How to think about raising capital and driving trial in these changing times

Elly Truesdell is a partner at Almanac Insights, a venture capital fund that invests in consumer food and food technologies. She has spent her career driving strategic growth in the natural and organic food industry, shaping the landscape of some of the fastest growing, most innovative sectors in consumer packaged goods. Truesdell spent nearly a decade at Whole Foods Market as global director of local brands and product innovation. She held the interim CEO role at Canopy Foods, a strategic co-packing business before transitioning to investment. Truesdell holds a bachelor's in media studies from the University of Virginia; she sits on the board of Scout Canning and Wellness in the Schools and acts as an adviser to Harlem Park to Park.

Here, Truesdell shares insights on raising capital in today's economic environment.

How has COVID-19 changed the way you are evaluating new opportunities?

The term “resiliency” is one being used over and over again as we continue to face the realities and challenges posed by COVID-19. In evaluating investment opportunities, the concept of resiliency—highly flexible and nimble companies, people, supply chains and revenue streams—has never been more important. Food and beverage is the only sector predicted to grow in 2020 so there’s no shortage of opportunity, but the pandemic, and cultural reset, begs new scrutiny over the foundations of businesses.

We’ve set a new barometer for excellent, high-integrity products, with clear value propositions and experienced, resilient teams.

What pieces of the valuation process are most difficult in today’s environment? Any other areas of the investment due diligence process that are particularly challenging to navigate with the macro uncertainty? 

Valuations are very tricky right now. We’re having conversations with other investors, founders and with our LPs on the subject, daily. As I mentioned—with food and beverage growing—it’s not a lukewarm sector, and still an interesting investing environment. A few things that validate a high (or higher) valuation right now is a strong balance sheet, a clear road to profitability, and, if you’ve demonstrated an ability to pivot (in the tumult of 2020)—a demonstration that those forces will continue long past a reopening—is critical.

How should early stage consumer packaged goods companies think about driving trial in our new-normal retail environment? Are there any examples of companies in your portfolio (or network) that are connecting with consumers especially well or creatively?

The million-dollar question! We’ve been pressing on our portfolio to consider how they’ll drive trial as demos/tasting in stores and trade shows are likely not coming back soon. A few things I think are exciting and novel: positioning your product in a new part of the store. Much like Beyond Meat’s placement in the meat department, if you have reason to show up in a unique merchandising area—use it to your advantage (for instance, a frozen treat merchandised with frozen fruit and smoothie packs rather than the ice creams). Aligning with online marketplaces and optimizing those channels effectively and thoughtfully for your brand has never been more important. One thing I’m waiting to see is a highly creative and strategic use of digital channels that we’ve never seen before. Looking forward to investing in the company that builds a successful digital trade show platform or equivalent.

What’s your take on prioritizing profitability versus growth as an early-stage health and wellness company in the current environment?

We’re focused on profitability now, and had been, going in (and leading up) to the crisis. Early stage food and beverage businesses have been way too focused on growth for the sake of growth without properly supporting that acceleration. There’s been too much capital thrown around, fueling careless burn, in many cases, with no end game. Some of the best food businesses need more time to grow and can do so in a measured, incremental fashion to maintain integrity and standards—without prioritizing growth at all costs.

What are two pieces of advice/wisdom you can impart to health- and wellness-focused entrepreneurs who are raising capital in the short term?

Consider your proposition and make it crystal clear why your business/product/offering is of very high value. It’s critical to understand why yours is better, novel, and how it enriches people’s lives and health. Don’t compromise your mission or purpose for fast money. If you’re finding it difficult to raise money from partners who align with you and your goals, stay the course—be scrappy and resourceful, and hold out for a true partner.