Brands that are starting to gain some traction, but need a little help and some fresh funds have a new place to turn — The Seed Lab.
The group bills itself as an “entrepreneur-led early-stage venture fund” and is looking to leverage the expertise and experience of founding partners Dany Levy and Jesse Cole and chairman George Hornig.
Levy founded Daily Candy, while Cole was chief executive officer and chairman of Haute Hippie and Hornig has a long background in finance with c-suite roles at Deutsche Bank Americas, Credit Suisse Asset Management, PineBridge and more. They have all put their own money into the venture and are looking to bring in more outside backers, which could coinvest as Seed Lab expands its portfolio.
The company has taken stakes in beverage brand Dirty Lemon and collapsible drink company Stojo. And it’s on the hunt for other brands across the consumer space.
“We look at ideas and vision, but few and far between are the visionaries that can also grow a company to profitability and scalability and get out of their own way,” Levy said.
Levy recounted that she hired around her weaknesses when she was building the recommendation newsletter Daily Candy and scaled the business with help of Hornig, the company’s first chairman.
It’s a role that Hornig fell into.
While working at the upper reaches of mammoth financial companies, Hornig found he was “learning more not from my direct reports, but players down the organization.”
As those people caught the entrepreneurial bug and struck out on their own, Hornig became an active investor and started to bring his global and capital expertise to budding businesses.
Now Seed Lab is looking for brands that, like the early Daily Candy, have the potential to scale.
Levy said: “We look at companies that are still too small for a traditional VC. We find these companies early on and do a lot of handholding and help them to the next phase.”
At Stojo, Hornig serves as chairman and advises on operations, marketing, branding and more. And Hornig and Levy have both been helping out at Dirty Lemon, which has been focusing on alternative beverage formulations and distribution channels.
Given the pace of change and innovation in the market and the low barriers to entry, particularly in sectors like beauty, dealmaking has become more active among smaller companies, where investors buy in early and strategic players are scouting the market.
“A lot of these bigger companies are looking to the entrepreneurial world to be their research and development,” Levy said. “The number of deals in our pipeline is quite overwhelming.”
But it’s also a part of the market that is always in flux and many companies are still very small and need refining, especially to appeal to larger investors.
“We have seen companies that feel good that may not have delivered the proof of concept that the traditional VCs need,” said Cole, noting he and his partners can step in and help develop a business. “We’re not afraid to get our hands dirty.”