Ice Cream Sundays 🍑
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Volume 44- December 19th, 2021                                                                                                                        View in Your Browser

TODAY'S NEWSLETTER πŸš€

Happy Sunday everyone! 

Inspired by today’s topic - the early days of a CPG company - I’d love to share one of my favorite quotes. I really believe it will resonate with new founders.   

β€œIf I could give a piece of advice to anyone starting out, in any field really, it would be to allow your imagination to expand to the belief that you are capable of achieving great things.

And beyond capability, that you’re worthy.” 

-Craig Shapiro, Perception

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HERE'S THE SCOOP 🍦

Hey David, Should I Self Fund or Seek Out Institutional Investors?

Getting a CPG brand off the ground in the early days is nothing short of a miracle. Although some tout the space as having relatively low barriers to entry regarding capital, launching in the food & bev space still requires you to cover the necessities like packaging, branding, manufacturing, sourcing ingredients, labor, and R&D, to name a few. 

Today, I want to pull back the curtain on Dream Pops’ early days, starting with fundraising transparency:

At the outset, I usually see businesses going one of two ways: 

The first – scrappy founder leveraging own $$$ and bootstrapping it until they’re able to bring in family & friends. The second – a large pre-revenue raise from institutional investors... successful companies have been scaled both ways.  

Although there's no "right" answer, Dream Pops took a scaled approach. We self-funded the business in the early days, then slowly brought on family & friends as the business started to prove itself in market. I like to refer to those as the early dark days - which most founders can relate to. This is when you need to iron out the details – identify the business model, establish product-market fit, set a price point, figure out packaging format, etc...

This is also when you should test, test, test and make all your mistakes. The many mistakes we made in the early days allowed us to collect feedback and pivot accordingly. Once we worked out the major kinks, we started to accept smaller checks from family & friends. 

We used the early seed round to double down on what was working and cut the fat. We stopped spend on the "unnecessary" aspects of the business–AKA, anything that didn't generate ROI. (You'd be surprised how resourceful you can be if your back is up against the wall.)

In my opinion, once you’ve found your product-market fit, gained some traction, and established a healthy customer base, institutional capital can be a game-changer. It can provide value-added resources that allow you to scale the business nationally and eventually globally.

I wish there was a cut-and-dry answer to this question. Learn from my (and other founders' experiences), but at the end of the day, you need to think long and hard about what's right for YOUR company. 

CASE STUDY 

What I've Learned Since Starting Dream Pops
  1. Think in 5-year increments: Building a CPG brand takes TIME. Stop reading the headlines and put in the work. You need to build your brand, community, and business one product, one customer, and one interaction at a time. Roll up your sleeves, and get going! (Read Pour Your Heart Into It by Howard Schultz. He talks about building Starbucks one cup of coffee at a time. This is the mindset if you want to build a legacy brand.)
  2. Sometimes losses ARE wins: We had early No's from retailers, investors, and foodservice partners - who at the time seemed like they'd change our business. Had we gotten some of these wins, we actually may have gone out of business / not had the ability to support them. Perspective is everything.
  3. Tell your story... EVERYWHERE: We are living in the golden age of CPG and have access to stadiums of eyeballs through supercomputers in the palms of our hands. FIND THE ORGANIC REACH - and optimize for your medium. Are you strong on video? Audio? Are you great on podcasts? Are you funny? Can you dance? Are you a great writer - Linkedin? Push for the volume of content, test and learn, share your narrative (consistently) and start now!
  4. Your margins don't have to be perfect when you start: Your product, however, needs to be. Don't try to optimize for gross margins at the expense of the integrity of your product early b/c of investor pressure. Make sure THERE IS A PATHWAY to 40% - 50% gross margins - but remember that economies of scale play in as you gain distribution, buy more raw materials, and scale the company.
  5. Don't forget to have fun.

 

EXCLUSIVE DECK 🀫

If you want to learn more about our unique early B2B approach, I’ve created a deck that dives into more detail for subscribers here. It includes outreach templates, apps we use, and important strategies I’ve learned along the way, so definitely take a look.

CHERRY ON TOP πŸ’

FURTHER RESOURCES ON TODAY'S TOPIC

RODEO BLOG ARTICLE | Raising Money on The Real 
STARTUP CPG BLOG | Fundraising 101
FOUNDER INSTITUTE ARTICLE | How to Raise a Friends and Family Round

MONDAY TO SUNDAY πŸ’‘

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UP NEXT ➑️

Thanks for reading this week. As always, feel free to reply back with feedback, thoughts, and questions. 

 

-DG

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The Courage to Dream. The Will to Innovate. The Tenacity to Execute.

The Courage to Dream. The Will to Innovate. The Tenacity to Execute.

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