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Harbinger Ventures Founder On Mitigating Risks As Early-Stage CPG Private Equity Investors

Harbinger Ventures, which prides itself on providing growth equity and strategic resources to the next generation of female entrepreneurs, has just led a $7.6m series C funding round in the California-based artisanal food brand, 4th & Heart.

The brand, primarily known for its gourmet flavored line of products featuring grass-fed ghee, hopes to use the newly-raised fund to grow its presence and innovate products for the growing health-conscious consumers who are attracted to better-for-you alternative cooking essentials and snacks, according to CEO and founder Raquel Tavares.


4th & Heart currently carries 21 skus of ghee butter spreads, oils and chocolate spreads, and is available in over 10,000 stores across the U.S., including Amazon, Whole Foods, Kroger and Sprouts.

In September this year, the company will expand its footprint to Target, which will be its first expansion into mass retail, and will launch a line of grass-fed collagen ghee protein and energy bars – WOKE.


The bars, which were debuted at Natural Products Expo West, will be available in a variety of flavors, including cookie dough, café latte, dark chocti and peanut butter.

4th & Heart said these products contain whole pasture raised eggs, its signature ghee, maple syrup and stevia. Containing 12g of protein per serving, they are also free of soy, lactose, gluten, palm oil, inulin and sugar alcohols.


Resonating with keto trend

Founder and managing partner of Harbinger Ventures, Megan Bent, said in a prepared statement: “4th and Heart is a trailblazer in the superfood category… Raquel and her team are driven not only by their strong vision for their own brand, but by their deep understanding of their target consumer.”


She noted that 4th & Heart also benefits from the keto diet trend thanks to the high level of healthy fat in its products.

“Ghee-based consumers for example may be using [the ghee-based products] as an alternative to a creamer in addition to cooking with it, so keto and other new trending diets have expanded the usage occasion of their great products,” Bent said.


The investment round also includes funding from other leading venture capitalists with expertise in the food and beverage space, including Cambridge Companies SPG, Blueberry Ventures, Boulder Food Group, Monogram Capital Partners, Finn Capital Partners and Everplus Capital.

Filipp Chebotarev, COO and partner at Cambridge Companies SPG, added: “Ghee offers functionality to a traditional category staple with 4th & Heart as the clear winner on shelf.


“As the ghee market continues to expand, Raquel and her team are positioned to be the category leader in velocity, innovation and consumer engagement.”

Strategic buyers

Down the road, Tavares hopes her company will be invested and ultimately acquired by a major CPG company. She was quoted saying: “Now that we’re larger in revenue, we’ll probably start getting inbound calls.”


Asked what particular CPG companies that are fit to buy 4th & Heart, Bent explained to me: “The most likely outcome of our buyers are often strategic. They really value where this company can fit in their portfolios, and that stems from a couple of things:

“One is that they are looking for growth in something they are struggling with on their own; they are looking for access to consumer segments that their existing portfolios are no longer connecting with; they’re looking for capabilities, whether it’s marketing, brand building or innovation.”


She added: “As 4th & Heart continues to demonstrate its success of driving the category growth and connecting with the next generation of consumers in an authentic way, we think they’ll be a great strategic acquisition candidate.”

Good leadership and business fundamentals

As a private equity firm that mainly focuses on investing early-stage consumer brands, Harbinger Ventures’ secret of mitigating investment risks is to keep its portfolio lean and ensure all the brands represent a cohesive vision, according to Bent.


Already having Sarah Jones Girabaldi-created Miss Jones Baking Co. and baby food brand that was co-founded by actress Jennifer Garner Once Upon a Farm in its portfolio, Harbinger Ventures also injected cash into Cora that focuses on women’s lifestyle and a quarterly hand-selected wine subscription service company called VINEBOX earlier this year.

“We always like to say that we invest behind founders that are talented enough to be successful with or without us,” Bent said. “We’re hoping that our involvement as a capital and thought partner can help accelerate their success.”


She stressed that having “good business fundamentals are a must” for a brand to be considered as an investment prospect by Harbinger Ventures.

“The primary KPI that we really look for is capital efficient growth,” Bent noted. “From our perspective, it’s an executive or founder who has not only delivered exceptional growth, but done it in a very capital efficient way. That points to a couple important things:


“One is product market fit – you are not subsidizing the product or the consumer behavior, and there is a natural success in what you’ve built. The second is really good leadership – intelligently allocating your resources in an optimal way in order to deliver that efficiency.”

To maximize its investment returns, Harbinger Ventures has also avoided fad-based consumer trends. Instead, it is pursuing opportunities that are “sizable and characterized by regular consumer use,” she added.


However, the biggest challenge of investing in early-stage companies is usually the lack of a complete track record of their growth.

Bent said: “The data isn’t perfect, but there is quite a bit of data and I think experience and time in the industry will allow you to get more and more comfortable and confident in interpreting that data, and really using it to form the foundation of your investment strategy.”


Harbinger Ventures plans to make two separate investments in the personal care and better-for-you food categories, respectively, by the end of 2019.

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