Welcome to our new website!
Aug. 23, 2022

Sita Chantramonklasri (Siam Capital) - How to raise a VC fund as a first-time manager, what investing in sustainability really means and her due diligence process

Sita Chantramonklasri (Siam Capital) - How to raise a VC fund as a first-time manager, what investing in sustainability really means and her due diligence process

Thank you Oscar Adelman for the introduction to our guest today, Sita Chantramonklasri, Founding Partner at Siam Capital. Siam Capital is in search of innovation that betters people and the planet. We discuss how Sita got into investing, what it was like raising a fund for the first time, what investing in sustainability really means, and her underwriting guidelines.

Some of the questions I ask Sita:

  1. Tell me about your journey into venture and your interest in investing
  2. Innovation and capital
  3. Why did you decide to raise your own fund?
  4. What was it like raising a fund for the first time? Was it hard raising a single GP fund as a woman?
  5. What did you think was missing from the market of venture capital?
  6. What’s your thesis? What is the fund’s mandate?
  7. What does sustainability and ESG mean to you?
  8. Where do you see the opportunities in better for the planet and better for you?
  9. Are you more focused on investing in physical products vs. software?
  10. How do you also think about the future of your fund? Do you want to be a single GP always or do you want to grow into a larger fund?
  11. What’s the difference between Siam and an impact fund?
  12. How do you think about this term conscious consumer?
  13. What are your guidelines of better for the planet vs better for you? (repetitive?)
  14. What’s one thing you would change about venture capital? (repetitive?)
  15. What do you look for in founders?* (added)
  16. What advice would you give emerging managers/folks looking to raise a fund? (added)
  17. What’s one book that inspired you personally and one book that inspired you professionally?
  • Educated by Tara Westover
  • Hidden Valley Road
  • Noise By Daniel Kayman
  • Think Again by Adam Grant
Transcript
WEBVTT 1 00:00:02.399 --> 00:00:16.559 Oh, hello and welcome to the consumer VC. I am your host, 2 00:00:16.600 --> 00:00:19.800 Mike Gelb, and on this show we talked about the world of venture capital 3 00:00:20.039 --> 00:00:25.160 and innovation in both consumer technology and consumer products. If you're enjoying this content, 4 00:00:25.239 --> 00:00:29.480 you could subscribe to my newsletter, the consumer VC DOT sub stack dot 5 00:00:29.480 --> 00:00:33.200 com, to get each new episode and more consumer news delivered straight to your 6 00:00:33.200 --> 00:00:37.240 inbox. Thank you, Oscar Edelman, for the introduction to our guest today, 7 00:00:37.479 --> 00:00:43.200 Sita Chantremont class are founding partner of Siam capital, Siam's in search of 8 00:00:43.240 --> 00:00:48.359 innovation that betters people and the planet. We discuss how CITA got into investing, 9 00:00:48.560 --> 00:00:52.520 what it was like raising a fund for the first time, what investing 10 00:00:52.600 --> 00:00:57.880 and sustainability actually means, and her guidelines when underwriting. Without further ADO, 11 00:00:58.079 --> 00:01:23.120 here sita. Sita, thank you so much for joining me today. How 12 00:01:23.159 --> 00:01:26.079 are you doing? I'm well, Mike. How are you? I'm doing 13 00:01:26.159 --> 00:01:29.599 great. I'm so excited, really excited to have you on the show. 14 00:01:29.640 --> 00:01:32.560 Thanks again for taking the time. Tell me about a little about your journey. 15 00:01:32.599 --> 00:01:37.439 What attracted you to venture capital and what got you interested in investing? 16 00:01:37.920 --> 00:01:41.959 Sure, so, I grew up in Bangkok and basically, you probably know 17 00:01:42.040 --> 00:01:45.680 this by now, but I picked up my American accent from watching too much 18 00:01:45.760 --> 00:01:49.079 television as a child. I won't go into too much detail about what some 19 00:01:49.120 --> 00:01:52.560 of the shows were, but honestly, as long as I can remember I 20 00:01:52.640 --> 00:01:57.400 was just super fascinated with what I felt or believed were like these forces that 21 00:01:57.480 --> 00:02:01.959 were responsible for this very visual divide between the two sides of Bangkok, which 22 00:02:01.959 --> 00:02:06.359 is my hometown, and initially I thought it was politics, which, you 23 00:02:06.359 --> 00:02:09.520 know, I think understandably so. In anyone who follows the new cycle is 24 00:02:09.520 --> 00:02:14.080 probably empathetic to that thought. But you know, I came to the US 25 00:02:14.360 --> 00:02:17.840 when I was seventeen to study that totally wide eyed and naive in many ways, 26 00:02:17.879 --> 00:02:23.000 and one thing led to another. I got interested in finance and ended 27 00:02:23.080 --> 00:02:27.039 up in turning at Goldman throughout college and did a stant there a few years 28 00:02:27.080 --> 00:02:30.039 afterwards, sort of the usual post college gig. And then on the trading 29 00:02:30.080 --> 00:02:35.479 floor I started to learn about technology, or I guess, to be quite 30 00:02:35.479 --> 00:02:38.039 blunt, like the rapid influx of it. We saw a lot of trading 31 00:02:38.120 --> 00:02:45.159 volume essentially get replaced by electronic trading volume Um and just the change that technology 32 00:02:45.199 --> 00:02:50.080 brings and how quickly that is so I love to an unhealthy degree, and 33 00:02:50.159 --> 00:02:53.479 Mike, you know this, food and restaurants. I jumped at this chance 34 00:02:53.520 --> 00:02:58.879 of moving to London to help launch Uber eats in the UK and and slowly 35 00:02:59.199 --> 00:03:04.159 along the way I started to realize that the biggest force of change, at 36 00:03:04.240 --> 00:03:07.240 least what I thought was, and I still do believe, and I know 37 00:03:07.319 --> 00:03:12.080 this might sound a little bit controversial, especially in this environment, but the 38 00:03:12.080 --> 00:03:15.560 biggest force of change is capital. And like that was the common threat between 39 00:03:15.759 --> 00:03:20.960 finance, technology, the world of venture whatever it might have been. And 40 00:03:21.000 --> 00:03:25.599 specifically, I was very intrigued by this combination of innovation and capital. It's 41 00:03:25.639 --> 00:03:30.639 been a long ish journey and I think when you start off you're not really 42 00:03:30.639 --> 00:03:35.360 sure where the destination is. I don't think there could be more exciting of 43 00:03:35.360 --> 00:03:38.960 a time to be focused on this space than than right now. Yeah, 44 00:03:38.360 --> 00:03:42.560 no, I mean, I completely agree with you and that's really, really 45 00:03:42.560 --> 00:03:46.120 fascinating. Thanks for giving us the highlight reel and really what attracted you, 46 00:03:46.120 --> 00:03:50.639 you know, to venture capital, going from, you know, the training 47 00:03:50.680 --> 00:03:53.960 desk all the way down to Um to VC and as well as you know 48 00:03:53.000 --> 00:03:57.719 what what kind of led to working at at Uber eats as well, which 49 00:03:58.080 --> 00:04:00.840 I also love food. As you know, we could probably delocate another hour 50 00:04:01.000 --> 00:04:04.680 just talking about our passion for food. So, exactly, exactly, maybe 51 00:04:04.680 --> 00:04:11.439 should introduced a second podcast all about food. Why did you decide to raise 52 00:04:11.520 --> 00:04:15.400 your own fund and what was it like raising your own fund for the first 53 00:04:15.439 --> 00:04:18.759 time? It's funny because a lot of folks have asked that and I would 54 00:04:18.759 --> 00:04:24.360 honestly be be lying, or or at least misleading, to say that my 55 00:04:24.439 --> 00:04:29.920 thought process at the time was that explicit or directional. Frankly, it was 56 00:04:29.959 --> 00:04:33.040 honestly a combination of a few different things. So one I saw what I 57 00:04:33.079 --> 00:04:38.160 believed was an opportunity in the market in multiple different facets, and I'm happy 58 00:04:38.199 --> 00:04:43.399 to go to go deeper in that into I felt like the ventural landscape in 59 00:04:43.439 --> 00:04:46.959 and of itself needed to be changed, or at least someone needed to try 60 00:04:47.399 --> 00:04:51.040 Um, even if at first on a much smaller scale. And then, 61 00:04:51.120 --> 00:04:57.360 lastly, and arguably probably the most important factor, is honestly, I was 62 00:04:57.399 --> 00:05:01.040 just very, very lucky and I had some Incredib bowl supporters who really gave 63 00:05:01.120 --> 00:05:04.879 me the confidence to take the leap and others who gave me the platform to 64 00:05:04.959 --> 00:05:09.680 do so. Honestly, wouldn't be here without those early believers. It was 65 00:05:09.720 --> 00:05:13.480 more serendipitous rather than hey, I'm going to set out a five year plan, 66 00:05:13.720 --> 00:05:16.600 if you will. So what was it like raising a fund for the 67 00:05:16.639 --> 00:05:21.800 first time? The fundraising process was actually pretty unusual in many ways. It 68 00:05:21.959 --> 00:05:28.199 was a reverse fundraising process. So at the time I was I was working 69 00:05:28.319 --> 00:05:32.040 at future positive with this Um Biz stone, who's been an incredible mentor of 70 00:05:32.040 --> 00:05:39.000 mine and a very senior x operator and investor, essentially pulled me aside. 71 00:05:39.160 --> 00:05:41.959 funnily enough, I actually think we were sitting at one of our favorite restaurants 72 00:05:42.000 --> 00:05:46.240 to New York and he asked whether I had considered launching a fund on my 73 00:05:46.279 --> 00:05:47.959 own. And one thing led to another, and I really need it. 74 00:05:47.959 --> 00:05:53.639 It was probably in the span of a few weeks a small number or handful 75 00:05:53.639 --> 00:05:57.160 of lps approached me and asked if we would be interested, if they were 76 00:05:57.199 --> 00:06:00.839 to anchor me, to launch a fund to focus on sustainability as a solo 77 00:06:00.920 --> 00:06:04.079 GP. And I'm sure you remember, Mike. Like you know, last 78 00:06:04.120 --> 00:06:09.600 spring and into the summer there was so much chatter around the rise of the 79 00:06:09.639 --> 00:06:14.879 SOLO GP model and its effectiveness in this new capital landscape. I guess I 80 00:06:14.879 --> 00:06:18.759 should also backtrack and and share that after Uber I went back to graduate school 81 00:06:18.920 --> 00:06:23.720 to study sustainable investing at Columbia. So it was while I was getting my 82 00:06:23.800 --> 00:06:29.160 master's degree and sustainable technologies that I've met Biz and Fred in the future positive 83 00:06:29.160 --> 00:06:31.680 team and well, I guess maybe team isn't the right word. There was 84 00:06:31.879 --> 00:06:35.600 only three of us and they had asked if I wanted to help them build, 85 00:06:35.800 --> 00:06:39.439 you know, this firm. And all that to say is that it 86 00:06:39.519 --> 00:06:43.279 wasn't totally out of the blue. Sustainability as an area I had been super 87 00:06:43.279 --> 00:06:46.720 involved for a long period of time with prior and throughout my time at my 88 00:06:46.800 --> 00:06:53.240 former fund Um. It was definitely an unusual process, but challenging in different 89 00:06:53.240 --> 00:06:56.639 ways. I can only imagine, honestly, what it was like to, 90 00:06:56.959 --> 00:06:59.800 you know, raise a fund for the first time as a single GP. 91 00:07:00.399 --> 00:07:03.839 Was it also hard raising a fund as a single GP as a woman? 92 00:07:04.079 --> 00:07:09.959 I think the reality is it's never easy to raise capital as a Solo G 93 00:07:10.160 --> 00:07:14.480 P, as an emerging manager or even as some seasoned funds, as we're 94 00:07:14.480 --> 00:07:16.759 seeing in this environment right now. So the short answer is, of course 95 00:07:16.879 --> 00:07:23.439 yes, and I think as a woman there are slightly nuanced challenges. We're 96 00:07:23.480 --> 00:07:28.759 all in a pattern recognition business and happy to go into more detail on that 97 00:07:28.879 --> 00:07:31.399 later. There are just fewer female investors to point to, and I don't 98 00:07:31.399 --> 00:07:36.120 think that's a particularly controversial statement. It's one that I think the industry has 99 00:07:36.160 --> 00:07:40.560 been trying to reckon with for a while. But, you know, with 100 00:07:40.839 --> 00:07:45.959 fewer female investors to point to, let alone female solo GPS, you know 101 00:07:46.040 --> 00:07:49.319 by data point, it just presents more question marks and there are definitely other 102 00:07:49.439 --> 00:07:55.720 nuanced challenges as well. I think that it's no secret that the landscape adventure 103 00:07:56.160 --> 00:08:01.199 has been trying to combat its gender bias for quite some time on both sides 104 00:08:01.600 --> 00:08:07.240 of the capital table, and I think that while we're making progress, it's 105 00:08:07.279 --> 00:08:09.560 safe to say that we still have quite a bit of ways to go. 106 00:08:09.959 --> 00:08:13.519 I know totally, and obviously we need, you know, way more women 107 00:08:13.560 --> 00:08:18.079 investors. We we need way more people of color investors. We've talked about 108 00:08:18.319 --> 00:08:20.680 a ton of the show about how then it trickles down and then you're actually 109 00:08:20.680 --> 00:08:24.360 investing in a lot more, you know, companies that are led by people 110 00:08:24.399 --> 00:08:28.240 who come from a lot more diverse backgrounds. Right, I remember we were 111 00:08:28.319 --> 00:08:31.120 chatting about this or we have, at least casually in the past. When 112 00:08:31.159 --> 00:08:35.960 you're you're pretty blunt and explicit and you're like, what do you think is 113 00:08:35.000 --> 00:08:39.279 missing from the market adventure capital? I don't think I or any one single 114 00:08:39.320 --> 00:08:43.759 person can answer that. I think at the time when we were we were 115 00:08:43.840 --> 00:08:46.559 chatting about it, the obvious answer was it was definitely not capital, and 116 00:08:46.600 --> 00:08:50.440 I think that, if anything, now we're also seeing the market reckoned with 117 00:08:50.480 --> 00:08:54.480 that. I mentioned pattern recognition earlier and I think in many ways, uh, 118 00:08:54.519 --> 00:09:00.879 that is responsible in good and well, in this case, challenging ways, 119 00:09:01.360 --> 00:09:05.320 but I believe pattern recognition is part of what is missing and needs to 120 00:09:05.399 --> 00:09:09.480 change, or part of what is responsible for what is missing and needs to 121 00:09:09.559 --> 00:09:13.720 change. You know, the business adventures is essentially two tasks, the process 122 00:09:13.720 --> 00:09:18.759 of sourcing and selection. If we go through pattern recognition in how we source 123 00:09:20.159 --> 00:09:22.840 a k like you know, I worked as an engineer at Google for x 124 00:09:22.960 --> 00:09:28.399 number of years and largely get deal flow from that channel, we implicitly are 125 00:09:28.480 --> 00:09:33.600 limiting the breath of founders and deals and companies that we see. And the 126 00:09:33.639 --> 00:09:37.519 other side of the coin around selection is is true as well. I mean 127 00:09:37.559 --> 00:09:41.039 if we adopt the same perspective of what has worked in the past will work 128 00:09:41.080 --> 00:09:46.159 again, because oftentimes that's all we know right. It's it's called subconscious for 129 00:09:46.200 --> 00:09:52.000 a reason, but we essentially have this tunnel vision into that same profile of 130 00:09:52.519 --> 00:09:56.639 founder or archetype of business and we miss out on like, well, a 131 00:09:56.679 --> 00:10:01.039 lot. Funny example around this is well is that one of the first investments 132 00:10:01.039 --> 00:10:07.360 we made out of the fund was into a company called Helena. They leverage 133 00:10:07.639 --> 00:10:13.679 a unique type of technology called Yeast Fermentation. It's actually pretty prevalent in food 134 00:10:13.679 --> 00:10:16.879 tech, but they wanted to leverage that to find a way to replicate the 135 00:10:18.000 --> 00:10:22.440 nutritional value of breast milk in infant formula. And I see you nodding and 136 00:10:22.440 --> 00:10:28.360 it's funny now because obviously everyone who has been in touch has, you know, 137 00:10:28.399 --> 00:10:31.639 even skimmed through the news over the past couple of months, is recognized 138 00:10:31.679 --> 00:10:37.200 how big infant formula has been dominating the headlines. And I remember I had 139 00:10:37.440 --> 00:10:41.000 been obsessed with this space for a while because the formula space is essentially dominated 140 00:10:41.000 --> 00:10:46.720 by three players and there has been little to no innovation over the last over 141 00:10:46.759 --> 00:10:52.240 ten years. And I remember when I had been socializing this, this market 142 00:10:52.240 --> 00:10:56.320 opportunity around infant formula. This is sort of pre full fun construction. It 143 00:10:56.440 --> 00:11:01.159 was met with a lot of question marks and mostly not to be so blunt, 144 00:11:01.360 --> 00:11:05.320 but a lot of the questions were from folks who didn't have the perspective. 145 00:11:05.360 --> 00:11:09.279 And I'll disclaim I don't have kids myself, but of course I've many 146 00:11:09.320 --> 00:11:13.519 peers who are moms. I have also, you know, followed the space. 147 00:11:13.799 --> 00:11:18.080 But a lot of people question like hey, it's infant formula an issue 148 00:11:18.080 --> 00:11:22.399 in the US. Is it really a monopoly? What do you mean there's 149 00:11:22.440 --> 00:11:24.759 been no innovation? Is The market even big? Like, why don't people 150 00:11:24.799 --> 00:11:30.240 just breastfeed? Anyways, my my point in bringing this up is like, 151 00:11:30.440 --> 00:11:35.600 obviously hindsight is but that's why it's important to have different perspective around the table. 152 00:11:35.960 --> 00:11:39.360 And it's not just because it's the right thing to do, but because 153 00:11:39.399 --> 00:11:45.799 you miss out on some of these decade defining opportunities. Right, like what 154 00:11:45.840 --> 00:11:50.799 don't you want to back a company that's transforming nutrition for, you know, 155 00:11:52.039 --> 00:11:56.679 arguably the most vulnerable pocket of our population? So yes, and and I 156 00:11:56.720 --> 00:12:01.080 think there's many ways to tackle that question. I think sort of all roads 157 00:12:01.159 --> 00:12:05.759 lead to one path and that we just we need more people who who want 158 00:12:05.840 --> 00:12:13.159 to at least challenge the automatic pattern recognition mold that we've been sleep walking into. 159 00:12:13.679 --> 00:12:18.799 I'm so happy you brought up that example. It's something that, you 160 00:12:18.799 --> 00:12:22.159 know, we've we've dealt with since there is, you know, formula shortage. 161 00:12:22.360 --> 00:12:24.919 We're very, very lucky. We weren't really as affected by that personally, 162 00:12:26.000 --> 00:12:30.200 but I can only imagine the people that actually were. That's right, 163 00:12:30.240 --> 00:12:33.360 because you're a new Dady, have a new dad. Yeah, yeah, 164 00:12:33.440 --> 00:12:35.240 yeah, even I'm at the old I think you brought up like a really 165 00:12:35.279 --> 00:12:39.320 interesting point in terms of pattern recognition, how we invest, and I want 166 00:12:39.320 --> 00:12:43.759 to also talk a little bit about, you know, on the enterprise side 167 00:12:43.759 --> 00:12:46.840 too. I know the show is not enterprise specific, it's consumer specific, 168 00:12:46.879 --> 00:12:52.240 and I am obviously way, way more fascinating and consumer than enterprise, but 169 00:12:52.279 --> 00:12:54.639 what is interesting is kind of this thing where, I'd imagine you invest in 170 00:12:54.759 --> 00:13:00.799 Enterprise Company, right, you're looking at what the customers problem points are and 171 00:13:01.200 --> 00:13:03.480 what the customer these are and then, of course you're evaluating if the company 172 00:13:03.559 --> 00:13:07.639 is actually serving like that, that could have a problem the customer needs in 173 00:13:07.720 --> 00:13:11.200 consumer and it's interesting because, like so, I think that, you know, 174 00:13:11.279 --> 00:13:13.759 if I was like an enterprise investor, I would know that I am 175 00:13:13.759 --> 00:13:18.039 not like the customer right for that company. But in the consumer I think 176 00:13:18.240 --> 00:13:24.879 is like what's fascinating and what's misconstrued is that you automatically think, because it's 177 00:13:24.879 --> 00:13:28.360 a consumer company, that Hey, I am the customer, right, like 178 00:13:28.559 --> 00:13:31.039 I am like the one, even though, like, if you think back 179 00:13:31.039 --> 00:13:33.759 to like, you know, if you're investing an enterprise company, like you 180 00:13:33.759 --> 00:13:39.200 don't have to be the company the customer. You actually aren't the customer really 181 00:13:39.320 --> 00:13:41.200 in order for the company to be big, right, but in consumer you 182 00:13:41.240 --> 00:13:45.159 don't think that way, right, and a lot of investors don't think that 183 00:13:45.200 --> 00:13:48.240 way, right. They think like, oh well, I'm not the customer, 184 00:13:48.320 --> 00:13:50.519 so, like, I don't understand this. Or you're not first, 185 00:13:50.600 --> 00:13:54.240 you're not one degree removed from the customer either. Right, exactly. I'm 186 00:13:54.240 --> 00:13:58.559 being a little facetious and also to myself, as like we're all lazy in 187 00:13:58.600 --> 00:14:03.639 the way that we recognize our own mental patterns. So it's much easier to 188 00:14:03.679 --> 00:14:07.120 see if whether or not you or your neighbor or your friend, or you 189 00:14:07.159 --> 00:14:13.120 know your bro or your buddy. Yeah, no, exactly. It's kind 190 00:14:13.120 --> 00:14:16.639 of my boggling right, because, like in consumer because, like consumer, 191 00:14:16.679 --> 00:14:18.039 it's, you know, it's kind of to the masses. You're telling to 192 00:14:18.200 --> 00:14:22.399 you know, individual you kind of assume or think that. You're like well, 193 00:14:22.440 --> 00:14:24.240 if I'M NOT gonna buy this or or, you know, maybe like 194 00:14:24.279 --> 00:14:28.120 my peers aren't going to buy this, then you know there's maybe like no 195 00:14:28.320 --> 00:14:31.039 market there, right, like just like maybe you might be thinking, especially 196 00:14:31.080 --> 00:14:33.440 if you're like a white male, right, you're trying to give us a 197 00:14:33.440 --> 00:14:37.639 white male investor to invest in. Helena, the company where it's, you 198 00:14:37.679 --> 00:14:41.799 know, dealing with Um formula. It's like well, I wouldn't buy this, 199 00:14:41.879 --> 00:14:43.720 but it's like well, if you actually be enterprise kind of approach, 200 00:14:45.159 --> 00:14:48.000 where it's like actually, I'm not the customer, let's actually go and talk 201 00:14:48.000 --> 00:14:50.360 to potential customers and see, you know, how big the market this is 202 00:14:50.480 --> 00:14:54.879 and, you know, kind of analyze it and kind of take that process 203 00:14:54.919 --> 00:14:58.200 like it actually would be much more valuable. Right, it would be way 204 00:14:58.200 --> 00:15:01.000 more valuable because Um and and I feel like sometimes gets that gets lost in 205 00:15:01.080 --> 00:15:05.519 consumer. When you actually invest in consumer, it's you don't need to be 206 00:15:05.559 --> 00:15:07.960 the customer. In some ways it's almost better investing that you're actually not the 207 00:15:09.039 --> 00:15:11.559 primary customer. Because you can make it then a very like objective decision. 208 00:15:11.559 --> 00:15:16.360 There's no kind of subjectivity that comes out to it, and we've kind of 209 00:15:16.399 --> 00:15:18.919 heard that from other investors to down the road. No, I couldn't. 210 00:15:18.960 --> 00:15:22.519 I couldn't agree with you more, Mike. It's funny because I think that 211 00:15:22.799 --> 00:15:28.000 in investors defense, I speak about this broadly, is like we're all inundated 212 00:15:28.039 --> 00:15:33.360 with companies and deals and opportunities and I think the reality is that, of 213 00:15:33.399 --> 00:15:37.480 course, if you took the time or the initiative to to set out to 214 00:15:37.480 --> 00:15:41.000 to see whether or not the other other people who fit the profile of the 215 00:15:41.039 --> 00:15:45.399 consumer would find this interesting, whether or not the market would be big enough, 216 00:15:45.840 --> 00:15:48.039 the reality of the day to day work is just that, you know, 217 00:15:48.200 --> 00:15:52.399 we're all time constraint, right, and I think that goes back to 218 00:15:52.480 --> 00:15:56.679 the point around like you just need to make sure that there's enough perspective around 219 00:15:56.679 --> 00:16:03.440 the table where when there are of people who represent different natural perspectives, like, 220 00:16:03.759 --> 00:16:07.440 then they have a different inclination to go through that endeavor or take on 221 00:16:07.519 --> 00:16:11.000 that effort to see if it makes sense, because for them, if they 222 00:16:11.080 --> 00:16:14.480 might be the obvious consumer, loves to kind of dive into a bit more 223 00:16:14.559 --> 00:16:18.480 of how you think about different categories. How does this actually translate in specific 224 00:16:18.519 --> 00:16:22.000 categories that they look at? I know you mentioned Um formula, which is 225 00:16:22.039 --> 00:16:26.519 great, but what are maybe some other categories as you kind of think about 226 00:16:26.559 --> 00:16:30.120 the funds and how they actually fit into the funds thesis? It's a great 227 00:16:30.200 --> 00:16:33.879 question, Mike, and I think that one of the biggest challenges in how 228 00:16:33.960 --> 00:16:40.960 we want to convey our thesis is really trying to first change this, or 229 00:16:41.000 --> 00:16:48.639 at least try to alter this perspective that you know sustainability or consumer or like 230 00:16:48.879 --> 00:16:55.879 verticalized disciplines. The interesting thing that we see about sustainability is that it's truly 231 00:16:56.000 --> 00:17:00.879 cross vertical and cross discipline, and so is consumer or at least changes in 232 00:17:00.960 --> 00:17:06.039 consumers behavior. So, for instance, there's opportunities across food, tech verticals. 233 00:17:06.240 --> 00:17:11.079 We've seen a lot of plant based consumer companies or CPG companies, born 234 00:17:11.200 --> 00:17:14.880 out of this mission to try to create a product that is better for the 235 00:17:15.400 --> 00:17:18.799 for the end user with better ingredients. But does that mean that eventually will 236 00:17:18.839 --> 00:17:25.599 need a platform that makes it easier for these companies to launch those businesses or 237 00:17:25.640 --> 00:17:29.599 tackle part of their supply chain or tech stack that's specific to those types of 238 00:17:29.640 --> 00:17:34.200 businesses. We made an investment into a company called tomorrow farms that's trying to 239 00:17:34.720 --> 00:17:40.759 create a platform to help all of these food tech businesses prepare for the, 240 00:17:41.279 --> 00:17:45.759 I guess, inevitable consolidation of some of these companies. So that's also something 241 00:17:45.799 --> 00:17:48.279 that is really interesting is that, like, hey, we're seeing a lot 242 00:17:48.319 --> 00:17:52.359 of CPG companies try to create products, but what is the next iteration of 243 00:17:52.400 --> 00:17:55.400 that? Right, like how do you create infrastructure to try to prepare for 244 00:17:55.480 --> 00:18:00.119 that DEX wave of consumption? Just like you know, sustainable fashion has becoming 245 00:18:00.039 --> 00:18:04.519 a big issue. Like do we back specific brands, or do we back 246 00:18:04.720 --> 00:18:11.359 marketplaces, or do we power the technology platform that is creating an entirely new 247 00:18:11.400 --> 00:18:14.240 material? So, you know, one of our earlier investments, which we 248 00:18:14.319 --> 00:18:18.559 rolled into the fund, is a company called ECOVATIVE design. It developed or 249 00:18:18.640 --> 00:18:25.960 develops a way to domesticate the growth of mushrooms for applications in textiles, food 250 00:18:25.960 --> 00:18:30.319 structure and packaging. That's more of a platform solution because of the scale and 251 00:18:30.359 --> 00:18:33.079 the volume is so big. Right. So I think that there are many 252 00:18:33.119 --> 00:18:36.799 ways to dissect it, but the way that we explore it is less so 253 00:18:36.880 --> 00:18:40.759 hey, like do we believe food tech is going to change, or do 254 00:18:40.799 --> 00:18:44.559 we believe sustainable fashion is going to change, or fashion is going to change 255 00:18:44.559 --> 00:18:48.160 to become more sustainable? It's like, how do we think about this problem? 256 00:18:48.759 --> 00:18:52.039 Uh, much more holistically. How do we figure out what are the 257 00:18:52.079 --> 00:18:57.599 platforms or infrastructures that need to exist in order for us to adapt and how 258 00:18:57.640 --> 00:19:03.720 all these different of the consumer pie has to change to make sure that the 259 00:19:03.720 --> 00:19:07.200 way we're spending money, in the way we're producing both products and services, 260 00:19:07.839 --> 00:19:11.480 meet the demands of tomorrow. When I think about sustainability, I also think 261 00:19:11.480 --> 00:19:15.640 about price. How do you think about, you know, price when you 262 00:19:15.640 --> 00:19:18.200 think about investing in some of these companies? I'd imagine if there's a company 263 00:19:18.240 --> 00:19:22.359 that's only really available or it can only really serve like the one percent or 264 00:19:22.440 --> 00:19:25.880 five percent of people, that's not interesting for you because, of course you 265 00:19:25.880 --> 00:19:29.200 want companies to have crazy amount of impact. Also, you know, really 266 00:19:29.279 --> 00:19:32.559 large, you know, markets to how do you think about price when it 267 00:19:32.559 --> 00:19:34.440 comes to all this? More like the director consumers side of things, it's 268 00:19:34.440 --> 00:19:41.519 a super interesting and also topical point that you bring up. Like, I 269 00:19:41.519 --> 00:19:47.400 don't think it's a secret to say that there has been a massive influx. 270 00:19:47.599 --> 00:19:49.880 You know, we we can just use food tech or better for you products, 271 00:19:49.880 --> 00:19:56.440 this as an example here. But massive influx of players and what we're 272 00:19:56.440 --> 00:20:02.759 seeing is that unless the size of the pie or the market itself grows, 273 00:20:03.640 --> 00:20:07.759 the market is not big enough, frankly, to sustain all these players in 274 00:20:07.759 --> 00:20:12.279 the space. And what I mean by that is unless a product is appealing 275 00:20:12.359 --> 00:20:17.880 to someone, and especially if it's food, from a taste level first and 276 00:20:17.920 --> 00:20:22.480 then, more practically, from a cost level perspective, it would be extremely 277 00:20:22.559 --> 00:20:27.359 challenging for that business to be competitive with legacy players in the long run. 278 00:20:27.720 --> 00:20:33.200 And I think that there's a period of time where consumers will might make that 279 00:20:33.279 --> 00:20:37.160 concession, and certainly certain pockets of the consumer can afford to make that concession. 280 00:20:37.519 --> 00:20:42.240 But as we're seeing now, you know, inflationary pressures are a very 281 00:20:42.319 --> 00:20:47.039 real thing that is hitting the pockets of many folks. I mean not just 282 00:20:47.079 --> 00:20:49.960 in this country and in Europe, around the world. And unless your product 283 00:20:51.319 --> 00:20:57.359 is also better for you but also in many ways either the same cost or 284 00:20:57.440 --> 00:21:00.680 even cheaper than the alternative it on the market, it's going to be very 285 00:21:00.720 --> 00:21:06.480 difficult for for for you to to convert that consumer over a long period of 286 00:21:06.519 --> 00:21:10.480 time and of course, I think the initial pushback is that it's it's difficult 287 00:21:10.599 --> 00:21:12.519 and I think that the reality is like, you know, we have to 288 00:21:12.599 --> 00:21:21.519 have some line of sight to how they can become price competitive. They operate 289 00:21:21.599 --> 00:21:25.400 under the assumption that they'll always be price prohibitive. You know, there's a 290 00:21:25.440 --> 00:21:30.839 ceiling to that growth due to the changing in the economic climate in the past 291 00:21:30.880 --> 00:21:34.920 six months. Does on the more investing in, you know, consumer brands 292 00:21:34.960 --> 00:21:38.799 and consumer products? Is the bar now much higher for you, considering, 293 00:21:40.240 --> 00:21:42.839 you know, that people are gonna be thinking twice about spending on premium products? 294 00:21:44.359 --> 00:21:51.720 We we've always tend to lean away from picking specific consumer brands and products 295 00:21:51.759 --> 00:21:56.519 anyways. So I don't think it's necessarily informed or biased from that perspective Um 296 00:21:56.599 --> 00:22:00.440 and it largely just goes back to to the question around how can you capture 297 00:22:00.519 --> 00:22:04.920 and leverage this opportunity that is powered by consumers, but at scale. You 298 00:22:04.960 --> 00:22:11.359 know, unless there are asymmetric market forces or market momentums, generally we have 299 00:22:11.440 --> 00:22:15.519 tended to stay away from, you know, a single name like it's like 300 00:22:15.559 --> 00:22:18.440 almost like single name stocks, if you will, but that's not always been 301 00:22:18.480 --> 00:22:22.279 the case. I think I mentioned one of my companies earlier is, you 302 00:22:22.279 --> 00:22:25.720 know, we backed more of a coupeer play, at least on the surface, 303 00:22:25.880 --> 00:22:30.799 consumer company called ever eating. They're delivering clean skincare for mothers, infants 304 00:22:30.799 --> 00:22:33.880 and babies, but they're they're one of the biggest players in China by far. 305 00:22:33.119 --> 00:22:37.680 So are part of our rationale in making a leap and picking a single 306 00:22:37.759 --> 00:22:42.119 name company in that space is because the market was so enormous and there was 307 00:22:42.200 --> 00:22:48.160 a sort of unequal opportunity for that company to be very competitive in that space. 308 00:22:48.240 --> 00:22:52.000 But it's a different tangent. To Go back to your question around how 309 00:22:52.000 --> 00:22:56.279 does the market, current market environment, change that? I think it would 310 00:22:56.279 --> 00:23:02.160 be impossible to ignore that for consumer brands, that our price point, that 311 00:23:02.240 --> 00:23:04.480 our price at a price point that is higher than most can afford or or 312 00:23:04.519 --> 00:23:07.839 consider, you know, discretionary spending, are going to find it to be 313 00:23:07.960 --> 00:23:14.319 pretty challenging time. But I think the reality goes back to an underlying question 314 00:23:14.359 --> 00:23:18.880 of why that consumer product should or should not exist in the first place. 315 00:23:18.039 --> 00:23:21.240 And if the answer to that question is that, hey, this is a 316 00:23:21.279 --> 00:23:25.640 consumer product that is a need to have, or at least a need to 317 00:23:25.640 --> 00:23:30.480 have amongst a big enough group of people, then the short or medium term 318 00:23:30.599 --> 00:23:36.240 market environment shouldn't change your overall business mission or mandate. Having said that, 319 00:23:36.400 --> 00:23:37.880 you know you still need to find a way to keep the lights on. 320 00:23:37.960 --> 00:23:41.720 You still need to make sure that your business is running to get to the 321 00:23:41.440 --> 00:23:45.160 next, who knows when that is, next part of the cycle where you 322 00:23:45.200 --> 00:23:52.960 can fundraise again, if your product is still fundamentally serving big enough portion of 323 00:23:52.000 --> 00:23:59.079 the consumer market and it's necessary enough for folks, then it's about kind of 324 00:23:59.119 --> 00:24:02.920 like, you know, holding down the Fort to ensure that you have enough 325 00:24:02.960 --> 00:24:07.799 of a runway to continue to produce and innovate on your products so that ultimately 326 00:24:07.839 --> 00:24:11.039 you can emerge on the other side, because the underlying needs shouldn't change. 327 00:24:11.440 --> 00:24:14.920 Yeah, no, that that makes that sense, because I mean obviously to 328 00:24:15.319 --> 00:24:18.079 you know, as investor. You one of the things that you build the 329 00:24:18.240 --> 00:24:22.640 build into, you know, your models, everything is obviously when you do 330 00:24:22.680 --> 00:24:26.279 have a down cycle, and so that shouldn't obviously change, you know, 331 00:24:26.319 --> 00:24:30.240 maybe where the consumer's heart is as well. And also, as you say, 332 00:24:30.519 --> 00:24:32.799 you need to keep the lights on. But you know, if you 333 00:24:32.880 --> 00:24:36.359 do have sales, if you have resonated with the consumer, then like you're 334 00:24:36.440 --> 00:24:37.839 maybe like the early stages of building your brand, and that's really, really 335 00:24:37.960 --> 00:24:41.279 critical. Totally again, I think the narrative is changing a little bit, 336 00:24:41.319 --> 00:24:48.440 but people think about innovation and sustainability or solutions and climate tech as something to 337 00:24:48.519 --> 00:24:52.680 focus on when other things are going well, if you will right. And 338 00:24:52.720 --> 00:24:56.000 I think that now this is something that's come up again in conversation. Like, 339 00:24:56.440 --> 00:24:57.880 you know, a lot of financial literature. They're like, or should 340 00:24:57.880 --> 00:25:00.640 we even be looking at the S G, or should we be looking at 341 00:25:00.880 --> 00:25:07.039 sustainable solutions when we have much more pressing financial needs? It's funny because the 342 00:25:07.079 --> 00:25:11.319 corollary to that thought is that, you know, just take a black swan 343 00:25:11.440 --> 00:25:15.880 conflict like the Ukraine Russia war. I think if anything, we have realized 344 00:25:17.000 --> 00:25:23.720 that energy dependency is extremely dangerous and in many ways we've also recognized that relying 345 00:25:23.759 --> 00:25:27.720 on you know, uh, wheat important, is also extremely dangerous, or 346 00:25:27.720 --> 00:25:33.079 at least many countries are witnessing that the hard way right now. So I 347 00:25:33.119 --> 00:25:37.359 think it goes without saying that sure, there are other pressing needs, but 348 00:25:37.559 --> 00:25:44.759 the urgency of US needing to invest in solutions now that will provide a much 349 00:25:44.799 --> 00:25:49.279 more sustainable from not only environmental or social aspect, but also from an economic 350 00:25:49.319 --> 00:25:53.960 standpoint, like making those investments are still very much necessary and I think you 351 00:25:55.000 --> 00:26:00.400 know many folks who are driving gas, you know, guzzling ours and seeing 352 00:26:02.119 --> 00:26:07.359 oil prices and gas prices go through the roof, or are wishing that they 353 00:26:07.640 --> 00:26:14.400 had electric vehicles or they had other electric modes of transportation, like an electric 354 00:26:14.440 --> 00:26:17.799 bike that can help get them the same too, radius, which is the 355 00:26:17.799 --> 00:26:21.279 average systems that people actually drive for. So so, yeah, I mean 356 00:26:21.319 --> 00:26:23.720 it's I think there's no doubt that it's it's you know, we have to 357 00:26:23.759 --> 00:26:27.319 reassess and there will be challenging times, but I think we still need to 358 00:26:27.400 --> 00:26:32.839 keep in mind that the whole point of why we're here and why we invest 359 00:26:32.920 --> 00:26:40.559 in these decade defining solutions is we want to make sure that we're preparing ourselves 360 00:26:40.559 --> 00:26:44.640 for the next decade. Yeah, that also I think it speaks to a 361 00:26:44.680 --> 00:26:48.279 little bit um about how you think in terms of, you know, very, 362 00:26:48.359 --> 00:26:53.559 very long term and the opportunities now are, you know, ones that 363 00:26:53.640 --> 00:26:57.519 will, you know, have impact in the coming decades. With all this 364 00:26:57.599 --> 00:27:03.000 being said, and you know now we know Um quite a bit, I 365 00:27:03.000 --> 00:27:04.000 feel like it made some really good ground in terms of, you know, 366 00:27:04.160 --> 00:27:07.359 what you invest in in your thesis. What are some of the qualities or 367 00:27:07.400 --> 00:27:11.400 what do you look for in the founders? It's a really great question, 368 00:27:11.599 --> 00:27:15.680 if I were to be completely honest, Mike, is is constantly evolving. 369 00:27:15.880 --> 00:27:19.640 I actually spent quite a bit of time of thinking and talking through with one 370 00:27:19.640 --> 00:27:25.920 of my mentors, Um Jonathan Bildenhall. He asked me about what was consistent 371 00:27:26.480 --> 00:27:33.279 across all my founders and I realized that we look for underdogs, underdogs with 372 00:27:33.759 --> 00:27:40.240 an unshakable fighting spirit that may be packaged in different profiles, gender background, 373 00:27:40.599 --> 00:27:45.119 but it's this underlying grit and perseverance. I think that that is the underlying 374 00:27:45.200 --> 00:27:49.440 thing that is truly a non negotiable. It's quite simple. Like the funds 375 00:27:49.440 --> 00:27:56.799 mission is is to seek out these undervalued opportunities, be it across individuals are 376 00:27:56.839 --> 00:28:00.720 either founders, or across industries. I eat sectors that are cross vertible to 377 00:28:00.880 --> 00:28:07.599 deliver disproportionate returns. And Yeah, I mean I think if these times reveal 378 00:28:07.680 --> 00:28:11.839 anything, is the thing to have right. So, what's one piece of 379 00:28:11.880 --> 00:28:17.079 advice that you would give to emerging managers or people that are looking to raise 380 00:28:17.119 --> 00:28:22.720 a fund? Well, Echo my earlier sentiment around finding the folks you look 381 00:28:22.799 --> 00:28:26.680 up to, values, who you align with, to learn and grow with, 382 00:28:26.000 --> 00:28:30.720 and anchor that to yourself as one of your north stars. I think 383 00:28:30.880 --> 00:28:34.920 the other thing I've always really fundamentally believed in is this sounds silly, it's 384 00:28:34.960 --> 00:28:37.960 actually something that my mom told me a long time ago, but no one 385 00:28:38.000 --> 00:28:42.960 can make you feel inferior without your consent. And be its starting a company, 386 00:28:44.240 --> 00:28:47.559 starting a fund, or working at a company that's, you know, 387 00:28:48.279 --> 00:28:52.079 still has its still trying to figure out its way, or a fun you 388 00:28:52.119 --> 00:28:55.480 know, you feel a lot of the highs and a lot of bows, 389 00:28:55.559 --> 00:29:00.200 and I think that there's it's really important to recognize that you need to also, 390 00:29:00.440 --> 00:29:03.480 I don't want to say be easy on yourself, but to have that 391 00:29:03.559 --> 00:29:11.799 perspective that sometimes we're our own harshest critics, so just chin up and recognizing 392 00:29:11.799 --> 00:29:15.000 that you can't do this alone, even if you are, in many ways 393 00:29:15.480 --> 00:29:18.440 a one man or one woman's shop. If I can hone any point home, 394 00:29:18.559 --> 00:29:23.480 it would be around this that like it's super important to have a close 395 00:29:23.559 --> 00:29:30.920 knit network of supporters and believers. I recall one time last spring when I 396 00:29:30.960 --> 00:29:34.279 was going through all these questions in my head and Jon of spark. He 397 00:29:34.359 --> 00:29:40.200 called me on a weekend to help me walk through my thought process and I'll 398 00:29:40.240 --> 00:29:44.160 never forget it. He he told me that he saw something, you know, 399 00:29:44.240 --> 00:29:45.960 similar to what he sees in his founders, and he didn't want to 400 00:29:45.960 --> 00:29:49.680 be out of line, which obviously is so comical, because how could he 401 00:29:49.720 --> 00:29:53.720 be? I was taking any advice I could get from him. He was 402 00:29:55.319 --> 00:29:56.720 pretty blunt and he was like, honestly, I think you should start your 403 00:29:56.720 --> 00:30:03.119 own firm. It's so funny because I I'm so thankful and appreciative and I 404 00:30:03.160 --> 00:30:08.440 truly genuinely believe that if it's not for surrounding yourself with people who share your 405 00:30:08.519 --> 00:30:12.799 values but who also give you the confidence for you to build on your values, 406 00:30:14.039 --> 00:30:17.200 it makes the world of a difference. And there's just so much you 407 00:30:17.240 --> 00:30:21.799 cannot control or calculate for, but the one thing you can do is choose 408 00:30:21.839 --> 00:30:27.160 who you surround yourself with. Definitely, definitely what one book that's inspiraty personally 409 00:30:27.200 --> 00:30:32.960 in one book that's inspiraty professionally. There's this book called Hidden Valley Road by 410 00:30:33.160 --> 00:30:37.680 Robert Colker, believe that's his name. I read during the pandemic and I 411 00:30:37.759 --> 00:30:41.880 loved it's actually a fiction or it's, secondly, nonfiction but reads like fiction. 412 00:30:42.319 --> 00:30:48.119 It's super fascinating but it chronicles a family and I think that the takeaway 413 00:30:48.119 --> 00:30:51.519 from this book is that you don't have to be a product of your circumstance, 414 00:30:51.799 --> 00:30:55.680 and I don't know if that's something that inspired me personally or professionally, 415 00:30:55.720 --> 00:30:59.519 but maybe both. And then another book that I really liked, and I'm 416 00:30:59.519 --> 00:31:03.240 sure a lot of folks have bread this, is think again by Adam Grant. 417 00:31:03.559 --> 00:31:07.480 It's probably more relevant in a professional setting that the synopsis is that he 418 00:31:07.559 --> 00:31:11.039 says he highlights how we all think about intelligence. I forgot what or aptitude 419 00:31:11.240 --> 00:31:15.359 as being like the ability to to learn or your mark on logic, but 420 00:31:15.799 --> 00:31:19.880 it's actually the ability to learn and think again, and I think that in 421 00:31:21.039 --> 00:31:25.599 not only in our environment but also in our field, that's probably arguably the 422 00:31:25.640 --> 00:31:30.079 most useful piece of advice to anyone could get. And then also grit by 423 00:31:30.160 --> 00:31:33.480 Angelo Duckworth, not to throw in another book in there, but just, 424 00:31:33.759 --> 00:31:37.680 you know, to hone in the point around grit and founders. Yeah, 425 00:31:37.839 --> 00:31:41.880 no, I appreciate you mentioned these. I don't think besides grit, I 426 00:31:41.920 --> 00:31:45.000 don't think we've actually had the other two, Hitt and valley road, or 427 00:31:45.079 --> 00:31:48.079 think again, being featuring on a booklest. I'm really excited to add those 428 00:31:48.160 --> 00:31:52.279 to our page. I appreciate you explaining the reasons why that they have had 429 00:31:52.319 --> 00:31:55.759 such a great impact. Sita, this has been so much fun. Thank 430 00:31:55.799 --> 00:31:57.440 you so much for your time. Yeah, thank you, Mike, and 431 00:31:57.440 --> 00:32:00.960 there you have it. It was such a pleasure chatting with Sita. I 432 00:32:00.960 --> 00:32:04.519 hope you all enjoyed our conversation. If you enjoyed this episode, I love 433 00:32:04.519 --> 00:32:07.480 it if you'd write a review on the apple podcast. You're also welcome to 434 00:32:07.519 --> 00:32:09.759 follow me your host, Mike, on twitter at Mike Gelb, and also 435 00:32:09.839 --> 00:32:16.480 follow for episode announcements at Consumer VC. Thanks for listening, everyone, O