Caitlin Strandberg is a Principal at Lerer Hippeau, an early-stage venture capital firm in New York City that invests in consumer products and service brands, as well as in B2B Enterprise market companies. Prior to Lerer Hippeau, Caitlin worked for a number of early-stage companies as well as other venture capital firms that invested in brands at various stages of their entrepreneurial journey.
In 2017, Caitlyn was included in the exclusive Forbes 30 Under 30 list for the venture capital industry. She is a graduate of Cornell University, where she majored in History, and she also holds an MBA from Harvard Business School.
Here’s a glimpse of what you’ll learn:
- The evolution of fundraising in the past decade and how brands can raise funds without giving up too much control in their company
- Common mistakes early-stage companies make when looking for outside investments
- Lerer Hippeau’s Amazon strategy for brands they invested in and how they help protect their branding in the marketplace
- Things early-stage brands should consider when deciding whether to hire internally or to hire an agency
- Why market fit is a major consideration for companies Lerer Hippeau invests in
- Why Caitlin Strandberg considers it a gift to meet founders who are looking for funding for their company
- Caitlin explains why authenticity, organic growth, and great customer experience are important when looking for funding
In this episode…
For early-stage entrepreneurs, it is important for them to think carefully about the decisions they make when it comes to finding venture capital investors. They have to think about how much equity and control they’re willing to hand over and whether their target market and projections are achievable; this also holds true once they start toying with the idea of joining Amazon. But the problem is, a majority of them have difficulty in evaluating these key areas in their business which is where companies like Lerer Hippeau come in — to help them increase their success rate ten-fold.
Caitlin Strandberg of Lerer Hippeau is an expert in venture capital investing and she is interviewed by James Thomson from the Buy Box Experts team about how early-stage brands should be thinking about opportunities to get investment while maintaining control of their company, the most common mistakes entrepreneurs make when looking for investors, things to consider before joining the Amazon marketplace, Caitlin’s criteria for selecting the right brands to invest in, and more. Stay tuned.
Resources Mentioned in this episode
- Buy Box Experts
- Controlling Your Brand in The Age of Amazon by James Thomson
- Caitlin Strandberg on Linkedin
- Lerer Hippeau
- Prosper Show
- Jeffrey Bussgang on LinkedIn
- Warby Parker
- Dia & Co
- Sweet Reason
Sponsor for this episode
Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.
The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.
Buy Box prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.
Learn more about Buy Box Experts at BuyBoxExperts.com
Welcome to the Buy Box Experts podcast where we bring to light the unique opportunities brands face in today’s e-commerce world.
James Thomson 0:11
Hi, I’m James Thomson, one of the hosts of the Buy Box Experts podcast. I’m a partner with Buy Box Experts podcast and formerly the business head for the selling on Amazon team at Amazon. I’m also the co-author of the book Controlling Your Brand in the Age of Amazon, and co-founder of Prosper Show, one of the largest continuing education conferences for Amazon sellers in North America.
Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire buy box experts you receive the strategy optimization and marketing performance to succeed on Amazon. Go to buyboxexperts.com to learn more.
Today I’m excited to welcome our guest Caitlin Strandberg, a Principal at Lerer Hippeau, an early stage venture capital firm in New York City that invests in consumer product and service brands, as well as B2B enterprise market companies. Prior to Lerer Hippeau, Caitlin worked for a number of early stage companies, as well as other venture capital firms that invested in brands at various stages of their entrepreneurial journey. In 2017, Caitlyn was named to the exclusive Forbes 30 under 30 list for the venture capital industry. Caitlyn is bringing her expertise to us today sharing best practices on how to invest and grow brands focused on online channels. So welcome, Caitlyn. And thanks for joining us today on the buy box experts podcast.
Caitlin Strandberg 1:39
Thanks for having me, James, and I’m thrilled to be here.
James Thomson 1:42
Caitlin, I’d like to start our discussion by getting your thoughts on how you’ve seen brands evolve the way that they seek outside funding over the past 10 years. We’ve heard a lot about cheap capital that’s available out there. How should early stage brands be thinking about opportunities to get investment without giving up too much control in their companies?.
Caitlin Strandberg 2:02
Sure. So I think that’s a really great question because, you know, we’ve been thinking a lot about how the consumer investing landscape has changed in the last decade. The world looks very different in 2020 than it did in 2010. And it Lerer Hippeau was one of the first venture capital firms to invest in digitally native brands and what is called DTC though we’re not really using that language anymore.
So we were the first check into companies like Warby Parker, all birds, Casper, everlean, really kind of at the beginning of you know, 2010 1112 when the benefits of kind of internet technology and mobile and social and and social networks really created a, a wide open space to launch brands, and to very quickly acquire customers, build businesses market to them in a cost effective way. That was different than anything we’ve ever seen before. So you had a completely reimagined supply chain, where you could cut out the wholesaler, you could cut out the distributor, you could cut out the retailer, you could go direct to consumer, as a channel. And many of these companies were built on that brief moment in time.
And some of the best companies in the world are also always taking advantage of market timing. And so, you know, I think in the beginning in 2010, you know, very few venture capital investors were willing to make bets on consumer products and consumer services. You know, venture capital for a long time has been traditionally tech focused and technology and software centric. But we saw an opportunity to invest behind new brands thinking the millennial consumer is going to want more in demand more and have different expectations now that, you know, their whole lives are in and out enabled, then any of the generations before.
So I would say in the early days, you know, we were making real big bets on opportunities with founders that had some relevant domain. Extra expertise, but in markets that were dominated by sleepy incumbents that just were not paying attention. So, you know, I would say it was probably tricky to raise money back in 2010 1112, around some of these ideas, it was very, very unknown where they would go and if those brands would become the ones they did today, and fast forward now that you’ve got some of these companies being even more successful, and it’s become a bit of like a hot space. You know, money has flowed into the space. So I think when you talk about, you know,
a lot of cheap capital being out there, it means that there are more investors than ever before. There are more companies than ever before, it’s never been easier to start a company. And from the investing side, it’s actually kind of easy, fairly easy to fund a business. That said, the way that we think about it is we’re investing in mission driven founders that are going after a big wide open space, not product driven companies. So for example, when we think about Joey, and Tim from Allbirds, they came to us and they pitched a story around showing the world you could create every day kind of apparel with sustainable materials. And they were very focused on climate change. Warby Parker was making sure Neil at Warby Parker was showing the world that you could get affordable, trendy, cool glasses, and a portion could go towards kind of underserved communities that needed kind of visual, you know, visual systems visual help.
And they were they were reaching this mission with a company and a set of products. And so that’s really what we funded. And I think now we’re seeing more and more companies come to us that it’s just a brand that they want to sell, it’s going to get capped, it’s going to get limited. They’re really kind of product, product businesses, or product companies, not necessarily businesses. So there’s a little bit of that and I think we’re seeing now in the market, a lot of companies, a lot of brands and products just get funded because you can do those early revenue jumps. But you kind of get stuck and you plateau when you’re trying to transition to the large scale you know, lifelong generation defining business route.
That’s a little bit how we think about it. I would say just to summarize, like, there’s a lot of capital because consumers kind of hot, you have all sorts of investors trying to put their money to work at more companies than ever before. And that’s a little bit of a factor of more technology and tools that make it easier to start and scale companies. So for example, you can get your capital from Kickstarter Angeles, you can get brand and creative done by red antler partners in spades. You can have Shopify basically be your web dev. You can do payments through Stripe, you can do shipping and logistics through flex port and then you can engage with your customers on Twilio or Zendesk if you really over weekend you could like put together a new brand and a new company and launch it and fund it.
You know, we see that with our companies. So it is easier to get capital. You do have to invest. There’s kind of jumping in but venture capital is not really just just about getting money to fund to fund the development of your product. It’s really about you know, it’s we’re buying equity in your business. And hopefully that equity increases over time. And we’re giving you kind of capital because we’re seeing that there’s an opportunity, a special, unique opportunity in the market to build a high growth and massive business at a time when you could never do it before. And so when you take the venture capital dollar, you are jumping on the train. And the commitment is you’re going to go bigger and faster and raise more money and raise more money and go for one of these billion dollar plus outcomes.
And, and a sophisticated venture investor knows that capital is a commodity, they’re hoping to give you more so things like that are you should be looking for an investor that helps you see around corners so that has seen the playbook before. has seen companies do well and struggle. They can kind of help you navigate the terrain. Moments moments, they can absolutely help you fundraise. cash is king in startups, especially with companies that are largely unprofitable for a shocking amount of time. So they help you fundraise that becomes a core part of the founder, kind of ritual is constantly raising money, constantly getting people excited about the business.
And then the third thing is you’re really looking for a coach and a cheerleader, but also someone that’s going to be direct and honest with you as you’re at that first stage of your entrepreneurial journey. Because starting a company and starting a business is very lonely, very difficult and very hard. Hopefully, you’re the co-founder that makes it a little bit easier. But there’s an awareness around that. And there’s a grace and acceptance around that when things go wrong. And so that’s how I would think about like, there’s a lot of cheap capital out there and they’re not going to give you called dumb money.
They’re not necessarily giving you the help and resources at a more sophisticated investor what’s called Smart Money could give you so that’s how I would kind of think about it. I know you asked a little bit about how early stage brands evaluate Raising money without giving up too much control? That’s a great question.
As seed investors, we are never at the place where we have control over a company. We really think that we invest in companies and brands that are founder driven, we trust we we bet on the jockey and we bet on the person and we know that the numbers are wrong, and they’re, they’re likely going to change we know that a company could pivot, we’re betting on the person that’s going to navigate kind of like the rocky waters that we know are going to come.
And ownership usually doesn’t kind of founders don’t usually get diluted and the ownership structure until much later in the lifecycle of a company. But at that point, you’ve got a board that’s high functioning, hopefully around you. They trust you as a steward and no one can do the job better than you and kind of things fall into place at that point.
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