In this episode of Nothing Ventured, host Aarish Shah sits down with Sam Kaplan, a partner at Five Seasons Ventures, a pan-European venture capital fund focused on investing in iconic and sustainable consumer brands. With an extensive background that includes roles at Citi and Birch Creative Capital, Sam shares invaluable insights into the venture capital landscape. They discuss the intricacies of investing, ranging from small checks of $25,000 to larger sums of $25 million, and delve into the importance of emotional connections to brands in early-stage consumer investing. Sam emphasises that customer acquisition costs reflect brand strength, while retention hinges on product quality, and highlights the unique challenges in consumer sectors compared to tech. The conversation also explores the critical concept of being first-purchase profitable and the significance of careful portfolio construction in venture capital. Tune in for a deep dive into the dynamics of consumer investing and the pivotal role of founders in business success.

Timestamps:

00:00:00 - Introduction to the Podcast and Guest

00:00:42 - Overview of Sam Kaplan's Career

00:01:32 - The Importance of Emotional Reaction in Consumer Brands

00:02:03 - Aarish Shah's Background and Podcast Purpose

00:02:51 - Sam Kaplan's Experience at Birch Creative Capital

00:03:30 - Open Door Policy and Learning from All Conversations

00:05:02 - Overcuration and Homogeneity in Venture Capital

00:06:15 - Diversity in Venture Capital and Outliers

00:08:03 - Evaluating Early-Stage Consumer Brands

00:09:03 - Customer Acquisition Cost vs. Retention

00:10:14 - The Role of Brand in All Businesses

00:12:13 - Brand vs. Product in Consumer Goods

00:14:24 - Personal Experience with Brand Loyalty

00:15:05 - The Power of Brand in Commodity Products

00:16:24 - Trust and Brand in Consumer Products

00:17:07 - The Limitations of LTV in Consumer Businesses

00:18:20 - Critical Success Metrics in Consumer Ventures

00:19:03 - Switching Costs in Consumer vs. B2B SaaS

00:20:01 - The Role of ARR in Subscription-Based Consumer Products

00:21:09 - CAC Payback and First Purchase Profitability

00:23:00 - The Challenge of Scaling Consumer Brands

00:24:06 - Identifying Early-Stage Indicators for Success

00:25:06 - The Myth of Economies of Scale in Consumer Ventures

00:26:05 - The Reality of Increasing CAC Over Time

00:27:09 - Strategies for Diversifying Growth Channels

00:28:03 - The Importance of Diversification in Consumer Brands

00:30:16 - The Risks of Diversifying Too Soon

00:31:25 - Supporting New Channels and Geographies

00:32:01 - The Importance of TAM in Consumer Ventures

00:33:06 - Investing in Premium vs. Luxury Brands

00:34:31 - The Challenges of Investing in Luxury Brands

00:36:00 - The End Goal of Venture Funds

00:37:10 - Portfolio Construction in Consumer Ventures

00:38:00 - The Difference Between Tech and Consumer Venture Outcomes

00:39:27 - The Importance of Protecting Downside Risk

00:40:46 - The Role of Entry Valuation

00:42:09 - The Scope of Investment at Five Seasons

00:43:12 - The Risk Profile of Consumer vs. Tech Ventures

00:45:03 - The Importance of Avoiding Zeros in Consumer Portfolios

00:46:07 - The Complexity of Consumer Venture Capital

00:47:51 - The Concept of Value-Add VC

00:49:17 - The Role of Founders vs. VCs in Business Success

Find Sam Kaplan online at:

LinkedIn: https://www.linkedin.com/in/samuelmkaplan/

Twitter:https: //x.com/FiveSeasonsVC

Five Seasons Ventures: https://fiveseasons.vc

This episode is sponsored by EmergeOne, fractional CFOs for venture backed tech startups from Seed to Series B.

Get in touch at https://emergeone.co.uk/contact-us/ or join the CFO team at https://emergeone.co.uk/join-the-cfo-team/

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