By Lynda Kiernan
New York-based Coefficient Capital initially set a funding target for its first fund at $150 million. However, that benchmark was surpassed with the fund announcing it has closed on $170 million in commitments from limited partners that include pension funds and endowments.
The fund previously raised $63.55 million by August 2019, according to an SEC filing.
Launched in 2018 and founded by partners Franklin Isacson, formerly a partner with consumer-focused CAVU Venture Partners and former director with Verlinvest, and investor and tech advisor Andrew Goletka, Coefficient Capital’s mission is to identify and invest in consumer brands that have the potential to succeed through multiple channels (e-commerce and retail), and that have the power to withstand market volatility and recession.
Meaning, brands align with the new ways that consumers are choosing and buying products, and that offer “a clear functional benefit to consumers at a price point that’s reasonable,” Isacson told the Wall Street Journal.
Drilling down, the fund will focus its capital deployment on food, beverage, pet food, and personal care brands that post trailing 12-month revenue of between $4-$5 million, according to the founders.
“The opportunity we saw was to create a fund that approached brand and consumer products from both directions – not just the traditional way of selling into brick and mortar but not just the D2C pure play,” said Goletka. “We wanted to bring those two together and be the solution for founders and companies that were serious about being successful in the omnichannel world.”
Isacson noted that potential portfolio companies do not need to be currently active in multiple channels at the point of investment, but the potential for multi-channel success needs to be present – something that is increasingly critical, as the current pandemic is proving. Factors such as lightweight packaging designed for ease of shipping is now a contributing consideration to the future success and strategic advantage for a brand.
“We were investing behind certain trends, that this omnichannel [movement] was really going to hit the grocery store and the drug stores and the Sephoras of this world in a way that obviously the bookstore and consumer electronic stores had been hit by it already,” Isacson told NOSH. “And we do believe that if anything, this will accelerate this shift.”
Investments will span Series A and Series B rounds, with commitments between $5 million and $15 million, with a preference to lead, rather than being a participant. Isacson and Goletka also said that they would prefer investment deals that involve gaining a board seat for the targeted company, and the fund will reserve the option to commit follow-on funding in subsequent rounds.
The fund has already invested in Nom Nom pet food, a provider of fresh, custom-portioned, vet-formulated meals for dogs that delivers personalized made-to-order pet food cooked each week in the company’s kitchen, that are then delivered ready-to-serve. And Just Spices, a German direct-to-consumer spice mix brand.
With a current team of six, Coefficient is looking to add two junior-level roles to help meet the needs of its portfolio companies that increasingly are developing and launching new products in-house rather than gaining them through M&As. In support of this shift in growth strategy Coefficient is pursuing a more hands-on approach through its proprietary tools that (among other things) help brands analyze their marketing, and costs associated with consumer acquisition.
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.