Funding Raising Capital DTC

Funding options to raise capital for your DTC brand

If you’re building your own consumer product brand, you will need sufficient funds. Research and development, manufacturing, and branding are not for free. As opposed to other ecommerce models, you usually have to pay for inventory before you sell it and that means cash flow is even tighter. And let’s not forget marketing is also paid.

All this leads most product entrepreneurs – or founders of DTC brands – to seeking outside funding to be able to scale. While banks may provide operating capital (for meeting ongoing daily expenses in the business), bigger injections allow brands to create an innovative product and grow customer base.

In this article, we list investor funds focused on direct-to-consumer brands with their basic requirements to help you find one that suits your business.

Read more: Best practices for direct-to-consumer brands

Venture capital for direct-to-consumer startups

Forerunner Ventures

https://forerunnerventures.com/

Type: Venture Capital

Fund size: $360 million (source)

Help with: consumer and consumer cycle understanding, operational expertise, strategic planning, marketing/ customer acquisition, and team building

Interested in: B2B/ B2C commerce – innovative brands, disruptive retail experiences and models, marketplaces, and some enabling technologies, SaaS and infrastructure platforms

Location requirements: not specified

Forerunner Ventures’ portfolio of companies is awe-inspiring. Every well-known DTC brand is on there – Away, Glossier, Ritual, Hims, Birchbox, Cotopaxi, etc. The fund’s focus is the changing consumer trends and how new brands fill the gap on the market.

Samaipata

https://samaipata.vc/

Type: early-stage founders’ venture capital fund

Fund size: €30 million (source)

Possible investment: first one € 500k – € 750k; total € 2.5m- € 3m per company

Help with: fundraising, talent and hiring, B2B sales, product, marketing

Interested in: early-stage marketplaces and digital brands

Location requirements: Europe

Samaipata is a mission-driven fund dedicated to emerging brands in Europe. Their investing philosophy is explained in their Customer Love Framework, a friendly playbook for the busy brand founder.

Collaborative Fund

https://www.collaborativefund.com/

Type: venture capital

Fund size: $250 million

Help with: building successful, impactful business

Interested in: Cities, Money, Consumer, Kids, Health

Location requirements: N/A

The founders believe in financial success while doing good and invest in such companies (like For Days). They also got support from influential people such as Nicholas Negroponte, Tony Hsieh and Pharrell Williams.

Obvious Ventures

https://obvious.com/

Type: venture capital

Help with: building a successful business while doing good for the world

Interested in: companies doing positive social and environmental impact; startups that create new solutions to big world problems in a profitable and scalable way.”

Location requirements: N/A

What’s interesting about Obvious Ventures is that they are really purpose-driven and they even encourage founders to include values and mission on their term sheets, which they call The World Positive Term Sheet. Part of their portfolio are Boon Supply, Diamond Foundry, Good Eggs and Miyoko’s Kitchen.

Sherpa Capital

http://sherpa.com/

Type: venture capital

Help with: operations, branding, strategy, global expansion and customer loyalty

Interested in: technology-enabled companies

Location requirements: N/A

The fund focuses on technology-backed products that have the potential to become household names. Curology, Brandless, ipsy, Quip, Stance, Rent the Runway are all among Sherpa’s investments.

Sunstone Capital

http://tech.sunstone.eu/

https://blog.maxniederhofer.com/setting-up-a-dtc-yc-in-europe-rfc

Type: venture capital

Possible investment: seed (€100K-€500K) and Series A (€1-5€M)

Help with: early-stage validation, team, product-market fit

Interested in: direct-to-consumer brands

Location requirements: Europe

This is a small branch of Sunstone Capital, actually, solely dedicated to emerging DTC brands in Europe. Their bigger focus is tech but since the boom of DTC brands they decided to dedicate a separate fund just for this sector.

Waterworks Ventures

https://watertowerventures.com/

Type: seed and early-stage venture capital fund

Possible investment: $100,000 – $500,000

Help with: business development, strategy, profitability

Interested in: “industry verticals redefined by connected devices, including commerce technologies, marketplaces, internet infrastructure, reimagined retail, direct to consumer (DTC), real estate tech, digital media, gaming, augmented reality, and AI.”

Location requirements: Southern California, the Bay Area, and New York

The fund wants to work with founders building products for the connected consumer. They look for passion, global ambition and willingness to revolutionize an industry.

Homebrew

http://homebrew.co/

Type: seed venture capital

Help with: operations, recruiting, networking, growth and scaling + a supportive community

Interested in: mission-driven teams, innovative and tech-backed solutions

Location requirements: not specified, portfolio features US companies only

The fund was created with the desire to do things differently from traditional venture capital firms. The founders Satya Patel (formerly VP Product at Twitter) and Hunter Walk (formerly led consumer product management at YouTube), and the advisors around the fund have vast experience in tech and innovation and believe in Bottom Up Economy.

Hybrid funding for direct-to-consumer startups

Spark Capital

http://www.sparkcapital.com/

Type: venture and growth capital

Fund size: $3 billion

Interested in: “amazing” physical products and experiences

Location requirements: unspecified

Spark is a fund oriented towards innovation, disruptive tech and visionary products. They support bold products and vouch to help throughout the entrepreneurial journey. Some of the companies they backed are LOLA, Smile Direct Club, Waifair and BloomNation.

CircleUp

https://circleup.com/

Type: capital in the form of equity (for products development and growth), credit (for working capital, incl. a revolving line of credit), or both

Possible borrowing: up to $3 million

Help with: growth at early stage for direct-to-consumer brands; consumer insights AI

Interested in: consumer product companies selling wholesale or direct-to-consumer ecommerce; vertical such as Food & Beverage, Personal Care, Apparel, Household Products, Electronics, Pets, Infants, etc.

Location requirements: US-based

An in-house machine learning solution called Helio gives the CircleUp-backed companies insights on marketing performance, projected revenue, brand positioning, etc. to base strategic decision on. Their portfolio includes Banana Brittle, Kettle & Fire, and 4505 Chicharrones.

Loans for DTC businesses

Clearbanc

https://clearbanc.com/

Type: lending

Possible investment: up to $1 million monthly

Help with: growth capital (for marketing purposes)

Interested in: any online businesses

Location requirements:  N/A

Clearbanc lends growth capital, meaning cash for ads so you grow. Repayment is a percentage of future sales. The application process is entirely online and negotiations of terms are possible. They take no equity – it works like a banc loan.

Investor Presentation

It seems like the options for funding your brand grow every day and no wonder – DTC brands are expected to be the public’s darlings and prefered choice in the future.

When meeting with investors, you will surely need to present your business performance and make it clear you understand your numbers. (What questions do investors ask direct-to-consumer brands?) This will convince them you know what you are doing and will show them the potential of your brand.

They will look for:

  • revenue trends
  • customer loyalty, customer lifetime revenue, repeat rate, time between orders, average order value
  • product performance report
  • marketing performance summary
  • cohort analysis and customer insights
  • opportunities for building customer relationships

All these are available in Metrilo

Learn more

Prepare for investor meetings with accurate data

 

About the author

Murry is co-founder and CEO of Metrilo. Helps the brands of tomorrow grow with lessons from SaaS: https://medium.com/@murryivanoff

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