Imaginary Ventures, the venture capital fund from Natalie Massenet and Nick Brown, is one such place to find backing for a start-up in the consumer brand space. It has just amassed $160 million for its second fund, more than double the size of its initial fund in 2018, and is looking to expand its investment portfolio.
“While we’ve continued to invest in the beauty, wellness, lifestyle, food and beverage, and fashion sectors, we’re also looking at a lot of new retail platforms, services and tools that are innovating on the consumer experience and transforming how brands operate and reach their customers,” Brown said.
Already this year, Imaginary has invested in cosmetics company Kosas, CBD tonic company Cann and mobile shopping app Foxtrot, but all of those came before March, when the coronavirus took hold of the West. But after a relatively quiet few months, Imaginary in June invested in Goodfair, an online thrift shop of sorts that promotes no consumption of new clothing, and then in Bread, a new hair-care brand aimed at curly or natural hair.
Since then, the company has invested in Nuggs, a brand of meatless “chicken” nuggets, and Pepper, an online food order system for wholesale and consumers. Its most recent investment is yet to be launched: Ami Colé, a new beauty brand “focused on melanin-rich skin,” as Massenet described it.
“We take a consumer- and product-first approach,” she added. “While many of our portfolio companies are leveraging tech and e-commerce to reach their audience, they all have excellent product at the heart of what they do, which is how we think about building our portfolio.”
The second fund, with capital raised from a mix of sources like high-net-worth individuals, strategic investment funds in luxury, beauty and retail sectors, as well endowments and pension funds, is looking to back even more brands. The goal is ultimately 15 or 20 investments, Brown said, noting that as the firm grows, “we’re focused on taking fewer bets and making more meaningful investments.” Investments through the second fund will range from $1 million to $10 million, but Brown said Imaginary’s work still goes “beyond capital, providing strategic and operational support to power early-stage growth.”
It seems to be working. Massenet said about half of Imaginary’s roughly two dozen investments are profitable. But even with an investment market seeming to cool on prospects that are focused solely on growth, without an assured path to profitability, Massenet sees it as vital that “entrepreneurs today aren’t just starting a business for the financial opportunity, but thinking about the fundamental opportunity for disruption that exists in their respective category.”
“Online discovery and distribution platforms have made it easier than ever to start a business, but it’s also more challenging to grow and thrive for the long term,” she added. “We believe the businesses that will endure, regardless of business model, will be those that build their strategies around an authentic understanding of their consumers and their market or industry. This understanding is at the heart of all the emerging brands we’re investing in.”
Even amid a pandemic, brands to be invested in abound. Brown cited Census Bureau data showing that applications to register new businesses grew 77 percent in the third quarter of this year, compared to the second quarter. Investments in U.S. start-ups grew 30 percent in the same timeframe.
“Historically, we’ve seen that economic challenges breed innovation.…We’re excited to see continued disruption and new business solutions emerge across every category,” Brown said.
For her part, Massenet sees “limitless opportunity” for Imaginary over the next decade.
“There’s a ton of disruption happening across the consumer landscape,” she said. “In 10 years’ time, if you close your eyes and imagine the best-in-class brands that are in your fridge, on your feet, on your skin, and that are changing the way we live across categories, our goal is to have backed the best of them.”
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