As a former founder who had to close her beloved business piece by piece as resources ran thin, the president of newly launched Crave Ventures knows how hard it is to scale with limited capital, and she’s determined to spare other entrepreneurs the same heartache.
That is why she is teaming with the CPG brokerage Alliance Sales & Marketing to offer early-stage CPG founders marketing, branding and retail support along with venture capital backing in exchange for an equity stake.
“I have been a founder. I felt the struggle. I know what it feels like to pitch investors, navigate supply chain issues, tech issues, disruption – all these things. And I know what it is like when things get tight and you have to cut services that are fundamental to growth. I had to let go of my PR team when things got tight – had I kept them on, we might actually have had a different outcome, because awareness drives everything. You can be the most amazing product in the world, but if you are under a rock, no one will ever know,” Katie Hotze, president of Crave Ventures, recalled during an interview at Groceryshop in Las Vegas earlier this fall.
She added her experience is far from unique, as underscored by story she recalled hearing from Scott Anderson, founder and CEO of Alliance Sales and Marketing and lead adviser to Crave Ventures.
“He told me how at Alliance he would see baby brands come in all the time with amazing products, but they didn’t have the right resources, and they were spending money on things that are low conversion,” and pulling back on services that can be expensive but have an outsized impact, she recalled.
“We wanted to create an option for baby brands to have the best of the best – the highest converting, most optimal solutions to drive a totally different outcome” than my experience as a previous founder, Hotze said.
Crave Ventures offers small startups a new path forward with a clear exit
That solution is Crave Ventures – a “founder-first, service-for-equity growth partner for emerging CPG brands” that “co-builds” with founders of pre-seed and seed-stage brands through exit, she said.
“Crave is built like an agency and backed like a VC,” allowing it to offer founders everything they need to offer polished, market-ready products, which Crave reinforces at retail through its partnership with the food brokerage Alliance Sales & Marketing to ensure strategic retail placement, Hotze explained.
“We have every type of sharp skill under the sun, from animation, videography, typography, product design, branding – if you can think of it, we have it. That is our core,” she explained.
In addition, Crave Ventures connects founders with CPG-specific public relations experts, which Hotze says is essential for growth but often undervalued by first-time founders.
“It is one thing to do shopper marketing at ShopRite when you get into 200 stores, but it is totally different when Better Homes & Gardens features you in their Christmas edition. And so, I believe in PR and the viral opportunities that PR gives you,” she explained.
How does Crave Ventures support fundraising?
To help small startups with limited capital cover the cost of these services, Crave Ventures also offers fundraising support in part by connecting brands with retailers who are willing to invest in food.
“I have raised millions of dollars through angel investors, VC, crowdfunding. There is a lot of pain, but a lot of gain,” said Hotze, who is using her experience to help others create effective pitch decks and scripts that are memorable and fundable.
Crave Ventures also is creating an “investor club,” which is currently in testing but is slated for launch in this quarter. The idea is it will help “democratizing access” to early-stage companies for angel investors, family offices and venture capital firms actively deploying capital in emerging food brands. Those interested can sign up on the company’s website for consideration.
It also offers an “equity for compensation model” to give small businesses access to the full suite of services it and Alliance offers.
Hotze described the agreement as “comfortable,” and she notes it does not hinder companies from raising other money. But, she also acknowledges the setup isn’t for everyone. Rather, the model is best suited for founders that plan to exit within the next five years.
A 36-month path toward exit
To grease the rails for that exit, Crave Ventures outlines a 36 month “continuum” for partner brands that gives them essential support systems, access to advisers and a clear path forward, Hotze said.
However, she adds, “We are not an accelerator. There is no cohort. There are no classes you have to take. You don’t have to partner with other brands that are participating. This is a concept that is hard for us to put a label on because it doesn’t really exist, but the easiest way to think about it is we act like an agency and we are backed like a VC.”
