Insight certainty 4/5 debate potential 3/5

VC hyper-growth expectations conflict with the reality of scaling physical inventory

Adam Pritzker · 20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble · Mar 15, 2019 · at 10:34

Adam Pritzker is the Chairman & CEO of Assembled Brands. He explains why traditional venture capital funding creates a structural mismatch for inventory-heavy consumer goods companies.

0:00 / 0:09exact quote · 9.4s
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“And the problem with VC financing and the manufactured consumer goods space is that the growth expectations exceed the reality of prudently growing a physical inventory base.”

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More from Adam Pritzker

Assertion Not checkable as stated
Traditional banks lack capability to underwrite individual DTC transactions
“With marketplaces like Amazon, social platforms like Instagram, and e-com platforms like Shopify, the buyer is now individuals, not stores. And factors and banks don't know how to underwrite that scenario, and we do.”
Adam Pritzker Mar 15, 2019 ▶ 9:21 20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble
Insight
Consumer brands suitable for venture capital financing are rare exceptions
“They tend to have very few skews and have a strategy in which they underprice the incumbent by selling direct, and those categories might include mattresses, razors, eyewear, and beauty, but again, I would say those are rare birds. Those are the exceptions to …”
Adam Pritzker Mar 15, 2019 ▶ 11:55 20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble
Opinion
Profitable consumer brands at $30M-$40M revenue make poor VC investments
“Brands don't have to grow forever. They can get to 30 or forty million in revenue and generate profit, which is why they're not great VC investments, but that doesn't mean they don't deserve capital.”
Adam Pritzker Mar 15, 2019 ▶ 16:06 20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble
Prediction Held up
Consumer brand exits will remain small, niche acquisitions over mega returns
“Definitely the latter. The media happens to like to cover the former, so there are amazing exceptions to the rule, and those are just wonderful stories. I think the reality is those are, again, exceptions to the rule.”
Adam Pritzker Mar 15, 2019 ▶ 22:32 20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble
Assertion Contradicted
90 of the top 100 consumer brands lost market share in 2018
“So, 90 of the hundred largest brands lost share in 2018.”
Adam Pritzker Mar 15, 2019 ▶ 5:58 20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble
Prediction Not checkable as stated
Retail re-platforming will make starting consumer brands progressively easier
“As retail is replatformed, it will only get easier to start brands and organize all the pieces of the value chain to get product to market quickly.”
Adam Pritzker Mar 15, 2019 ▶ 8:42 20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble
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