Granola doesn’t often enter the sphere of venture capital, but trends in investment and consumer goods are taking granola out of the bowl, and onto the cap table.
Online investment platform SecondMarket is partnering with CircleUp, a crowdfunding platform where accredited investors can make equity investments in up-and-coming consumer product businesses.
“For crowdfunding to work, it has to be done properly with expertise, curation, and due diligence,” said SecondMarket’s senior director of sales Bill Siegel in an interview. “CircleUp is vertically oriented in the consumer goods space and know how to find good deals. With this partnership, investors will have the opportunity to look at really unique niche brands, many in the artisanal food movement. The coolest part is investors can go to a store, eat and enjoy a product, and think its awesome. Now they can go online and bet the rest of the country will enjoy it too, and that the business will grow and become profitable.”
CircleUp combines the popularity surrounding small-production, high-quality products with the momentum of crowdfunding. VentureBeat reported in January that the platform helped five food-related businesses raised over $5 million by connecting them with investors. By getting featured on the site, these companies were able to the small companies the capital they needed to expand their production and distribution. Products included healthy fruit snacks, granola, all-natural butter alternative spreads, and kale chips.
SecondMarket is a registered broker-dealer that connects investors with investments. While investors may be interested in backing consumer goods companies, they probably don’t have expertise in this field. The partnership with CircleUp will make it easier for investors to find promising opportunities, because they are only presented with a selection of vetted, curated businesses.
“Right now, CircleUp is fielding inquiries from tons of consumer goods companies,” said Siegel. “They know where to source these deals, whereas most people have no background in this. Generalist crowdfunding platforms wouldn’t know how to originate these types of transactions that only comes with industry specialization. The second part is diligence to ensure the companies can execute and scale.”
This partnership is part of SecondMarket’s ‘investment education months’ initiative, which is designed to educate the members about “under the radar” asset classes. SecondMarket provides educational tools such as webinars and white papers, and if interested, the investors have access to investment opportunities within those classes. February is “early stage consumer goods month.” Other themes include health and education.
When asked if SecondMarket would continue to form partnerships like these, Siegel said it would only be with platforms or programs that are similarly dedicated to a specific vertical. The idea is to create specialized “stores” to shop for investments. Like shopping at a boutique rather than Walmart.
Back in November, SecondMarket announced a one-of-a-kind partnership with AngelList, a network and subscriber-base of angel investors, to let accredited investors fund startups for as little as $1000. These strategic partnerships support SecondMarket’s efforts to sustainably build out both side of its marketplace.