TLDR:
- Private equity is playing a bigger role in consumer startup funding as venture capital funding decreases.
- PE firms are investing in both early-stage and more established consumer brands.
Private equity funding is becoming increasingly prominent in consumer startup funding, filling the gap left by a decrease in venture capital funding. While venture capitalists traditionally invest in early-stage companies based on growth potential, private equity firms are now making controlling investments in more established companies to help sustain profitability. This shift has led more founders to turn to private equity to extend their runways and navigate challenges in obtaining VC funding.
Key points in the article include:
- PE firms like Great Hill Partners and L Catterton are showing a growing interest in investing in consumer brands at various stages, including earlier-stage companies.
- Recent success stories, such as Nutrafol and Tula Skincare, backed by L Catterton, are attracting more brands to seek private equity funding for growth and eventual exits.
- New private equity funds, such as SKKY Partners and Brynwood Partners, focused on consumer brands are emerging to provide financial support to startups.
- PE-backed brands, like Wthn and Boll & Branch, are leveraging private equity investments to fuel expansion, launch new products, and enter new markets while maintaining profitability.
- Both venture capitalists and private equity firms are increasingly looking for scaled businesses that are profitable, signaling a shift away from investing in conceptual or early-stage ventures.
