The Startup CPG Podcast


In this episode of the Startup CPG Podcast, host Daniel Scharff turns the mic around on one of his own co-hosts. Hannah Dittman, former investor and host of Startup CPG's Saturday investing episodes, spends a huge amount of her time talking with founders and VCs and reviewing applications for Startup CPG's Founders and Funders events. Daniel puts her on the other side of the interview to answer one of the most common questions the community asks: what actually makes a brand investable?


Hannah walks through her path from Benefit Cosmetics to private equity consulting at Parthenon Group, investing at Main Post Partners, and global brand management at Morphe before landing at Startup CPG. Daniel and Hannah then dig into what Founders and Funders and Roadshow events actually are, what goes into the application and one-pager investors receive, and the specific mistakes that keep brands from getting meetings even after they're accepted.


Listen in as they discuss:

  • Hannah's path from Cal and Benefit Cosmetics through private equity, VC investing, and brand management before Startup CPG
  • What Founders and Funders and Roadshow are, and how the two event formats differ
  • Why treating fundraising like a partnership evaluation, not a job interview, changes the entire dynamic
  • What "investable" actually means to a VC: category, TAM, exit potential, and traction
  • Whether pre-revenue brands should even bother applying to investor events
  • What the Founders and Funders application actually asks for, and why the one-minute pitch video matters
  • Why skipping the pitch video is one of the fastest ways to get rejected
  • What makes an application stand out, and why "differentiated" means more than just the product
  • How investors read a brand's fundraising history, for better or worse
  • Inside the one-pager: the traction data point that matters most, and the formatting mistakes that bury it
  • Why competitive benchmarking and retailer quotes carry more weight than raw numbers alone
  • How the investing landscape has shifted over the last decade, from pure growth to profitability and omnichannel success
  • Why "challenger brands in overlooked categories" are gaining more investor interest than ever
  • Hannah's closing wish for founders: fundraising is relationship building, and investors are lucky to be part of your business too


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Show Links:

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  • Episode music by Super Fantastics

Creators and Guests

Host
Daniel Scharff
Founder/CEO, Startup CPG

What is The Startup CPG Podcast?

The top CPG podcast in the world, highlighting stories from founders, buyer spotlights, highly practical industry insights - all to give you a better chance at success.

Hannah Dittman
My first piece of advice would be to not treat fundraising like a job interview for yourself, which it can very much feel like, I think treat it like a co man or a partnership evaluation that you would make in any other context of your business. You would go into one of those conversations understanding exactly what you wanted or needed to get out of the relationship, what the purpose of the dynamic would be, what the purpose of the funds are for. You would take your time researching and getting to know your potential partners before trying to formalize anything serious or a business relationship with them. I think the anxiety and the need for capital can kind of make the power dynamics feel really off and make it feel like you're singing for your supper.

00:49
Hannah Dittman
But I think the people who are most successful treat it more like relationship building in any other business context.

00:57
Daniel Scharff
Hello Startup CPG listeners. Today's episode is a little different because we are turning the mic around one of our own Hello And Startup CPG podcast hosts. Hannah Ditman is a former investor and she's the host of our Saturday investing focused episodes. She spends a huge amount of time talking with founders and investors and she's part of the team that reviews applications for our legendary founders and funders events. She has watched countless founder application videos, reviewed decks, looked through metrics, and evaluated the brands that seem the most investable. So today we're answering one of the most common questions we get in our Slack channel and in person at events, which is what really does make brands investable? How can they do well at these investor focused events? We've got all those tips and more coming right up. All right, let's get into it.

01:45
Daniel Scharff
Here we go. Welcome everybody. Special treat today. One podcast host interviewing another podcast host from our Startup CPG podcast. So welcome Hannah. Thank you for joining me this time as a guest on the podcast. Hello.

02:02
Hannah Dittman
Thank you for having me. It is very interesting being on the other side of the table. Excited to be your guest today.

02:08
Daniel Scharff
All right, so Hannah, since you're usually the one asking all the questions, I will be asking them of you. And I'd like to start with Hannah. What's your background? Probably a lot of people even who listen to your investor spotlights and fundraising journey episodes don't even know all about it. But what is your background? How did you end up with us at Startup CPG?

02:25
Hannah Dittman
Yeah, well, I love consumer. I study business at Cal in the peak of Silicon Valley days and everyone was doing the tech thing. I did a quick internship in tech and got a lot of free food and free activities but felt like the work wasn't necessarily what I wanted to spend the rest of my career doing. I decided I would explore a little bit and find the polar opposite of whatever tech was. And that's what landed me in consumer.

02:50
Hannah Dittman
I started at Benefit Cosmetics and a role in strategic marketing and pivoted over to buy side and went into private equity consulting at the Parthenon Group in the consumer division and then went over the investing side at a consumer fund in San Francisco called Main Post Partners, which is a little bit later stage Consumer private equity and then went back into operations, was global brand manager for Morphe, which is a big beauty D2C company, and then have been on the founder journey with my own personal care Startup and then enjoying the fun ride at Startup CPG as well. So yeah, I've spent a ton of time in consumer and really enjoy the space and the people making products and all of the creative passion that goes into it.

03:32
Daniel Scharff
So this will answer for a lot of our listeners why you know so much. Because Hannah is investor, operator, consultant. You've done a lot of the different roles in the industry and so now we're very lucky to get to have you on our team as well and just for everybody's benefit also. We met Hannah because I think a little bit over a year ago we wanted to just be able to do a lot more of this content. Like I never fundraised personally really, and nobody on the team really did. So like we should get somebody who has that experience so we can deliver some more of this really important content. We're doing great with getting buyers on the podcast. We don't speak investor, we should get someone who does.

04:10
Daniel Scharff
And so we originally recruited Hannah to start doing some content with us, writing and podcasts around fundraising. But then very quickly we came to Hannah with this idea for probably what she spends a lot of her time on now, which is founders and funders.

04:26
Hannah Dittman
Yeah, tons of fun. I feel like it's so exciting to get to do the IRL stuff and I was super happy to have that added to my plate because it's totally different energy than just being behind the screen or being in just a one off conversation. It's so great to be in a room full of people all doing the same thing.

04:43
Daniel Scharff
All right. And so I know we talk about it on this podcast a lot and today why I really wanted you to come on is because in the slack we get a lot of questions from people or in person questions I get from people a lot like, hey, how come I didn't get selected for that epic event in December or how can I do really well at the Roadshow events? So I want to talk about that a lot today. What can go into the applications and how people can do well at the events. But just to level set everybody, can you remind all of our wonderful listeners out there, what is Founders and Funders?

05:11
Hannah Dittman
Yeah, Founders and Funders is our premier series of events bringing investors and founders together all with the intention and goal to hopefully get some checks written for some early stage CPG brands and lubricate the fundraising process, kind of create the Startup CPG warm intro and get all the right people in the right room to get relationships built and deals done. So a super exciting event series and I think super high value given how much time and research and energy typically goes into just figuring out who to even contact in the first place, let alone getting a conversation with them all the way down to the end of the road of getting an actual investment deal closed. So super exciting Founders and Funders is our main event in December.

05:58
Hannah Dittman
It's application based and invite only for brands, but Roadshow was our way to make the series more accessible across the us. All brands who get a ticket on time are welcome. We've had awesome events in LA and New York so far with Austin coming up soon and then San Francisco later this year. So we're super excited about the success that Roadshow has had and all the amazing brands and investors that we've been able to bring together in that series as well.

06:24
Daniel Scharff
I love it. So the flagship founders and funders, the first one that we launched, that was New York, that was last year in December and we had the top 70 VCs who invest in companies from the pre seed to Series A there they were all there. They showed up. And like you mentioned, it is application based. So we had a lot of applications. We only had room at the event for the top 150 brands from those applications. And then the Roadshow that we launched this year is specifically because the investors are awesome. We want to make sure that brands have access to them even if they didn't get into this specific event. That was very difficult for us to narrow down to the, let's say very investable brands we thought could do well at that event.

07:06
Daniel Scharff
And I know you said hopefully get checks, but also we've seen a lot of checks. So we're excited to announce a bunch of the deals that already happened from that event. But then the Roadshow is any brand can buy a ticket, fill out the one pager and Then we send those to investors and they pick which, let's say, 10 to 15 brands they want to meet with very quickly at the event. And the reason we do it that way is because, you know, with buyers, they can take a bunch of brands. A buyer could meet with 15 brands at our booth at one of the shows and take seven of them.

07:35
Daniel Scharff
But with investors, some of them might only do a deal a year, so the probability is much lower, which is why we really try to lubricate, as you said, as many introductions as possible. We want you to meet all the VCs, and then it's on you to carry the conversation forward with them following the event. And founders tell us that they spend up to 50% of their time fundraising. So we're just trying to help with that somehow cut down the time or make it more effective or just really do what we can do for the people who are fundraising to make that a little bit more effective. So I wonder, because were just coming hot off a couple of these Roadshow events that we've done, how were they for you compared to the big December one?

08:16
Hannah Dittman
Yeah, I feel like tons of energy and really exciting and a slightly different maybe vibe in the room. It's a little bit more casual at Roadshow, but I would say a very similar caliber of event. Really. Like, I think we delivered really strongly on Roadshow and they're shorter and a bit more truncated, so a little bit less open networking time and things like that, but still really great turnout. I think we probably had like a 3 to 1 brand to investor ratio. So you're definitely going to get a lot of touch points with the right people. They're local oriented, so a good portion of people in the room are kind of right in your own backyard, which makes continuing the relationship and conversation a bit easier versus everyone traveling to New York. So I think it was super awesome.

09:08
Hannah Dittman
Whereas we have a whole day of panel content at Founders and Funders, we just had a shortened panels in at Roadshow, but they were super high impact and well received. We had one hour of one one meetings at Roadshow. I think we've done over 500 combined one one meetings now with over 700 combined attendees through all of these events. So the impact we're able to make with something like that is just crazy. And yeah, we didn't know what to expect with Roadshow because it was going to be open application, but I found the caliber of brands to be super great and a lot of traction and exciting meetings being taken. It was so awesome. To see investors genuinely excited about meeting with brands that were in the room there and even seeking some out.

09:54
Hannah Dittman
And that felt really good because, you know, that's like the best place to be is when someone's really excited about a brand and you think maybe the relationship will blossom from there.

10:03
Daniel Scharff
Yeah. And in case anyone's wondering what it feels like to be there. So at the beginning, we have the first hour or so reserved for the one one meetings. We sent out the one pagers to all the VCs. They selected the ones from that one pager packet that they would like a one one meeting with. And then we time those. We're ringing a cowbell. It's fast and furious.

10:18
Hannah Dittman
Daniel's on the cowbell for sure.

10:20
Daniel Scharff
We always need more cowbell. I will rock that cowbell. Like it if you let them ring the cowbell every once in a while. So I share the love.

10:27
Hannah Dittman
We all become kindergarteners again.

10:29
Daniel Scharff
It is fun. But yeah, you need it to get people to move because they're stuck in these great conversations. So every six to 10 minutes we're switching it out. New conversation happens, brands rush in, and that'll go on for a little bit over an hour. So let's say we get through 12 meetings person, times however many investors were there. We recently had 60 of the top VCs for our new York City roadshow, which was amazing. And then after that, it goes basically into networking time and there'll be a panel that comes on as well. But what you can expect on the networking is everyone knows who the investors are. We actually ask them to wear a big money dollar sign necklace and then we introduce them. So the brands are just kind of forming little lines all around the event.

11:11
Daniel Scharff
Talk to the investors that they're most interested to see. They've seen the investors on a packet, they've researched them, they know who are the best fits for them and they're. They're just getting conversations with as many of them that are a fit as possible. So really high energy, highly productive. But yeah, I think you're right. The roadshows probably feel a little more casual because they're shorter than the December event that we do. That's an all day event that has a lot more content as well. Okay, so I know in a minute we're going to get into specific application tips, which I think is going to be really good because, Hannah, you've done dozens of interviews with VCs now on our podcast series, these episodes that hit on Saturdays. Most of them are with investors Some are brands talking about their fundraising journey.

11:51
Daniel Scharff
I wonder, because you also were a VC for so long and have such a good handle on this industry. What are a couple of the general tips you might have for brands around the fundraising journey and things that you're hearing from VCs?

12:03
Hannah Dittman
Yeah, I mean big question. I could talk about this for hours and obviously spend a lot of my weeks doing that on the podcast. But I would say if I were going to break out tips before diving into specific application, I would maybe keep it a little bit more high level in meta at first and say my first piece of advice would be to not treat fundraising like a job interview for yourself, which it can very much feel like. I think treat it like a co man or a partnership evaluation that you would make in any other context of your business. You would go into one of those conversations understanding exactly what you wanted or needed to get out of the relationship, what the purpose of the dynamic would be, what the purpose of the funds are for.

12:46
Hannah Dittman
You would take your time researching and getting to know your potential partners before trying to formalize anything serious or a business relationship with them. So I think the anxiety and the need for capital can kind of make the power dynamics feel really off and make it feel like you're singing for your supper and you really need the money and it's 100% in their hands whether they're going to give it to you or not and they're doing the valuation you're not. But I think the people who are most successful treat it more like relationship building in any other business context. I think the second piece of advice I would say is fundraising is easier done from a place of strength, of course. So planning ahead is critical. Don't wait for the bank account obviously to be zero or to be in a capital emergency.

13:29
Hannah Dittman
That's very stressful and very hard to get a fundraise done. I think you want to know what growth or success milestones might be on the horizon and plan around those and use them if you can to get a partner excited as well. I think having paced exciting momentum over time really helps other people see all the awesomeness that your business has going on that you can see it and the vision that you see it helps them see it too. And then I would say the last thing is fundraising is not a one and done situation. It's a one and one and one and one and then maybe done situation. Once you take institutional capital, you are climbing a mountain and you don't just like get off the mountain after you get that one done.

14:13
Hannah Dittman
There's multiple fundraises likely that will be need to get executed. You'll need to strategically prepare for those. Each of those might get a little bit more challenging and have more proof of concept and more proof of traction that need to behind them. You know, you're managing more metrics now. It's like the capital, what was it used for, what was the valuation, all of these other things that are going on that impact future fundraises. So it's not just about the first one. It's about the whole journey of fundraising that you're signing yourself up for. And I think keeping that in the back of your mind and being really thoughtful about how you're going to operate your business going forward under those parameters is also really important.

14:55
Daniel Scharff
Okay, very helpful. Great prelude to all the stuff we're about to get into. Okay, the first one is we talk a lot about investable businesses, whether it's the kind of brands we think are investable and good candidates to have at the December event that is application based. Also, if brands want to feel like they are a good candidate for an investment for a VC at some of our roadshow events, what do you think it really means to be investable as an emerging brand?

15:23
Hannah Dittman
Yeah, I think there is so many ways to think about that. And I by no means am an expert on anything. I would say I know enough to be dangerous, but I'm an n of 1. So I'd also say take everyone's individual advice with a grain of salt as well. And I would say that when we're talking about the concept of investable, I think what most people are really referring to is that they need to see a way to be able to make a return on their investment. They need to see a way to be able to make money on the investment that they're making in a brand. And I think that looks differently for a lot of different people depending on how they approach their investment thesis and mandates.

16:02
Hannah Dittman
But I would say from a high level perspective that probably falls into things like the category you're playing in. Like sometimes categories can just be categorically harder than others. Like apparel can be for some people just completely out of their investment mandate. Or other categories might just be categories that they don't want touc versus a category that they're really interested in or as part of their fun thesis at the time or something like that. Tam is another one. I would say I think people have opened their minds a little bit more to this. But if something feels like way too niche or they can't understand how it would get mass market appeal, if they have scaling concerns with a concept that might make something not investable.

16:46
Hannah Dittman
Because if it can't scale to a certain size or to a certain level of mainstream, then maybe it won't be able to exit. Or to reach the end point it would need to return an investment and then exit potential and that we're talking about what the appetite would be for an exit and what that path might look like. Obviously a sexy one would be a strategic acquirer, being interested in another financial sponsor, being interested in an ipo. I think having their head wrapped around where does this company go towards its exit, then how am I going to return my money or make my returns? Return my fund at exit is really important and they're kind of thinking through that. I would say the other areas I would point to as investable or not would be traction and company performance thus far.

17:32
Hannah Dittman
Like if category makes sense, TAM makes sense, exit potential makes sense. Like conceptually the brand makes sense. But when you're looking at the margin profile, it's like margins that just can't even ever become profitable or declining sales the entire time it's been a company or something like that. The performance might be the reason or the lack of traction might be the reason that it's not investable. Like maybe there's 0% repeat customers or something like that. And then double clicking on that. The unit economics of the business model itself, like if you're only sold dtc for instance, and the cost of acquiring your customer is through the roof and you don't have a margin profile that's going to be able to support something like that, and you're losing money on every single sale you're making.

18:18
Hannah Dittman
Even maybe if your gross margins are okay on a widget basis, the business model itself or the unit economics of the business overall might not make sense and therefore might not be investable until you pivot your distribution strategy or find a different way to get your sales generated. But I would say those are kind of where my mind goes to investable. It's understanding a business's health and opportunity to be a viable and hopefully highly lucrative successful investable asset.

18:47
Daniel Scharff
I like that. I was just thinking about when you're talking about tam, the total addressable market. I mean, it can be like sometimes people will just talk about a category like, oh, we're in water and it's X billion dollars in water. It's such a big Category or other people will talk more about a specific need state. Like yeah, we're this product for this kind of consumer and you know how many consumers there are like that who have this particular need, like runners who need this kind of a hydration product is that market's this big. I think there are a lot of different ways to talk about it.

19:14
Daniel Scharff
I think the challenge is if somebody is so niched down that they're like this is for left handed people to use on the fourth week of like the month when there's a full moon out and only if they also have this kind of a genetic predisposition, like okay, this is so specific. How are you going to grow after that?

19:35
Hannah Dittman
Big time?

19:35
Daniel Scharff
Yeah, that can be a little. When they get too niche down, it's good to have a niche like your core consumer to start with but also to understand how you're going to broaden from that. And yeah, and I think if investors, especially if they understand that need and they can resonate with it or they just see what you're talking about, they will be excited to figure to like yeah, okay, I get it, that's what you're going for and we're going to broaden from there. Okay, locked in. Got it. And I think the traction point is really interesting as well. Whether it's E comm or you're just talking about your velocity but just really having some grippy points to talk about.

20:06
Daniel Scharff
Otherwise we can all want an idea to be successful and to have something out in the world but in the end of the day the consumers just don't get it. They just don't get it. Pick it up. It's expensive to educate them to tell a story. There's a lot of noise out there in this world. So okay, you said all this and it's a beautiful idea but is it working? Could it work right? So I love all those points. A question by the way that we do get because we are the community for early stage brands is wait, does that mean that I have to have already traction to talk about if I'm really early? Maybe I'm pre revenue or just in a few stores. Does that mean I shouldn't even apply or like I'm not going to get checks from anybody?

20:42
Hannah Dittman
What do you think I would say still apply? Short answer, long answer is there's different investors playing across what I would say the investment spectrum. On the furthest left is like super duper early stage just concept pre revenue. And on the super right is late stage PE or super late stage investments. There's people playing across this entire spectrum and have different focus areas. So I would say while you might not be attractive to growth investor or someone focusing on that sweet spot and seed as a venture capitalist, you might be very attractive to a super early stage fund who focuses on pre revenue and that end of the market. So I think there are investors probably for everyone. Is it a little harder, especially in today's climate if you're pre revenue without traction? Probably yes.

21:33
Hannah Dittman
But that being said, I think there's always ways to pitch a compelling story and there might be other things that you have going on like being a multi time founder can help that or having a really strong clear concept and prototype and a really crisp way that you're going after the market might be compelling enough. So I would say there's no one size fits all answer investing almost ever.

21:55
Daniel Scharff
Yeah, we definitely have had pre revenue brands at our events. Pre revenue brands have gotten checks. I think it like when they do, I would almost say oh there is a good read like yeah, that founder has a heavy background, they have a track record from something else or this is just one of the most interesting concepts and this is an area that people do have investing theses around right now and that is just going to be a hit and they want to take a big bet early on. I think if you don't have some kind of really like very pro branding or idea or a heavy background, it can be tough because I do see a lot of people come into our slack channel like hey, I want to do this.

22:30
Daniel Scharff
Anyone know investors I can talk to like that always just feels like it's going to be a tough sell where they haven't really proven anything out before this project or during this project. So it can happen. But yeah, I think you need to come in with a pretty convincing story if you're earlier stage.

22:49
Hannah Dittman
Yeah. The other thing I would say to that is so much of fundraising is relationship building and I think getting ahead of that, even if your first round, if your pre revenue is realistically probably going to be friends and family and angels or something else most likely, I think at least for roadshow events, it's still I think really beneficial to be able to kind of get feedback early on from relevant people about your concept while you can still incorporate that feedback and make changes or make a gut check at least. And then I think building relationships with people can definitely only help down the road for sure.

23:22
Daniel Scharff
Yeah. And speaking of which, even if you don't get the chance to go to one of our Roadshow events or the big one in December. Hannah and Adriana from our team and a bunch of other people have helped us to create this incredible list of all of the very active VCs out there. And so we released it for the first time a year ago. We've now added to it throughout the year just because we are constantly on the hunt for who is actively investing in the space right now. These are early stage institutional VC investors and so you can access the database for free. It's on our website, startupcpg.com if you go under founder resources and databases, then it's on there as the top investor database. And we really try to make it easy for you.

24:01
Daniel Scharff
We put information about the check size that they do, the profile of their firm, even their current portfolio and where are they located. Even if you're going into a particular city, you want to try to set up some meetings so that is all accessible to you. So I hope whether or not you make it to an event that you will use that because it is really good to build those relationships like Hannah was saying. And we have done our very best. This is the same list we use to invite the investors to our event so you have the access to it as well. And do your job. LinkedIn, you know, their job is to find good projects to invest in. So hopefully you will be one of those.

24:35
Daniel Scharff
So okay, if we talk about our December event, which is a very special event and that is where we do try to put the most investable brands in front of these investors for this December 1st. I wish we had unlimited capacity for every brand out there, but we do not. We don't have unlimited space. So we do limit it to 150 or 200 brands out of probably this year I expect we'll get maybe 800 to a thousand applications. So there is an application process. Can you just talk a little bit about like what are we actually asking the brands to fill out and why is it important?

25:09
Hannah Dittman
Different categories of information, I don't think anything that they probably haven't come across before, but general company information that's just to contextualize your business. Obviously understand what you're doing and where you're sitting in the world and how long you've been around for and kind of all of the background information, your mission and vision to really understand what's your big picture goal for the company, who are you serving and what's your purpose for doing it. The next set of areas would be traction related and those are questions trying to explain why this company would Be a great investment. Those are things like your distribution, your growth, your profitability, your plans to get to profitability, your velocities, your repeats, kind of all the metrics that indicate a winning, successful company.

25:59
Hannah Dittman
We look at your product offering and future pipeline, trying to understand how many SKUs you have and what the strategy is for them. Your founders and team and their backgrounds, your fundraising history, to understand how you've gotten to where you are today and where you're hoping to go in the future. And then a quick pitch video as well, which is probably like a minute long quick pitch of your company. And that one I think is great just to get a little bit of a human aspect to an application. But also it's kind of a peek into what a one one meeting with an investor might be like.

26:34
Hannah Dittman
Those are short format pitch meetings and I think being able to get a taste for what that conversation might be like and how prepared you are for something like that is also really helpful to understand as well.

26:47
Daniel Scharff
Just to be clear with everyone, we do not want a professional edited video with fonts and graphics and all this stuff. This is a grip it and rip it iPhone selfie video. It's pretty quick. And we are just generally trying to get a sense for the brand and the team and just how they're pitching the product overall.

27:07
Hannah Dittman
Yeah, definitely. And like I said, it's peek into what a one one meeting would be like. And for reference, these are just casual like you meet at a high top table, the investor's there, you're there and you're just kind of having a casual conversation, pitching your business and getting into it for five minutes or so. So it's a similar vibe. It's not a commercial by any means, but it definitely is just getting to hear it from you face to face and seeing how you speak about your business and the most important points of it in a short period of time.

27:37
Daniel Scharff
Yes. And I think it's good for people to understand also, like we feel very fortunate that the VCs place a lot of trust in us by coming to the event. A lot of them fly in for it and they do it because they're expecting to meet great brands, which they do. And we also are placing a lot of trust in the brands to then come and like fulfill their commitment and be prepared for the event and make the most out of it because it could be another brand that was there in their spot if they no show or just half asset or something like that. And so I will say probably the easiest way to not get accepted into one of these application based programs is to not do the video. Some people will just like put in an image in its place.

28:16
Daniel Scharff
Like, okay, I mean, if you don't want to put in the effort to do the video for this event that we know is incredible, then are you really going to do the other stuff that we need you to do as well and do it on time? Because it actually takes Hannah and my team ton of time to coordinate all of the stuff that goes into this event from the one pagers and the meetings to the day of. And so that is a pretty quick way. So overall, when you're reviewing this application, then you have the full set of questions that they've answered. The video is there as well, but all of the details about their business, the fundraising history, the mission, everything that's there.

28:52
Daniel Scharff
What are some of the things that might make a brand stand out to you either in a good or bad way as you're going through these applications?

28:58
Hannah Dittman
Yeah, there's so many different things. I think also, whereas an investor's might be looking at companies or diligence with a very scrutinizing lens and a very discerning eye, I think at Startup CPG we're brand allies and our goal is to get amazing brands in the room. So of course we're evaluating. But at the same time I think we're really champions of the brands and looking for reasons to be excited about them. And that can come in so many different formats and ways. So you could be a founder with a really compelling background and doing something interesting and that could be the spiky point that really makes you stick out. Or you could have a really interesting product concept and have good traction and have a really compelling price point, but maybe still be in your early journey and that might be something that's exciting.

29:45
Hannah Dittman
I think the investment story or the brand story of why an application might be exciting are so different. But I would say we're typically looking for something in some area to be above average and for the holistic story of the company overall to make sense and be quote, unquote, investable or compelling. So when we're looking at unit economics and traction, wanting to make sure the team is managing that and understanding it and communicating it in a way that would resonate with investors, but also that they're contextualizing that relative to their competitive set and performing well. So if you're going to be talking about velocities, for instance, I think a really great way to help your application would be to contextualize that relative to the rest of your category and your competitive set and make it really clear and showcase that you're performing better.

30:39
Hannah Dittman
And that's a point of differentiation. If you're going to be talking about your price points, maybe you're making something better, higher quality, but at a lower price point. Contextualize that price point and benchmark it against everything else so that it's really clear why that is compelling. I think you're really just trying to find the areas where a brand is differentiated. And that is such an overused word. And a lot of people think that means product differentiation. That is one aspect of it. But differentiated as a company, when I'm looking, for instance, if you're a beverage brand, assume that I'm getting a hundred beverage brand applications and they're all saying similar stuff with a similar mission statement and a similar product. What else can you tell me that would make me feel like you stand out in the crowd and are differentiated?

31:26
Hannah Dittman
And that's kind of, I think, a great way for founders to be thinking about it. Is it your business model? Is it a marketing strategy that you have going on? Is it your founder background? Is it your metrics, your traction, your performance to date? Maybe it's your relationship with your retailers or feedback that you've gotten for them, distribution opportunities, unique flavors that no one else is doing something like that. There has to be something for an investor to be able to grab onto and latch onto and think something is going to be worth betting on. And so we're kind of doing the pre screen of that and looking through all the application points and trying to find the highlights for you, really? And getting excited, what we do.

32:03
Daniel Scharff
Okay, so let me ask you another one, because I think you've taught me a lot about this fundraising history, because we do ask this. It is a very important thing for investors to understand. So you can have a fundraising history where like, okay, yeah, they've raised money. Okay, that like, shows that there are people who believe in this concept. And maybe I need to look harder because some of the stuff that wouldn't have jumped out from their application, like, there is something here because they've been able to raise money. It can also work against you because you can look at a business and be like, well, they've raised a lot of money and they still don't necessarily have the traction they would need to or the sales then to get to that next raise. How do you evaluate the fundraising history of a brand?

32:40
Hannah Dittman
Yeah, I would say a lot of investing in general is storytelling and puzzle piecing. What investors are really trying to do a lot of the time is just understanding what's going on in your business and what has happened over time from a business perspective. And fundraising history is part of that journey. I think there's no right answer here. Or one way to get a company built or done is just contextualizing a lot of the answers and performance with the fundraising history in the background. So, for instance, if a business is seems like, oh, wow, all these metrics are great. They seem like above average on a lot of stuff with an interesting concept and they're generating like a size, they're doing over a million dollars in sales. That's pretty great.

33:25
Hannah Dittman
Like, and then you get to fundraising history and you realize, well, they've already raised $7 million. Now the story has changed because now when you're looking at that same company, you're like, well, you had $7 million in the bank and we only generated $1 million in sales. Like, what happened to that money? And now that kind of operator narrative no longer has the same storytelling that it once did. So I think it's just understanding, like I said, what's happening in a business in that context. At the same time, maybe you're a founder who's really punched above your weight and you've done all these successful things. Then you get to fundraising history and you realize, wow, they did all of this with like $50,000 in their back pocket. That's crazy. That's amazing.

34:08
Hannah Dittman
And it kind of gives you a color for what the operational discipline opportunities, the founder mentality and the capital management has been like within a company. And like I said, there's no right or wrong or one way to do something like that. But I think it's just another layer of context that's helpful for people to understand what actually was going on behind closed doors during that time of building the business. And then I think going forward, if you have already fundraised, like I said, you're kind of now on that fundraising merry go round. And that's also important for investors to know because now they're going to need to be thinking about what your cap table looks like, how much room there might be on it, what your cash burn has been like, the capital management, like I said, of all of that stuff.

34:50
Hannah Dittman
And then also what the valuation might have been before. Are you going to have a down route going forward? What's the narrative of that going to look like for future investors that they may need to make sure would get on board down the road and all of these other complexities. So it's just kind of like a diligence item.

35:06
Daniel Scharff
Yeah, that is really good to hear all of that context, I think also, I mean when I see the applications, if I see a brand that's gotten to 500k or million or more in revenue and they haven't really fundraised yet and now they're applying to come to a fundraising event, I'm like, I think that gives them a huge leg up with investors because they're going to see that. They're like, okay, good traction, have been very responsible with how they've grown the business and there's room there like they can do around and they're still going to have massive incentive and room to fundraise more if they need to. Is that what is going on in the investors minds if they see something like that?

35:39
Hannah Dittman
Yeah, for sure. And I think also just, you know, how many things had to go right and to work and that you really had to build a super strong relationship with your customer to get there because you couldn't pay to play. There's like nothing you could pay to play on if you didn't have the money to do so. Whereas if you had raised a ton of money and then you were only generating that amount of sales. My first place that I'm going to be looking next is going to be the marketing span and the team and the headcount because I'm going to be like, where did the money go? Probably those places and are we not seeing repeats? Do you actually not have a strong relationship with your customer and they're not coming back? There's not actually affinity.

36:18
Hannah Dittman
You're essentially purchasing customers through high marketing spend. Investors minds are always thinking, what's the next question that I need to ask to dig deeper? You're kind of on a fact finding mission. And so when you see something like oh yeah, wow, they've done all that with no money, your mind goes to a very positive question place which is like, wow, that's magical. How did they do that Instead of like oh what's wrong? Where's the gremlin that I need to uncover?

36:45
Daniel Scharff
All right. And by the way, the application that we have actually pretty closely mirrors the one pagers that we will eventually have for the brand. So the way we do this is for all of our investor focused events, the founder and funder events. A brand will apply if it's the one in December or just get a ticket for the other ones and then if they're participating in the event, they fill out a one pager. We've designed this to be a one page template. The reason is because we want to send every investor attending this one pager ahead of time. So we do it in a consistent format. It's our format and every brand has to fill it out so that it's really easy for the investors to flip through all of them.

37:21
Daniel Scharff
We send it to them as a combined PDF separated out by category. Because some of the investors are focused on specific ones, some of them go across and then they're looking through it. The Ssections on the one pager are consistent. So it's all the stuff that we talked about before. So we send those out ahead of time and that is what the investors flip through to decide who they actually want to take the meetings with. And so they are actually looking at the complete picture of your business. You'd be surprised. I actually am really happy. I've seen brands starting to use that as a one pager outside of our events. Just as a really nice synopsis to send to investors about the business that highlights. What are we doing? What are the products? What is the SRP of each of them? Who are we?

38:00
Daniel Scharff
What is the history of fundraising that we have with the business? And really important, those traction points, like, if you don't have a nice tight data point that you can pull out to get people interested in the business, then get one. Whether it is about how your product's performing in the market, like, yeah, we doubled at Target last year or something like that, or one great velocity highlight or E Com stat, something like that, then like, you got to get one. Because that is going to be the thing that really, I would say is the most important piece of that one pager. If there's one thing I'm going to look at, it's going to be that traction data point. So those are a really important part of what we do.

38:36
Daniel Scharff
And I, I do think if brands get into the actual event, but then maybe don't get a lot of meetings, that usually is going to be why. And it's either because maybe their brand just isn't in a place where the investors are really going to look at it as much as some of the other brands that are there. Or what I find is more common is sometimes the brands didn't actually put the right effort into telling their story on that one pager. And it really is a skill to tell your fundraising story. And it is an even bigger skill to tell it in a one pager where it has to be so simple.

39:07
Daniel Scharff
And I would Say the kind of mistakes that I've seen brands make and I know Hannah, you've been very close to seeing the brands all do the one pagers and giving them a lot of coaching. We run training on it. I've seen brands lean in just with maybe too much heart on it and actually fill out too many of the sections talking about the mission and why the product is so beautiful. And then they never quite got around to the numbers. Like they just know this is like traction, not about like why your product's important. I want to see hard numbers and get me excited and show the growth and why everyone's picking this thing up. Are there other common mistakes you've seen people make on those one pagers?

39:41
Hannah Dittman
Yeah, I would say being too verbose or cute with the formatting. Like you want clear communication with clean formatting. When investors are going through like a hundred, two hundred of these back to back, they're like flipping pages in a book looking for something that's going to quickly pop out of them. So keeping things easy to read in a stable formatting along everyone else is great because it allows them to really focus on the metrics they're going to look for. And every investor might have something else that they index on a little bit more than others. Some might really care about the revenue scale you've gotten to. Some might really care about just your concepts. Some might really care about looking at your traction points and that's what really matters to them the most. All of it matters.

40:22
Hannah Dittman
But they're going to have their first eye on something and if it's hard for them to find, that's not great. And then as you're saying, Daniel, I think strong traction points that paint the picture of a business and also leaves you wanting to learn more I think is really helpful. You're not going to be able to say every single thing that's amazing about your business in just one pager. It's the introduction, it's the flyer so that someone says, I am ready to read the book now. And that means some can be left off. You don't need to cram every single little thing in there. It's the most important appetizers that want you to continue eating after that. So interaction points.

40:59
Hannah Dittman
I think we left that intentionally open ended because every business is so different and it's a choose your own adventure based on what makes the most sense for your business and what's most compelling about you. But I would say again, as I said earlier, try to contextualize things to benchmarks if you can. Not every investor is like a category expert, especially if you're in a little bit more of a niche category. If you're just kind of quoting statistics in a vacuum, like a velocity number, maybe it lands, maybe it doesn't. But if you know, oh, this is a super solid velocity for our category, show what the category averages on a little chart with you next to it and show that you're doing a lot better than the rest of the category or whatever the metric you might be comparing to.

41:45
Hannah Dittman
I think competitive benchmarks always help and something I haven't seen a ton of, but I would also say holds a lot of weight if you have a really strong relationship with your retailers and can get some like really strong quotes or feedback or anything like that from your retail partners and you're looking to add more to that space. Buyer feedback, if it's a big mainstream national retailer, can hold a lot of weight sometimes. You know, if you've got a really good relationship with Target or Walmart or Whole Foods or something like that and they're willing to give you a quote for this and be a partner as you're fundraising, I think that can help a lot sometimes for sure to get a third party objective opinion on your brand.

42:25
Daniel Scharff
Yeah. And even if some of them may not love the like, wait, you want a quote from me? You know, sometimes if they're at a bigger company, they might not even know how to get that approved to do. But I also have seen it done well where someone will just have a screenshot in the data room of like, look, this is what the buyer says about us. And I love seeing that as an investor and just like the proof of the launches all like there and well organized, all that stuff. Okay, so Hannah, as we're wrapping up here, one thing I would love to know is just what do you feel like the investing landscape is like these days? Because it's evolved a lot.

42:56
Daniel Scharff
If I rewind back to, I mean, there have been different stages, like when I moved out to the better for you CPG World 2016, money was just flowing freely into these food tech companies where you could raise 300 million bucks and not have much revenue. And then like I would say it got tighter. 2020, 2021, It was a little more free flowing as well. Just for whatever reason, CPG was really bolstered by pandemic style stuff and brands were getting pretty good valuations. And then it got really tight for a while. But like, how are things evolving these days? What would you say people are looking for compared to the past, what do the investors want to see now that they might not have looked at previously?

43:36
Hannah Dittman
Yeah, I would say definitely there's twists and turns in this journey over the last decade and it's an interesting time to be watching CPG. I would say a few things. I think no surprise to anyone, profitability has become a little bit more important than maybe purely growth was at some point in the past. Of course there was always investors that did have a mind on profitability, but I think any that were purely focused on growth have changed tune. And those that had focused on profitability are kind of doubled down on that sentiment. I think omnichannel success has become more important nowadays than it was in the past. Again, the idea of like purely dtc, I think a lot sexier in the past.

44:16
Hannah Dittman
I think there's still investors that are excited by DTC and it's not like, oh, if you're a DTC only company, you're screwed by any means. But I do think omnichannel success has become a little bit more mainstream of a focus. I think something that I find interesting and relevant for our audience particularly is I think challenger brands in overlooked categories have gained a lot more interest and used to have a lot of a harder time fundraising because they were seen as way too niche. But I think there's been enough success stories of these kind of random category products that people thought, how big is that? Or how disruptive is that really going to be?

44:55
Hannah Dittman
Or how much attention is that really going to get that now almost every brand, it's like sometimes the more niche of an aisle, the more interesting it can be to investors. It seems disruptive. And I think if you know that there is a big incumbent that has owned whatever you're trying to do for a long time, even if it seems like not a super sexy part of the store or of the category, I think having a really clear story of like hey, XYZ incumbent is this much market share, no one else has touched it and we're touching it now. And these are all the ways that we're making a better differentiated product that has gained a lot more traction as a storytelling pitch that resonates than maybe it has in the past. But yeah, I would say there's no one size fits all.

45:46
Hannah Dittman
All investors are different and look for different things. But I would say those are kind of the most noticeable shifts I've seen. I've also seen a lot of investors move towards growth. They'll kind of market it as like seed stage investor with A growth mindset, which I think is so challenging and not the most ideal for founders. When I hear that, what it means to me is like they want to lean in early with a smaller check size, but want you to have all the traction and performance that de risks an investment of a later stage growth company that had a lot more momentum and capital to work with.

46:19
Hannah Dittman
So I do think there we're still in a little bit of, I would hope the end of the founder squeeze where it's have your cake and eat it too for investors and a really high ask for founders. And I hope that does right size in the future. But I do think we're still a little bit in that spot now.

46:36
Daniel Scharff
It's so funny, you and I were giggling a little bit because I was asking somebody who is an investor. Yeah, like, what do you look for? And they're like, yeah, I want them to be above this dollar threshold, which was kind of a high one and really profitable. And I'm like, well, that brand does not need to fundraise, by the way. I know, but then in reality, when you see them invest, it's like often not that case. Right. Like smaller brands, not exactly hitting all those metrics. So there's kind of what they say they might want. But then also it's possible even if you don't hit those metrics.

47:06
Hannah Dittman
Santa's wish list versus what actually shows up under the tree.

47:10
Daniel Scharff
Yeah. Right. First. Yeah. Versus what was available at on Amazon that day. So, okay, last one for you, Hannah, which is you do such a wonderful job on our podcast with all of your episodes. I hear compliments from people all the time about your interviews with the investors, and I know it's so helpful to all the brands out there. What is your wish for all of the brands that are listening to your episodes? What are you hoping that they get out of your episodes? What are you hoping that they learn or can take away from those episodes as they're on their fundraising or not fundraising journey?

47:43
Hannah Dittman
Such a good question to end on. And I will also say I do think I like being on the interviewing side a little bit more than the interviewee side.

47:50
Daniel Scharff
Me too.

47:51
Hannah Dittman
But I will say the thing that I hope that everyone leaves with is feeling empowered and really feeling excited about the fundraising journey instead of being overwhelmed and anxious about it. I think demystifying it, I hope helps. Knowledge is power in every aspect of business, and I think fundraising is no different. It's easy to be overwhelmed by something you're not as familiar with, but I hope by hearing what Diligence is actually about how investors answer questions. Even the way they think or where their knee jerk reaction goes to helps you get into their mindset a little bit more. And I hope everyone realizes an investor is lucky to be part of your business. It is their benefit. They're not doing it for charity, they're doing it because it will benefit them if they are part of your business.

48:41
Hannah Dittman
And it's important to be humble and curious, but to not forget that piece and not let yourself feel like you have no power and you're just fully at the whims of these other people and the powers that be. Don't let the need for capital or growth or whatever it is that you have your ambition on to be the reason that you start feeling negatively or judging your own self or your business or feeling unsure of where you're going. I think treat it like any other business interaction and I hope hearing enough about it makes it feel like that where it's a little bit more rinse and repeat, look for a real partner, ask thoughtful questions, be confident, ask for feedback, handle it the way you would handle any other interaction.

49:21
Hannah Dittman
And I hope that more than anything, all the founders out there that are hustling for some checks get them and that we see some awesome continued success stories because that makes me so happy. Because I can only imagine the feeling that they're feeling when their dreams are coming true and they know they're going to be able to achieve a lot of the things that they've been working really hard and set out to do. So it's a great feeling and probably why we all do what we do at Startup CPG. So hope it helps.

49:49
Daniel Scharff
I love it. Yes. Thank you, Hannah. Amazing. Thank you for everything that you do on the podcast and very importantly, designing and executing a lot of these huge founder and funder events that we do and we are seeing huge impacts from them. You and I personally know of probably six or seven deals that have already gotten done from the one in December, which given the, I mean, lead cycle that can take on fundraising, is pretty incredible to see. So this was the dream for this event, for just deals to happen and they are happening and you are a huge reason why. So thank you for everything that you do and all of the thoughtfulness that you put into it and thank you to all the brands for just being out there and participating in it.

50:27
Daniel Scharff
I know sometimes it's hard if you don't get selected for a particular event, but we really do encourage you to use the resources, reach out to all the VCs on there have a really great pitch for them. Come to the roadshow events where we really have so many of those VCs as well. We are doing absolutely everything that we can think of to create opportunities for the brands out there and we will continue to do so. It is really our pleasure to do that. So thank you, everybody. Thank you, Hannah. And make sure you tune into her Saturday episodes if you aren't already. Now you know why.

50:57
Hannah Dittman
Thank you so much. Thanks, Daniel. And you don't give yourself enough credit, but Daniel's an even bigger reason that we have all of this amazing stuff going on. So, yeah, shout out to Daniel. He's a mastermind behind obviously everything we've got going on at Startup CPG. And I know this is a huge vision of his and he's been incredibly hard behind the scenes and traveling literally everywhere all the time to make all of this awesome stuff happen, both with the investor side of the world, but with. With everything else we've got going on too. So huge claps to him as well.

51:26
Daniel Scharff
Thank you. Thank you, Hannah. Isn't it a wonderful world? It is. Where we get to do this for a living. It's so much fun. All right, thank you. Bye, everyone. Bye. Well, my friends, we've now arrived together at the end of another episode of the Startup CPG podcast, the top globally ranked podcast in CPG. As you may know, we're not just a podcast. We're a community of brands and experts. And you should join. You can sign up @startupcpg.com you'll then get an invite to our online Slack community. You're going to hear about amazing events near you, all of our special opportunities to get you in front of buyers, investors, brands and more. It's a free community. So what are you waiting for? I will see you there or on our next episode. Bye. Bye.