Springdale GP: “Creator Space” and Authenticity Key to Investing Strategy

After announcing the closing of its $40 million Fund II yesterday, venture capital firm Springdale Ventures is looking to “double down” on its early stage CPG investment strategy in the new year.

Founded in 2019 by Genevieve Gilbreath and Dan Graham, Springdale is a venture capital firm focused on early stage CPG brands across product categories including food, beverage, beauty, pet and wellness.

Springdale used its Fund I to invest in about 30 brands, Gilbreath said. At nearly twice the size, Fund II has already been used to invest in 14 new brands and will ultimately be used for initial investments around as many companies as the first fund – however, the size of the checks will be larger.

Springdale writes first checks of about $250,000 to $1 million, and the firm will aim towards the upper end of that range as much as possible with a projected average check size of $1 million (up from an average of $750,000 in Fund I). Around 25-30% of Fund II is being reserved for reinvestment in existing portfolio brands.

Springdale’s first fund saw the firm bring companies like Better Booch, Beatbox, Goodles and Acid League into its portfolio. For Fund II, Gilbreath said the firm will continue to target early stage brands, and intends to seek out startups in trending categories like non-alcoholic alternatives, beauty, and “humanization of pets” products.

Brands playing in the “creator space” will also be a particular focus for Springdale, she said, whether in the form of influencer brands like Mr. Beast’s Feastables and the YouTuber-founded BloxSnacks, traditional celebrity partnerships like the Melissa McCarthy-backed whiskey distiller Big Nose Kate, or brands where the founders are now positioning themselves as influencers and building awareness through a strong social media presence – as is the case with Asian-inspired hard seltzer brand Nectar.

“One of the things that we found, and what we’re seeing across the industry, is that consumers more and more are really relating to folks who bring a lot of authenticity [to brands] through their product endorsement, and through the use of the product, and especially through the creator space,” she said.

As numerous brands in recent years have sought to establish themselves by partnering with celebrity investors and brand ambassadors, Gilbreath said that trend is continuing to grow. With so many in the market, having an “authentic” connection between a brand and its top influencer is vital as consumers are quick to pick up on deals where the celebrity is not fully behind a product – and that savviness extends into the pitch room with investors as well.

In the case of Big Nose Kate, establishing that the relationship between the brand and McCarthy was important to Springdale before making an investment.

“[I asked] what kind of relationship do the founders have with her? How often are they talking to her? What are they doing together?”

According to Gilbreath, Springdale was ahead of the curve on the post-pandemic investment trend that has rebuked the “growth-at-all-cost” strategy towards brand building. Since its inception, the fund has prioritized companies that have demonstrated strong business fundamentals with a path to profitability built into their model.

She noted that while high performing brands have generally been able to raise money with relative ease, the current investment environment is far more hostile to mid-range and early-stage companies.

However, as investors have become more cautious in their investments in recent years, she said that Springdale has similarly slowed down and become more selective in which brands it will invest in.

“It’s sharpened our selecting tool,” she said.