them to kind of understand their thinking on why they chose you and or how you've been helpful to them in the past. I would ask them specific examples of what they have done to support their founders, how they have gotten them a certain retail relationship or made an introduction or helped them.

29:43
Josh Resnick
You know, some of the things we pride ourselves on is, you know, helping to fill their funnels or, you know, make this certain introductions to people in our network or, you know, to tap into some subject matter expertise that they're looking for or, you know, help them validate a hire they're just about to make, help them finish their fundraising journey. I would ask those specifics on how they have done that for their portfolio companies in the past. And also I'd ask them, hey, when has something gone wrong with your portfolio and how have you reacted to that? You know, tell me the story of numbers not coming through or something happening, maybe a disagreement on the founding team and they had to split up and how did you handle that? How did you support them?

30:24
Josh Resnick
How did you react to that being really clear, even asking the questions, what are your expectations of me? By writing this check and coming on board of our camp table, what do you need to see to go, oh, this was a successful investment for me. Making sure expectations are aligned would be really helpful. If they come back to you and say, oh, I hope you need to 10x in three years, maybe that's not the right fit for you because that would imply it's, I got to do everything, anything at all costs to hit a certain number. And that might not be in the long term best interest or the brand or, you know, investors. So just making sure you're totally aligned on how you're. What the expectations are, I think are helpful.

31:06
Hannah Dittman
Those are great pieces of advice and awesome questions that I feel like shed so much insight into so many different aspects of what it would be like to work with someone and where you want to make sure you're protected as a brand as well. So thank you for that. Very well said. I'd love to pivot into a Slack question. As you know, startup CPG has the largest slack community in the industry with now over 35,000 members. I'd love to pull a question directly from our channel and have you answer it as a case study for any founders that might have a similar question. Today's question is what is the difference between a pre seed and Series A round?

31:42
Josh Resnick
Yeah, I can do very high level from my perspective. So pre seed for me typically means you maybe you haven't launched yet, maybe you have, you know, your brand down, your packaging down, you've thought through your logistics chain, you have your core team in place or just about to maybe hire them. Maybe you have a couple of people still ready to go. You understand your pricing strategy, you understand who your ICP is, your ideal customer profile. You kind of have all the foundation ready to launch. But maybe you haven't launched yet or you have launched but it's pretty light. Maybe the website has been up for two or three months. Maybe it's, you know, online only. You just have two or three hundred thousand dollars revenue coming in.

32:27
Josh Resnick
Maybe you have a light understanding of your cost to acquire, your customers and your, you know, return on ad spend and your average order value. But you certainly don't know your LTV or your take rate on subscriptions. Your churn. There's still a lot of things you don't know but you've started to gather some information. So it's kind of that early pre launch to just post launch phase where valuations can be lower but the sky's the limits in terms of like all the potential out there for the brand. But I understand as an investor when I'm coming in there's still a lot unknown. You really don't even have a data room. I'm being sold on the founder, the product, the expectation of differentiation and how you're going to win in this space. But it's not proven yet and I'm okay with that.

33:17
Josh Resnick
When you get to a seed now it's like I really understand my customer well. I've settled in on my pricing. I might have started to jump from online as a CPG brand to retail and I'm starting to have some early retail success. So now I understand some longer term numbers like velocity and churn and CACs have settled in. I have a pathway to bring my gross margin down from where it started precede, but now I'm starting to scale up a little bit more. So this phase is like I'm really starting to understand my Customers and velocity. And I've worked out all the kinks in my logistics train, or a lot of them, and now I want to add fuel to the fire.

33:58
Josh Resnick
So seed is where like I'm ready to go and I know what I'm doing and I can really put this capital to work. Series A. Is all of that on steroids? You know, I've been in the market for a few years now. Maybe I'm doing 10, 20, $30 million of revenue. I have a locked in team that's firing on all cylinders. But maybe now I'm raising money to level up my team to this next, you know, big stage. I'm just about to hit some really huge accounts or I'm in a huge accounts, but now they want to expand nationwide. I'm filling my product development funnel more and now I have, you know, five other products coming out and all the development associated with it.

34:37
Josh Resnick
It's just now I'm really widening that aperture in terms of going national and taking the country by storm and, you know, my valuation reflects that.

34:46
Hannah Dittman
Beautifully said and I think super helpful to make it so tangible and anecdotal for people to understand where they might between or where they might be sitting. I think that's often a very common question we get asked all the time and hard for founders to wrap their head around. You know, is it a valuation size, is it a revenue size, is it a stage of business thing? And I think investors have their own perspectives on these things a little bit too, but really helpful.

35:14
Josh Resnick
Can I add one more category in that wasn't mentioned?

35:17
Hannah Dittman
Yes, please do.

35:19
Josh Resnick
So friends and family round is that earliest of rounds where you're still figuring a lot out, but you just need a little bit of money to pay for legal, to buy samples, to maybe hire a branding agency just to do those early things to get ready to launch, just to throw that in as probably the very first round that CBG founders are going to be thinking of.

35:41
Hannah Dittman
Yeah, that's really helpful and definitely, I'm sure the audience is very familiar having gone through some of these stages themselves, and I think they probably empathize a lot with you understanding that too. I feel like the journey is long and like there's a lot of hustling that needs to get done before you even talk to an investor. So really helpful point, Josh. You've been such a wealth of knowledge today. I could ask you so many questions. You have so much experience and relevant experience and a ton of color and passion and excitement for what you're doing that's obvious for founders that might want to get in touch with you or think they might be a good fit for your fund too. What's the best way for them to get in touch?

36:21
Hannah Dittman
And second part of my question is do you have any advice for those interested in joining OpenSky or just investing in general now that you've kind of gone on this journey yourself?

36:32
Josh Resnick
Yeah. So on the first part, you know, email is the best way to reach me. Honestly, I don't know if that's too old school or not, but Jrpensky VC also LinkedIn, you know, a lot of people you know reach me through LinkedIn and also sometimes in person I try to put myself out there being in panels and talks and, you know, conferences and stuff. So if you see me talking, show up and grab some time with me afterwards and happy to have coffee with folks, you know, around Venice. Even if it's not a great fit with OpenSky, I love getting to know the community and being as helpful as I can in terms of people becoming LPs in OpenSky. Same thing, you know, just please reach out to me directly via email. Would be happy to have that conversation with you.

37:16
Josh Resnick
We think were a great entry point for people who want to have a little of exposure to CPG or that technology stack and feel really good about results on Fund 1 and for people generally wanting just to like, I'm going to try my hand at investing. Angel investing obviously is one route to go. But and I don't mean this to be self serving, I would recommend you become an LP at a fund first. And that's what I did is I learned how to invest in some ways by being a part of a fund as an lp, getting exposure to their thinking and how they constructed their portfolio and the do's and don'ts and the lessons they learned there and observing that first, then you can start dabbling and being angel.

37:58
Josh Resnick
But just like I don't recommend you do individual stock picking, I don't really invest going down the angel route. It's much better to kind of join someone who's creating this curated basket like an index fund for stocks, but for direct investments in companies, I think that's the best way to kind of get your feet in there.

38:16
Hannah Dittman
Yeah, that's a really unique and thoughtful piece of advice that I feel like makes a ton of sense and gives you a lot of purview into not just investing but also the operational rigor behind what all of that takes and a lot of the kind of back office stuff that you would need to know as well, which can be really helpful and really tedious, I'm sure. Well Josh, thank you so much for your time today. Like I said, you are a wealth of knowledge and such a pleasure to chat with such a kind investor, kind human, and I'm wishing you all the success and fun too. Excited to be following along on your journey.

38:49
Josh Resnick
Thank you Hannah. I've really enjoyed this as well. I really appreciate your questions. It was a lot of fun.

38:54
Hannah Dittman
Thanks again. Well friends, we've now arrived together at the end of another episode of the Startup CPG Podcast, the top globally ranked podcast in cpg. And if you love this podcast, you'll love our Slack community even more. Here at Startup cpg, we're a community of brands and experts and you should join. Sign up @startupcpg.com you'll then get an invite to our online Slack community of over 35,000 All Star CPG members, hear about amazing events near you and all our special opportunities to get you in front of buyers and investors, brands and more. It's a free community. So what are you waiting for? I'll catch you on the next episode and I'll see you on the Slack.