The co-founders of leading consumer-focused private equity firm Alliance Consumer Growth (ACG)—investors in EVOL Foods, Krave Jerky, The Honest Kitchen, and BabyGanics—answer questions from natural products entrepreneurs.
Q: What traits should natural entrepreneurs seek in investor partners?
A: These six characteristics can help you find the right investor for your natural company.
Industry Focus: An investor who specializes in the natural products industry will be able to add much more value than a generalist investor who dabbles across different industries.
More Than Just Money: Professional investors can bring experienced, hands-on help with consumer and trade marketing, product development, operations, finance and team building.
Professional Partner: In addition to a tool box of industry specific resources, professional investment funds bring: a portfolio of other companies going through similar stage of growth who can also be resources; and committed capital (meaning if they say they’re investing, you have certainty of the deal closing).
Alignment of Time Horizon: Professional investors will want an exit or liquidity event at some point so they can return capital to their limited partners. Make sure that your time horizon is aligned with theirs.
People You Like and Trust: It's a relationship and you're going to be spending time together. Check the investor's references and speak to their other portfolio company CEOs.
People Who Trust You: Be leery of someone who needs to own a majority stake of your business. It means they may inherently trust their own decision making more than yours.