Habitat Happenings

Habitat Friends and Supporters,

Happy New Year! We’re wishing everyone a spectacular year ahead.

If you're receiving this, you're a founder, investor, or operator that we have genuinely enjoyed engaging with in the past… and/or someone we simply admire 🤩 

Our goal: to keep our community informed on what’s happening at Habitat Partners in hopes of finding opportunities to collaborate with you in the future.

For a quick refresher on us, check out our website or our Notion page.

Thanks for reading and hope to hear from you soon!

PS: We will be making a west coast trip surrounding our attendance at Expo West and would love to connect.

(1) 2024 Full Year Review

2024 was a tranformational year for the Habitat Partners team personally and professionally. We welcomed Daniel Faierman as our newest partner and William Walker as our first MBA intern. Blake and Daniel welcomed their sons, James and Miles, into the world. Reschedules and off camera zooms have become more common… but the experience of being a first time parent is irreplaceable. Of course, 2024 was full of plot twists and challenges, underscoring a difficult macro environent. We are thankful for our amazing partners who did an outstanding job navigating complexity.

A few key 2024 portfolio highlights 🎉 

• In 2024, Habitat Partners portfolio companies raised ~$235M ($900M if you include Figure’s $675M Series B) in follow on capital despite a challenging macro environment. This is a true testament to the quality of the founders that we are privileged to engage with on a regular basis. It also proves that startups that were able to withstand the volatile 2021-2023 period are emerging stronger than ever, reinforcing our optimism and belief in the perpetual resilience of the venture capital asset class. Despite recent declines, both venture capital and growth equity continue to outpace other strategies and demonstrate the potential to consistently drive outsized returns relative to public equities over the long term. 

• Farther, Motion, InnBeauty, Happy Wolf Snacks, Truehold, PopUp Bagels, Rainbow Insurance, Figure, Roxberry, Endear, Ayoh Foods, and others hit meaningful milestones and took steps to solidify positioning in their respective markets.

• We welcomed ~8 new companies into the Habitat portfolio including Medbill AI, MarkOS, Ayoh Foods, Mezcla, and a handful of others that will be announced in the months ahead as they emerge from stealth 👀

• We attended some stellar events such as Expo West, Commerce Summit, and more. We had some great media features: check out Habitat Partners in Modern Retail and Daniel’s recent feature on The Consumer VC.

(2) 💫 Recent NEW Investments

👻 Stealth B2B SaaS (Seed)

🏯 DAMDAM Tokyo (Seed)

👻 Stealth DefenseTech (Series A)

👻 Stealth Beverage (Seed)

We expect stealth investments to become public before our next update… 👀 

(3) 📰 Portfolio Companies in the News

🛒 Endear: closed a ~$6M Series A in late 2024. Endear has been instrumental in helping notable omnichannel brands such as Gorjana, Reformation, and UntuckIt get the most out of their in-store retail marketing efforts. If you or anyone in your network operate an omnichannel brand with owned retail locations, you should definitely meet the Endear team! No brainer… 📩 

🐺 Happy Wolf: the healthy kids snacking brand launched in 300 Whole Foods locations across the US. Each bar is formulated with gluten-free oats, dates, and sunflower seed butter and contains no refined sugar and no artificial colors or flavors and is Clean Label Project Certified, Non-GMO Project Verified, and USDA organic certified.

🫙 Ayoh! Foods: follwing the close of our pre-seed investment in mid 2024, Ayoh! Foods went live with a bang in mid-November and has acheived incredible early traction. Ayoh comes in four flavors including Original Mayo, Dill Pickle Mayo, Tangy Dijonayo, and Hot Giardinayo. The extra-saucy, 12-ounce mayo bottles are now available online and will be in stores soon.

⬇️ See more on our full investment thesis on Ayoh below ⬇️ 

🤖 Figure AI: Figure is officially revenue generative! This milestone comes just 31 months after filing their C Corp. ARK Invest recently released a really interesting piece covering their Figure Investment Thesis and Seeking Alpha referred to Figure as a future tailwind for Nvidia.

🧴 InnBeauty Project: one dual-chamber serum and nearly $200K in clinical testing later, InnBeauty announced the launch of a breakthrough anti-redness serum. On January 2nd, the brand released its Calm the Red Down Dual Chamber Redness Treatment Serum. The brand was pacing towards $50M in sales at the end of 2024.

🥯 PopUp Bagels: Bagel madness continues! PopUp Bagels founder Adam Goldberg recently appeared on Fox Business (see below) to chat expansion plans. PopUp brought on Tory Bartlett, a former exec at Moe’s Southwest Grill, as CEO. The chain is planning to open ~100 locations in the next few years leveraging a franchising model.

📢 If you are in Boston, run don’t walk: 70 Pier 4 Blvd, Suite 330. First location is live!

💡 Branch Energy: Branch Energy, a provider of long-term energy price stability through a combo of fixed-price energy supply contracts & behind-the-meter battery storage systems, announced new exciting partnerships: 1) Energywell, an energy tech company powering the sustainable energy transition, announced a multi-year tech licensing agreement with Branch Energy and 2) Voltus, a leading distributed energy resource software platform annouced a partnership with Branch Energy to open revenue streams.

🌈 Rainbow Insurance: Rainbow, the digitally-enabled managing general underwriter specializing in tailored small business insurance products, announced the launch of its admitted restaurant insurance program in New Jersey, Virginia, and Iowa. This expansion strengthens Rainbow’s footprint across critical U.S. markets to work with more agents in key regions such as the Tri-State, Mid-Atlantic, and the Upper Midwest.

💪 Mezcla: Mezcla is now available in 9 divisions of Albertsons! You can now find Mezcla at select Albertsons, Safeway, Kings, Star Market, Shaws, Vons, Acme, and Jewel stores. Look out for Matcha Vanilla, Hot Chocolate, Peanut Butter Chocolate, and Pistachio Chocolate on shelf.

🏥 Medbill AI: CEO Julian Nakache recently appeared on wellbound for a deep dive on Medbill AI’s mission: saving people time, money, and stress on health insurance and medical bills through AI-powered heatlhcare services.

📽️ Motion: Betakit covered the triumphant rise of Motion and it’s ties to growth marketing agency, Shoelace.

💊 KinderFarms: announced that Kristin Recchiuti, former CEO of Advantice Health and 20-year Johnson & Johnson veteran, will join the company as CEO as the company embarks on it’s next exciting stage of growth.

(4) Why We Invested In Ayoh Foods 🫙 

Pre-seed CPG investing is often described as “grave digging” 🪦 

It’s not an unfair generalization. CPG hyper fragmentation is and has been in full effect for several years. Peruse the aisles of Whole Foods or the next big thing wall at Sephora and find out for yourself. Truly innovative product differentiation that solves an untapped consumer problem is a rarity in today’s ecosystem.

Taking a leap of faith and investing prior to getting exposure to revenue, repeat purchase rates, conversion rates, customer acquisition cost, velocities, margins, cash burn, final product formulations / brand identity isn’t for the faint hearted.

Ayoh Foods is the prototypical example of what we look for in a pre-seed CPG concept at Habitat Partners. We wanted to share why this concept cuts through the noise as a blueprint for what a strong pre-launch business looks like in CPG – Daniel has been asked on a few panels lately what we look for in early-stage concepts so hopefully this helps. While all startups face their challenges, we are beyond excited by Ayoh’s incredible progress after just a few months in market.

1/ Founder-Market Fit based on historical professional experience

Passion-filled founder stories are nice, but robust founder experience is crucial. In rare cases, founders come from outside industries and can self-teach CPG successfully. At Habitat, we over index on founders who have extensive historical CPG experience ideally from multiple angles and functions. David McCormick (Ayoh Founder) fits this mold perfectly with prior experiences spanning from Director of Grocery at Whole Foods to VP of Ops at Jackson’s to COO at Siddhi. It was easy to feel confident in David’s ability to set up bullet proof manufacturing, supply chain, finance, and go-to-market functions.

2/ Product differentiation and consumption occasion expansion

This is where we saw potential “magic.”

While Sir Kensington’s, Primal Kitchen, and Truff have line extended into mayo, a strong historical emerging brand fully dedicated to disrupting the mayonnaise shelf didn’t exist from our perspective (maybe besides Duke’s).

More importantly, we love innovation that expands the occasion base through which a product was historically consumed... this kind of innovation accelerates lower velocity categories and brings new consumers to shelf.

If you pattern match to Bachan’s, which is used in a multitude of ways, it becomes easy to imagine Ayoh being used as a marinade, a dipping sauce, for deviled eggs, or even aa salad dressing to name a few use cases beyond sandwiches. There’s nothing retailer buyers love more than a brand that sets a new velocity benchmark in a lower velocity shelf set. We also don’t mind that the global mayo category clocks in at over $10B… but this wasn’t a huge factor.

3/ Healthy projected gross margins backed by co-man contracts

One of the few objective quantitative checks that usually can be done during a pre-seed CPG investment is auditing gross margin projections. By leveraging access to co-man contracts for pricing and comparing it to the price that a product will be sold at on DTC and to retail distributors (or retailers in the case that the distribution methodology is direct), one can back into DTC/retail projected gross margins and reconcile this landed gross margin versus provided P&L projections.

At Habitat Partners, we have high standards for all in gross margins (net revenue – product COGS – warehousing/fulfillment – freight in/out… sometimes referred to as “contribution margin”). Our bar is particularly high in the condiments/oils/spices category. Without giving away specific numbers, Ayoh passed this test with future opportunities for further margin accretion.

4/ Clear strategy for organic virality

We candidly are not extremely focused on the celebrity/creator-led brand thesis. These deals typically involve premium valuations and diminishing marginal return risk. In fact, I’ve never invested in one until Ayoh. The more we learned about Molly Baz, the more we realized how authentic her involvement would feel in the case of Ayoh. It also doesn’t hurt that her engagement rates are off the charts. Our decision to invest would have likely been the same without Molly; however, organic virality and a CAC advantage in the early days enable a business like Ayoh to be more capital efficient at a stage when capital constraints tend to be the tightest.

5/ Winning proposition for premium and mass consumers/retailers

Mayo is loved on the coasts and in the flyover states. We believe both consumer profiles will have an affinity for the concept. Further, Ayoh’s pack price architecture has the ability to service a Whole Foods or a Walmart profitably.

6/ Attractive entry valuation compared to potential scalability

While we won’t share valuation details, the valuation was fair. Especially when creators or celebrities are attached to early-stage deals, pre-moneys often reach 8-figure territory (and with Logan Paul involved, even 9-figure territory 🤔). We do our best to avoid any deal dynamic as such.

7/ Robust history of M&A in condiment/sauce category

• Kraft Heinz <> Just Spices (undisclosed)

• Kraft Heinz <> Primal Kitchen ($200M)

• Advent <> Duke’s ($1.5B)

• McCormick <> Cholula ($800M)

• McCormick <> Stubbs ($100M)

• McCormick <> French’s/Frank’s ($4B)

• Unilever <> Sir Kensington’s ($140M)

• Danone <> Follow Your Heart ($260M)

(5) 📰🎧️ Good Reads/Listens

The Consumer VC Podcast ~ Habitat Partners’ Daniel Faierman recently appeared on The Consumer VC Podcast with Mike Gelb to discuss Habitat Partners and managing a dual investing strategy between CPG and SaaS.

Hamilton Lane’s Charts of the Week ~ Hamilton Lane - tremendous overview on fundraising & returns environment across asset classes. Despite recent declines, both venture capital & growth equity continue to outpace other strategies & demonstrate the potential to consistently drive outsized returns relative to public equities over long term.

Red Antler’s State of Brand Report ~ Red Antler - Red Antler released a tremendous overview deep diving on the current state of brand building in the context of today’s consumer culture. Well worth a read if you missed it.

Forerunner’s State of the Market ~ Forerunner - A great status update on the state of early stage VC and AI’s maturing intersection with consumer. We loved how simple, yet compelling this overview is!

The Startup CPG Podcast ~ Habitat Partners’ Daniel Faierman recently appeared on the startup CPG podcast to discuss the state of CPG investing alongside friends Carolyn Simmons (Melitas), Greer Tessler (SFV), and Andrew Reynolds (RCV Frontline).

Personalization 2.0 ~ Torch Capital - An interesting overview on the future of commerce personalization. We’ve had an ongoing debate internally about over-personalization and the risk of creating consumer boredom/fatigue by over-personalizing daily touchpoints with technologies.

Consumer Trends 2025 ~ Dan Frommer - TikTok Shop and Amazon domination, continued strength in e-commerce spending, protein and fiber, and a strong gen z beauty consumer.

More food companies are getting snatched up ~ The Minnesota Start Tribune - it feels like CPG M&A is starting to accelerate again following the acquisitions of Siete, Ghost, FATTY, Hiya Kids, and several others. We expect CPG M&A to continue accelerating in 2025 with: 1/ more pressure on strategics in regards to ingredient quality (MAHA), 2/ a healthier interest rate environment, 3/ less regulation, and 4/ a handful of quality assets.

(6) Archive

2024 Q3 Update

🤝 Thanks for reading and continuing to be a part of our growing Habitat!

- Blake, Daniel, JB, and Emily