In Episode 95 of The Wendel Forum (originally aired on April 13, 2013, on 960 KNEW AM radio), show moderator Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Deven Clemens and Gregg Bagni, directors of White Road Investments.
Founded in 2008, White Road Investments is venture capital firm backed by several current and former executives of Clif Bar. (Clemens is senior director of corporate finance at Clif Bar. Bagni is president of Alien Truth Communications and former marketing vice president at Schwinn Cycling & Fitness.) The company invests in health and active lifestyle businesses, including consumer products and outdoor companies.
Clif Bar is motivated not just by financial return but by a five-pronged philosophy, which is to promote the sustainability of its planet, community, people, business and brands. That same philosophy applies to White Road Investments. Clemens and Bagni are specifically looking to fund companies that are mission-driven and that will have a positive impact on the environment and community. The directors want to work alongside entrepreneurs who are eager to learn, grow and do more good. In particular, they’re interested in investing in new categories and new products. For example, they’ve funded a dehydrated pet food company. Currently popular categories in the health space include gluten-free products, plant-based proteins, raw foods, minimal-ingredient foods and bike businesses in urban markets.
In particular, White Road Investments funds with companies with $1 million to $25 million in revenue, with a particular focus on those in the $2 million to 7 million range. An investment can range from $750,000 to $2 million with $1 million being the sweet spot.
The company’s directors want to get deeply involved in the companies in which they invest, beyond simply a quarterly check-in. Realizing that great businesses may take awhile to succeed, the focus of White Road Investments is longer term than most VC firms. In addition to funds, White Road Investments offers companies its expertise, including marketing, operations, strategy, finance, branding and sales advice, as well as “connective capital,” the ability to provide connections from its directors’ longstanding business relationships. White Road Investments also offers the resources of Clif Bar, including the ability to test new products with Clif Bar consumers, who are usually the perfect target demographic.
What new healthy products do you predict to emerge?
Listen to the interview with Clemens and Bagni: Episode 95 of The Wendel Forum (27:30 mins; mp3)
White Road Investments Website: http://www.whiteroadinvestments.com
960 KNEW AM Radio website: http://www.960KNEW.com
Dick Lyons’ online profile: http://www.wendel.com/rlyons
November 20, 2012
In Episode 84 of The Wendel Forum (originally aired on November 10, 2012, on 960 KNEW AM radio), show moderator Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Aaron Binkley, Director of Sustainability at Prologis, and Rich Chien, PACE program manager at San Francisco’s Department of the Environment.
San Francisco’s PACE program uses stimulus funds to improve the environmental performance and reduce greenhouse gas emissions from the City’s existing building stock. Part of the Department of Energy’s green building policy, PACE launched the commercial building program a year ago. It’s first project is Pier 1, the headquarters of Prologis, the country’s largest industrial real estate company.
At a cost of $1.6 million, the PACE-Prologis project will include rooftop solar panels and energy efficiency upgrades. Specifically, the building will receive retrocommissioning of its heating and cooling systems (primarily related to software, controls, valves and motors) and a full lighting retrofit (replacing bulbs and some fixtures; adding sensors and daylight capture equipment). When it’s completed in 2013, the project will reduce energy purchases by one third from last year’s baseline. All of the building’s tenants (including the Port of San Francisco) will benefit, and savings will be applied to all occupants on a pro rata basis. The changes have been calibrated so as to not generate excess energy that needs to be sold back to the grid.
Piloted in Berkeley in 2007, the PACE program uses local governments’ taxing or bond-issuing authority to fund projects that have a public benefit. The PACE-Prologis project is 100 percent privately funded, with bonds issued to private investors. Repayments are made through the property tax billing system, which allows for longer terms (up to 20 years). The property is the collateral and repayment obligations transfer to the new owner if the building sold. The interest is federally taxable and California tax-free.
A challenge to the PACE program is that the loan agreements from residential and commercial lenders typically prevent land owners from further encumbering their properties without the lender’s approval. Since the PACE bonds are repaid through increased property taxes, the bonds are effectively senior in security to the lenders’ loans. Some lenders may be reluctant to approve PACE financing unless they are confident that the resulting energy savings will translate into a sufficiently higher property value so that their positions are not impaired. One approach to lender reluctance is for the lender itself to purchase the PACE bonds. In that case, the lender is only subordinated to itself and gets the benefit of the investment in the PACE bonds.
How could the PACE program impact your community?
Listen to the interview with Binkley and Chien: Episode 84 of The Wendel Forum (27:44 mins; mp3)
Prologis Corporate Responsibility Web Page: http://www.prologis.com/en/responsibility.html
960 KNEW AM Radio Website: http://www.960KNEW.com
Dick Lyons’ online profile: http://www.wendel.com/rylons
In Episode 78 of The Wendel Forum (originally aired on September 29, 2012, on 960 KNEW AM radio), show moderator Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Scott Potter, managing partner of San Francisco Equity Partners, a private equity firm that specializes in consumer products growth companies.
Potter’s firm partners with companies that have demonstrated a proven demand for their products. So while there’s no consumer adoption risk, the companies are usually facing operational and scale challenges to reach the next level. Typically, they are $5-10 million companies poised to scale their businesses, often to north of $100 million.
Identifying these optimal risk-reward companies is more science than art. San Francisco Equity Partners is particularly focused on its companies’ channel strategy. That is, a given beauty product can’t successfully be sold at both Sephora and Wal-Mart. Channels include food (Safeway), drug (Walgreens), mass (Wal-Mart), club (Costco), prestige (specialty retailers and department stores) and direct-to-consumer (online and direct-response TV). Determining the right channel for products is often a company’s key to success.
A growing channel is the so-called natural channel, as epitomized by Whole Foods, which is separate from the traditional grocery channel. But Potter’s firm specializes in natural products that are targeted for the mass channel. Companies targeting this channel should not ask consumers to pay more for an inferior product “just to save the fish,” Potter says. Rather, the product’s value proposition has to work in and of itself outside of sustainability and natural missions. The prime example is Method products.
When San Francisco Equity Partners first invested in Method, it was producing just hand and cleaning products. It has evolved to include bathroom and specialty products and even successfully launched into the competitive laundry space. Early on, Method knew it would never have the marketing budget of Proctor & Gamble. So it chose to overinvest in packaging, focusing on the point of sale: when product is on the shelf. Method’s in-house design team devised a distinctive look, including the bottle molds, and focused on the aesthetic and the user-experience (such as the one-hand laundry detergent dispensing system). With the “design baked into the products,” Method aspired to be like Apple.
At what kind of store are you most likely to purchase natural products?
Listen to the interview with Scott Potter: Episode 78 of The Wendel Forum (27:48 mins; mp3)
San Francisco Equity Partners Website: http://www.sfequitypartners.com
Method Products Website: http://methodhome.com
960 KNEW AM Radio website: http://www.960KNEW.com
Dick Lyons’s online profile: http://www.wendel.com/rylons
October 9, 2012
In Episode 76 of The Wendel Forum (originally aired on September 15, 2012, on 960 KNEW AM radio), show moderator Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Ben Lee, director of business development at San Francisco-based CircleUp, a crowd funding platform founded in April.
CircleUp provides an online mechanism for consumer products companies and retailers to reach out to a broad network of potential investors, who may fund the companies in exchange for equity. CircleUp, which affiliated with WR Hambrecht, takes a commission.
So far, they’ve received 600 applications; they’ve selected 10 companies and four – including a baby skin care brand and an organic food brand – have been successfully funded. CircleUp’s team serves as a curator for the investors. In evaluating companies, they look for businesses with $1 million to $10 million in annual revenue. Usually these companies are seeking to raise $500,000 to $2 million to launch new products and achieve the next stage of growth. The typical investment is $5,000 to $25,000 (while each company’s offer is different, these are generally in the form of preferred stock shares); CircleUp assists with larger transactions offline.
While CircleUp streamlines what can otherwise be a year-long funding process, raising money through the platform can still take several months. Although CircleUp selects companies and presents opportunities, investors must do their own due diligence. Like any private company investment, crowd funding is risky and the investment horizon may be three to seven years.
Lee says CircleUp’s goals include enhancing the ecosystem around consumer products, helping as many small consumer brands get financing as possible, and making sure CircleUp’s platform is a great experience for investors and companies.
Have you participated in crowd funding? What do you see as the biggest opportunities and challenges to this form of financing?
Listen to the interview with Lee: Episode 76 of The Wendel Forum (27:56 mins; mp3)
Circle Up Website: https://circleup.com
960 KNEW AM Radio website: http://www.960KNEW.com
Dick Lyons’s online profile: http://www.wendel.com/rlyons