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 Ep.7-Guest Series: Cristina Nuñez, Co-Founder & General Partner, True Beauty Ventures on What Beauty Founders Don't Know

In this guest series episode of JumpStart Beauty Brand Podcast, Rohit Banota spoke to Cristina Nuñez, an extraordinarily multi-talented & super intelligent Co-Founder and General Partner of True Beauty Ventures, focused on emerging beauty and wellness brands.


9:31-What distinguishes True Beauty Ventures from other funds?

17:42-What does True Beauty Ventures look for in a potential investment?

24:24-What beauty founders usually get wrong about retailers?

26:47-The dating and selection process that TBV follows

35:18-How does TBV support beauty founders and brands post-investment?

38:29-Founder traits that scare TBV the most post-investment

41:12-Winning traits of beauty founders who partner with TBV

44:12-How to apply to True Beauty Ventures?

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[00:00:31] [00:01:00]

[00:01:09] Rohit: Hey Cristina, I welcome you to Jumpstart Beauty Brand podcast, which is all about what is it that beauty founders do not know, especially when it comes to growth, profitability, and scaling of their brands and businesses. So for my viewers who do not know, I would like you to first introduce yourself to them and then you can dive deep into your entrepreneurial journey, the transition points and how did you land at True Beauty Ventures. And then I’ll have a follow up on the same, Cristina. Great.

[00:01:39] Cristina: Thank you.

[00:01:39] Thank you so much for having me, really happy to be here. My name is Cristina Nunez and I’m the co-founder and General Partner of True Beauty Ventures.

[00:01:47] We’ll get into True Beauty I’m sure a little bit later, but we are a beauty and wellness focused emerging growth fund. I started the fund in 2020 alongside my co-founder and partner Rich [00:02:00] Gersten. And we have been off to the races since we started. But I have to say my entrepreneurial journey was not a straightforward path by any means.

[00:02:09] I think most people’s journeys are not. And I may have ended up in a venture capitalist seat, but I don’t consider myself a venture capitalist. I consider myself a sector specialist. And really that sector specialization was born out of my personal journey. I started my career in finance.

[00:02:33] I was an investment banker at UBS covering consumer and retail. I did that for three years. So I lasted those grueling investment banking years. I then moved into private equity, my first private equity fund, which was L Catterton. A consumer focused investment fund. The largest now today not when I was there.

[00:02:53] We were a smaller team, but I focused on consumer more broadly. I was an associate for a couple of years.[00:03:00] I met my co-founder, Rich Gerson at Catterton, and then he recruited me over to another private equity firm called Tengram Capital, which was also focused on consumer. And I was a senior associate there.

[00:03:12] So I had spent the, at that point in time, the bulk of my career in finance and I always had this itch to do something a little bit different to, make my experience a little bit more well-rounded. I loved consumer and I loved investing, but I always felt like I was missing a core part of my experience, which was, being on the company side and getting operating experience.

[00:03:33] And there was an opportunity at one of our portfolio companies called Laura Geller Beauty, which was a makeup brand. Luckily for me, I loved beauty. I. To take a step back. I was always the the friend in the friend group that would do people’s makeup when it was time to get ready. I was putting on all the lotions all the skincare, even when I was in high school.

[00:03:54] So going into college I would always tell my friends to apply their skincare. And it just was a part of [00:04:00] my life growing up and I was, haircare as well, I was always doing my hair every morning, ready, getting ready for school, even as a young child. So jumping into the beauty world was, I was very excited about that.

[00:04:11] I just didn’t know what I was about to experience, which is, beauty’s an amazing category, but man, it can be tough. And the industry is can be grueling and cutthroat at times. So I jumped into the deep end of the pool. I worked across various functions at Laura Geller to really experience, really, how does the company work first and foremost?

[00:04:31] And then what are the nuances that I need to learn about beauty? So I spent a lot of time on supply chain, a lot of time in the ops team, really understanding the nuts and bolts. But then I played across various functions. Call me a Jill of all trade, put me in coach wherever you need me to be.

[00:04:45] That’s what I did so I could learn the business. Eventually, I became the Chief of Staff to the C E O and after three years, we successfully sold the business to Warburg Pincus, which was a great accomplishment. At that point in time, I didn’t know what I was gonna do. Maybe go back into private equity, [00:05:00] take that experience and go back into pe.

[00:05:01] But the buyers of Laura Geller had different plans for me and they wanted me to run a skincare brand that was in their portfolio called Clark’s Botanicals. And I partnered with the founder Francesco Clark, who’s an amazing founder. But he had been building his business for a long time and he was doing it alone.

[00:05:17] It was him and a couple consultants. So I came on board with my business background and really helped supercharge growth, helped develop a team, helped expand further in from D T C into wholesale. We did a massive rebrand of the brand and really beautiful new packaging and logo and great formulation.

[00:05:34] So I loved that experience at the helm of that company. Really building something from, very small to slightly larger in a short period of time. And really that indie beauty early stage. That was what I was doing hardcore. And I loved it. And so now flash forward, as I created this venture with my partner.

[00:05:56] That experience of being in the, founder [00:06:00] G M C ,is so valuable to what we’re doing today because I had a firsthand, view a firsthand seat at the table there. And I could actually apply the learnings to helping our small businesses grow. And more importantly, I had a ton, I have a ton of empathy for founders.

[00:06:15] What they’re going through because man, it is difficult. It’s a lonely job. And you’re, it’s 24 -7. In this role today, I am bringing that kind of finance investor experience within consumer, my beauty operating experience and bringing them together to True Beauty, and, spending a hundred percent of my time now in this amazing sector that I love.

[00:06:36] Rohit: Amazing, amazing. Cristina, I have to say, your career path and transitions, I’ve heard a lot of other episodes, podcasts, where you have been and I’ve read about you, it’s just amazing. The transitions are very interesting. You moved straight from, very rarely an investment banker would make, there’s no judgment, because I know quite a few of them, they’re very good at decks, slides, et cetera.

[00:06:58] But you have made the transition, from [00:07:00] hardcore corporate, to now, Intimate, indie beauty category.

[00:07:04] So I think that’s just amazing and I love what you guys are doing. Thank you. Doing with True Beauty Ventures. So when I started out, I wrote my plan on the paper. I didn’t achieve it, but I saw you guys coming in after one or two years and doing everything that I dreamed of. And in such a short span of time, this just wows me, in such a short, few years, two or three years, you are one of the best portfolios possible in emerging beauty brands.

[00:07:28] And there are a lot of other, VCs out there or funds who try to support, but I don’t see their trajectory as amazing as yours. So what is it that makes True Beauty Ventures different?

[00:07:38] Rich and you, I see you’re very personable with the founders, the kind of relationship you have. I might not see other ventures posts on my feed maybe, so that could be the reason. But whatever I’ve seen of you and your interactions, plus the brands, every brand is doing phenomenally well, by the way, just so you know, Youth Foria founder, Fiona Chen?

[00:07:58] I had spoken to her [00:08:00] before she worked with you people and I’m in awe of her too.

[00:08:02] Amazing. Yeah,

[00:08:04] Cristina: talk about a founder, who, she does not take no for an answer. She will break down a window or a wall. If a door shuts in her face and she knows what she wants, and she’s laser focused in how to achieve it I’m wowed every time we, I, talk to Fiona and her, just drive to make things happen for her and for the brand.

[00:08:27] And she’s wicked smart, very creative but also very business savvy. And that’s a quality of founder, quite honestly, that really helps make for a great partnership with us, but also a successful investment when they’re able to be the creative marketing, brand visionary, but then they also have the business side of it

[00:08:48] and can, read spreadsheets and, analyze data and build models.

[00:08:53] That’s her. And then she adds another fundamental element, which is, she can create demand. She can go [00:09:00] on social media and create demand for her brand. She can connect with people, she can create community, she can go on tv. She was on Shark Tank, so she is the trifecta. And we love that about her.

[00:09:09] I just wanted to add that plug for her. She’s awesome.

[00:09:13] Rohit: Of course she deserves it. Perfect. So yeah. So over to True Beauty Ventures. Yes. What is it that distinguishes you and how come this hyper growth for you? Of course, this is what you bring to your portfolio, but then the other ventures have not had this.

[00:09:27] exponential growth, if I may put it this way, for your venture itself, what distinguishes you? How did you like figure out the formula? I know Rich has a great background in beauty, but of course it’s a team.

[00:09:37] Cristina: Yeah, no, absolutely. We get asked this all the time, what’s your special sauce?

[00:09:42] And at the end of the day, this is all we do. Beauty is, and wellness together. And it’s, there those categories are converging quite nicely, but this is all that we do. We live and breathe this industry, so we’re in it. And you mentioned, we’re very [00:10:00] present on social media.

[00:10:01] We’re very active in the community. We have a mentorship program that we launched. We partner with other accelerators

[00:10:09] and mentorship programs to also provide insight and dedicate our time to it. We’re quoted in publications all of the time and just like a beauty brand founder,

[00:10:20] we are founders, we are building a brand as well. So for us, that’s part of the job is, yes, we have to be amazing investors, we have to be excellent at picking investments and managing them and nourishing them

[00:10:34] and nurturing them and having them, helping them grow and exit hopefully

[00:10:38] and returning money to our investors.

[00:10:41] But we’re also building a beauty brand. For everything from our website to our merchandise to the way that we present ourselves is so important because if we don’t do a good job of that, how are we gonna help, our brands do that. We have to be visible to not only

[00:10:57] our own portfolio, but to [00:11:00] other brands out there, because founders aren’t always thinking about investors.

[00:11:04] Investors are not always top of mind. So when we are that present, we can be top of mind

[00:11:09] for people who are thinking, you know what, maybe it’s time for me to raise money, and I’ve seen True Beauty Ventures.

[00:11:14] Maybe they could be an interesting partner. So we’re top of mind for them. But at the end of the day, the sector specialization allows us to be better value added partners to our portfolio in ways that I think other funds who maybe don’t spend as much time in the sector, they don’t have that luxury.. They don’t have that unfair advantage of being more of a strategic investor than we are a financial investor.

[00:11:41] The way that we provide, our platform that we’ve developed and how we provide

[00:11:46] services and our in- service to our portfolio companies, so the level of conversation we have with them,

[00:11:51] whether that be around distribution decisions that they may needing to make or how to scale in [00:12:00] a retail environment to how to acquire new customers, to how to

[00:12:05] position their brand in a differentiated way that is able to engage with their community

[00:12:10] to how do I build out my team?

[00:12:12] These brands are all growing quite quickly, so they’re constantly thinking about organizational design and talent.

[00:12:19] So help, we’re helping them vet. People in the industry. Luckily, between my co-founder and I, Rich, we know a lot of people in the industry, so we could be very valuable to helping them bring on the right people to grow.

[00:12:31] Our team, our junior team is amazing. We have three other women. So we’re a team of majority women. 80% of our investment team we’re women, which is amazing. And, they’re also incredible specialists in the industry and can add a ton of value,

[00:12:47] A lot of analysis that we do for our companies.

[00:12:49] Be it on the, financial side, on the sell-through data that they get, helping them understand it

[00:12:54] and cut it different ways and provide insights not only across, what’s going on in their business, but across the whole [00:13:00] portfolio.

[00:13:00] We have an entire portfolio of beauty brands that we could, we could leverage, analytics around what’s going on from a performance perspective and be able to provide more informed decisions.

[00:13:09] Not to mention, we have our finger on the pulse of the rest of the, most of the industry and what’s going on.

[00:13:15] So I just think we can be a better partner that could answer questions and if we don’t know the answer, we could very quickly find an answer or provide a resource to do that.

[00:13:25] And I think that’s the huge benefit. There’s a lot of other great investors that are investing in the space, don’t get me wrong.

[00:13:31] We love partnering with some of them that we think have a real good eye and understand the industry better. But we think what we have the benefit of focus,

[00:13:41] we think really outweighs what others can offer, but that’s, of course, we’re drinking our own Kool-Aid.

[00:13:46] But I think what we hear from our portfolio is that it really does matter and that’s the most important thing.

[00:13:51] Rohit: That’s amazing. I’ll share something with you ,every time I ask people about their secret sauce.

[00:13:57] People who are doing very well, or [00:14:00] funds or brands who are doing very well,

[00:14:01] their answer is very fundamental in nature. Very simple to understand. And every time I ask people, who, maybe are struggling,

[00:14:08] are still trying to figure it out, there’s a lot of jargon there.

[00:14:11] And I don’t see fundamentals. So I love it. I think clarity is so important and I think you have it. And especially, you’re working in beauty, all the brands are in beauty and wellness,

[00:14:20] for example, health food is very different from beauty.

[00:14:22] If you buy a protein bar, you’ll love it. You’ll eat six in a day. If you buy a skin serum, if you love it, you cannot eat it.

[00:14:28] Cristina: What’s so interesting about that? I love that you brought that example up because we were speaking to a very senior woman at Ulta

[00:14:36] and she made the comment to me, and I love this, she said, beauty unlike other consumer categories, consumption is pretty endless.

[00:14:46] Unlike food, right? You’re limited by the amount of calories you can really have in a day. Maybe you have those six bars ’cause you love it so much, but I guarantee you’re not gonna feel well. However, you could really, you’re limited in beauty by [00:15:00] your shelf space,

[00:15:01] like our bathroom shelfie behind me here is getting quite full.

[00:15:04] As you can see, we’re gonna have to start moving some stuff around as we make investments. But, you’re limited by the amount of physical space you have. Of course, you know your, how much of your wallet you wanna dedicate to beauty at the end of the day. But I can tell you that it’s a category that when something works for you when something

[00:15:22] changes how you feel and obviously how you look, you stick with that and you, so you’re very loyal on the one hand, but also, you wanna try new things, you wanna play, you wanna discover.

[00:15:36] And that’s why environments like Sephora, Ulta do so well because, you can come in thinking you’re gonna get one thing and you walk out,

[00:15:43] spending multiple hundreds of dollars later because you encounter new brands.

[00:15:47] And that environment of playfulness and discovery is really just enjoyable. And we love that about the space. I’m sure you’ve seen all the data. The beauty continues to grow and, [00:16:00]double digits. The latest Circana data for Q2 confirmed again that prestige beauty is growing faster than mass, although mass continues to grow, but prestige grew in both dollars and units,

[00:16:11] which is amazing to see. And that was at 15% growth. So it’s a sector that’s resistant to many different situations, be it a global pandemic or a recession inflation, et cetera. It has its ups and downs and some categories can be cyclical of course, but it’s an amazing place to play in, which is why I think you’re seeing so many investors wanting to come in and wanting to come in early.

[00:16:35] Because it’s a category that you wanna jump into earlier. So we get so many interesting calls from larger private equity funds that call us to say, oh, we really love this person in your portfolio and or this brand in your portfolio. And I’m like, you have no business talking to them. They’re so teeny tiny.

[00:16:51] But I think they also recognize that they have to come in earlier and start building those relationships earlier.

[00:16:58] Rohit: Absolutely. Absolutely. No, I’m [00:17:00] absolutely with you. Beauty is rooted in evolution, it is so basic. Of course men,

[00:17:05] they’re starting to use beauty. I need to use more. It is still very nascent compared to, and I have a theory, I think nobody has still cracked why men need beauty. I think nobody has cracked the problem. I have my theories on that.

[00:17:17] I’d love to

[00:17:18] Cristina: talk to you about that. Maybe we’ll do another podcast about it.

[00:17:21] Rohit: I would love it. I would love it. But you are bang on, the discovery that Sephora has created,

[00:17:25] and I’ve spoken to the CXOs of L’Oreal, et cetera, they’re in awe of what Sephora has done. They’re like absolutely wowed by the trajectory that Sephora has had.

[00:17:33] But, now coming to True Beauty Ventures, Cristina, tell me what, the big question that every founder maybe wants to know, is what do you look for in a founder, in a brand, in an idea

[00:17:44] so that you decide to have those brands in your portfolio, and what’s the selection process like?

[00:17:49] Cristina: We get asked that a lot. What do you look for in an investment? And I wish I could tell you it’s a short list. The reality is, and I feel [00:18:00] for founders that are launching brands today, because the bar keeps getting higher. Because to achieve success and scale requires just more.

[00:18:08] And so there are, we have a number of, I think we probably have 10 or 11 different buckets of areas that from our, in,

[00:18:15] in our detailed criteria list that we double click on when we’re evaluating an opportunity,

[00:18:21] once we’re already in diligence and we’re going deeper. But if I had to zoom out, because I’m not gonna go through those 10 or 11 with you.

[00:18:29] If I had to zoom out, I always like to boil it up to positioning, product and people. And sometimes the people part comes first. But at the end of the day, it’s a very crowded, & saturated market. Really because it’s not that difficult to launch a brand. You just have, need to have a good idea.

[00:18:47] Someone to run a low M O Q, small run for you, something to package it in,

[00:18:52] and you can put up a website and you’re off. It’s not that hard to launch. But it’s very difficult, very capital intensive to scale.[00:19:00] So, what happens is you have many brands in the industry that are launched.

[00:19:04] We probably have seen, in the three and a half years that we’ve been in business,

[00:19:09] we probably have seen 1400 brands. We’ve made 14 investments, so it’s roughly one out of every hundred that we say yes to. And we say no a lot of times to brands that are great. They check most boxes, but they don’t check them all.

[00:19:25] And I think that’s the hard part. But, at the end of the day when it comes to. Positioning, because it is a crowded space. It’s that differentiated, unique brand positioning that tells a story, that tells a story that quite honestly resonates with consumers, that engages people, that has created some sort of momentum.

[00:19:47] But that positioning has to be backed by incredible product. In this space, you could probably get someone to buy something once, but, that consumer is pretty discerning. If your product does not do what it says it’s going to do, they will [00:20:00] not buy it again and they will talk about it. So you have to have excellent product that really does

[00:20:06] you know what it says. Ideally, you have product that has real IP behind it. Now we’re moving towards science backed and everything has to have strong efficacy, proof points, clinical studies and everything like that, which again, the consumer is demanding.

[00:20:21] So you have to have that product that delivers on all of those promises, including

[00:20:25] your own brand mission promises. If you’re about sustainability, if you’re about clean, if you’re about inclusion, You name it, right? You have to make sure that the brand positioning and the product that they support, that overall brand story.

[00:20:37] And then the people, when it comes to the founder in particular, we spend a

[00:20:43] lot of time getting to know founders. And that’s because one, we talked about Fiona earlier on, and her ability to lead the

[00:20:50] business, drive the vision and create demand. It’s important that a founder can do all of those things.

[00:20:55] That’s become much higher on our list. And then it becomes, and it’s all about partnership at the [00:21:00] end of the day, do you,

[00:21:01] are you like-minded with this founder? Do you have the same vision for the brand and alignment on the path to growth and the path to

[00:21:08] profitability and scale and all of those things?

[00:21:10] So how do you find that out? You don’t find that out during diligence. You find that out over time. You find that out developing and building relationships with them. And in our case, that’s like sharing knowledge and insights and guidance along the way, even before

[00:21:22] any money is exchanged even before a deal’s closed.

[00:21:26] So that part takes a lot of time. And if we don’t have that connection with a founder and we don’t believe that they’re either credible in the space or have a very true compelling story, it’s not gonna work. The other part about people is you’re investing very early usually right? So it’s usually the founder and not that big of a team.

[00:21:43] So if there is a team in place, that’s fantastic and vetting those people. But at the end of the day, the onus falls on the founder and the investor, in this case us,

[00:21:52] to help them build out their team successfully. ’cause people are everything at the end of the day when it comes to execution.

[00:21:57] I think the last thing I will add, [00:22:00] because it matters a lot more to us,

[00:22:01] We have always been huge believers in omni-channel distribution. And even when, even back in the day when people said Retail is dead and it’s all about D T C and a lot of, I have to say a lot of VCs believed that we’ve never believed that because in our space, that doesn’t work.

[00:22:17] And you can only scale so much when it comes to D T C and we just talked about how amazing the retail

[00:22:22] experience is to discovering product and all that. And the specialty beauty segment within beauty is amazing. What Sephora and Ulta have done, for us to really feel comfortable getting in early, there has to be

[00:22:35] either a retailer, a key anchor retail partner already involved, one that’s about to be launched, or really significant interest from one of the two, usually Sephora or Ulta. That gets us excited because, that, we know is a huge piece of ultimate success and scale and exit. So I would say, there’s so many other things I didn’t hit on D T C metrics.

[00:22:55] I didn’t hit on margin and profitability. My goodness. You need to be set [00:23:00] up for success when it comes to your gross margins. Gross margins usually equal capital efficiency. And that’s your best path to profitability. And in this space, like gross margins should be good. And they vary by category, of course, but they should be strong.

[00:23:13] So we have, as you can imagine, a very extensive list, but to not bore you too much,

[00:23:18] those are the ones I’d highlight.

[00:23:21] Rohit: I love them and you’ll never bore me. Don’t worry. I just, everything you’re saying, I love this stuff so much. So three follow up questions on those. I’ll keep them short.

[00:23:29] One is: in the end you do look for validation outside of your intellectual exercise or your observation because no matter, there’s nobody on the planet who can just look at some paper or some data number and say, “this will do well.” So obviously, I wouldn’t call it a heuristic, I would call it the reality of the market that yes Sephora is deeply interested.

[00:23:50] They wanna list it or they are doing well in, in some place, right? And that is what sometimes, I think founders don’t get. They think, I get the money and I’ll do that. But you [00:24:00]need, Paul Graham says, the founder of Y Combinator says, “Build something that people want.” So many times founders forget this.

[00:24:06] They are, they think VCs or the investors are an answer to everything. And of course, you are the biggest, one of the biggest enablers. But then God helps those or investors help those or market players help those founders who help themselves. Yes. So you bang on.

[00:24:21] Cristina: Just to add to that point, quickly.

[00:24:23] We have this conversation all the time when it comes to brands saying I’m gonna launch Sephora and my

[00:24:30] business is going to triple, quadruple in the next year. And we always say just first of all, that’s not gonna happen. That’s just not how it works. But retailers will do wonders for you in terms of visibility and support, especially indie brands.

[00:24:47] They do, they do a good job of indie brands giving them the chance and giving them like, whether it’s next big thing at Sephora or, giving them special placement online and programming and all of that. But retailers don’t [00:25:00] create demand. Brands create demand, and we always tell that to our brands.

[00:25:05] You can’t rely on just that launch, that’s just phase one of your journey to get on the

[00:25:11] shelf, which is very competitive, by the way. So kudos to you for getting on the shelf, but then to stay on the shelf is incredibly difficult, and then to succeed and outperform those targets that the retailers give you requires so much investment outside of what you’re doing in store.

[00:25:30] So yes, it falls on the brand, it falls on the founder if they’re able to have that superpower of creating demand as well, or bringing in the right people to do that. And investors too, we can only, we can’t go in and do it for you, but that’s the guidance that we share all of the

[00:25:48] time to level set what launching in a retailer means.

[00:25:52] It’s just, there’s so much more that has to be done, and it’s definitely no guarantee of success.

[00:25:58] Rohit: That’s brilliant. Absolutely. I [00:26:00] loved everything you said. That’s just so amazing because this is the biggest missing gap that I feel like,

[00:26:05] traction is their responsibility, not someone else’s.

[00:26:08] And yes, then there are people who will enable you to succeed. Now, you said something very amazing,

[00:26:14] you said, we spend time with founders, et cetera, before the deal happens. So I would take it, it’s more like dating. How does that dating process take place and

[00:26:23] who gets, who doesn’t even make it to the dating process within just five seconds.

[00:26:27] I have my heuristics, like I can tell within a minute or 30 seconds of speaking to

[00:26:32] a founder, whether we are a fit or not.

[00:26:34] I have those telltale signs and they don’t come out of a book, they just come out of my experience with them.

[00:26:40] Yeah, gut feeling, tell me the dating process and, first, what’s like the Tinder

[00:26:43] process and then the actual dating

[00:26:45] Cristina: process?

[00:26:46] Yeah. Yeah. The dating process we take that very seriously and, listen, I dated my husband for 10 years before we got engaged, or 11 years before we got married, so clearly I’m a believer in it. Now I think it’s one of those [00:27:00] things where we’ve learned through experience in the cases where

[00:27:06] we haven’t known a founder for a very long time, meaning you may just meet them for the first time in the middle of a transaction and you’ve never had any interactions with them before.

[00:27:17] They were never on your radar. Those haven’t worked out the best because you just don’t know what you’re, who you’re partnering

[00:27:25] with at the end of the day, and so much relies on the decision making ability of a founder, especially in their seat, to make decisions quickly with imperfect information.

[00:27:42] That’s one where you have to know, can they do that secondarily, can they do it and do they

[00:27:49] want help and guidance, right? Do they or do they just wanna cheque, like gimme a cheque and leave me alone? If we sniff that out, we’re not the right partner for you. The whole point of being a sector [00:28:00] specialist and having a very concentrated portfolio of brands where we put meaningful cheques into our companies is to have that one-to-one relationship very closely tied,

[00:28:13] we hope you’re the first call when something goes right, but more

[00:28:17] importantly, when something goes wrong. That part of it has to be there. And we have to feel like the founder wants that inherently. And if we are just another list on their VC, they’re ticking down their VC list, who’s gonna gimme money?

[00:28:31] Who’s gonna gimme money? That’s not, it’s not interesting to us. If they’ve never really wanted to engage with us outside of a process that’s a red flag. Then we can just tell, like at, in a conversation. And we always joke around, like it’s not really scientific, it’s did you get the warm

[00:28:47] and fuzzies when you talk to that founder?

[00:28:49] If not, I don’t know. Are they, do you wanna hang out with them? Do you wanna go out to dinner with them? That’s important in any partnership, in any, in this case it’s not a marriage,

[00:28:58] but it is, it’s a [00:29:00] longer term relationship. I think I think those are, it’s a gut type of thing.

[00:29:05] The only other thing I will add, because your gut could be wrong, let you know we’re all not always gonna

[00:29:10] make the right have the right initial first reaction. We are very well connected in the industry, so we could always vet somebody. Just to make sure and we tell founders, vet us, call any single founder in our portfolio and ask about us.

[00:29:25] We want you to, and we encourage you to, because you feel more comfortable

[00:29:29] that you’ve done your homework on us, but we’ll do our homework and we’ll try to

[00:29:32] get intel from other people just to validate. Are they good people? Are they credible?

[00:29:37] How are they to work with, et cetera. Just

[00:29:40] Rohit: amazing. Now, I know you said it’s gut, there must be some informal pointers in

[00:29:47] a checklist, do you look for freudian slips? Do you look for warm and fuzzy feelings? Like you said, there must be like three four things that, or like how broad is the investor search, how well they understand you.

[00:29:57] How do you go out with them for lunch? Do you [00:30:00] invite them or you speak to them over the phone?

[00:30:01] Cristina: In a very zoom world, like obviously, we zoom as much as possible, but I think the other and in

[00:30:07] person’s great too, for the most part, our entire portfolio is based out of New York, California,

[00:30:15] or Miami where I’m based, which is great for us.

[00:30:18] So we can hit most of the people that we’re talking to, either in our portfolio or potential

[00:30:22] investments are in those geographies. And we try to go out once a quarter out to LA. And spend a week out there. And my team, for the most part is based in New York. So there’s, easy touchpoints there.

[00:30:34] I’m flying there all the time, as well. In person is becoming much more important. But I think there’s the other just casual things. For example, we see them in the news again, this is a prospective investment. We see them in the news and we’ll ping them, hey, congratulations on this, or saw you in this and,

[00:30:51] how they respond back is really important, and then if they engage with us, in a dialogue on social

[00:30:56] media and liking our posts and commenting, and we comment on that [00:31:00] there starts to become

[00:31:00] a rapport that you start building with people. And then when they start inbounding you like, hey,

[00:31:06] I have a question. Can you hop on for five or 10 minutes? I’d love to run something past you. Or even if it’s just over email and they’re asking for your advice and guidance

[00:31:13] on something, that’s a really good sign too. So yeah, it’s like all of those little tiny, pieces of info that come our way.

[00:31:22] And then if they have an investor update that they send to their own investors,

[00:31:26] sometimes founders will just add us on. So even if we’re not on their cap table, they’ll still send us their formal investor

[00:31:34] updates, which is really nice too. It means that they want, us to feel like we’re a part of it.

[00:31:39] Rohit: And that’s very interesting. I don’t think many founders know about this. I’ll be very honest, like this whole, because to me, if there’s an investor, where there’s some interaction that has happened,

[00:31:51] I think founders will always be in their inbox. If I were a founder, I would love to, as much as possible.

[00:31:57] So you just don’t wanna

[00:31:58] Cristina: be too aggressive.

[00:31:59] Rohit: But [00:32:00] what stage does this happen in? After you have showed interest?

[00:32:03] Cristina: I think it’s. So we take a very proactive approach generally. The inbounds that we get to us, we obviously look at everything and we try to respond to everything, whether it comes through LinkedIn or it comes through email or it comes through social media. On Instagram or TikTok. We try to respond as much as possible.

[00:32:22] But it’s the ones that we have identified proactively, because again we have our ear to the ground and

[00:32:28] we’re seeing so much that if there’s something interesting about a brand that we notice and we reach out and a founder writes back to us right away and starts engaging with us, that’s,

[00:32:38] those are the relationships that I’m referring to where like we spotted something. And they reacted very positively to it. Even if they’re not looking to raise money, they, and sometimes they’re like, oh, actually I’m in the process

[00:32:50] or not in the process, but I’m thinking about it. I’ll be launching something quite soon. If we find out that they’re already in a

[00:32:56] process and maybe didn’t reach out to us,

[00:32:58] I think that’s also can sometimes [00:33:00] be a little bit of a red flag. If they didn’t think to reach out to us it could just be that they didn’t know that we existed

[00:33:06] or they weren’t connected or there could be reasons, but I think it’s when we proactively

[00:33:09] reach out and they’re very receptive to it.

[00:33:12] And it becomes very natural and organic to just engage with this founder. So that is pre-investment. And then of course, post-investment that dialogue is then much more formalized. And we have our monthly touch bases. Every one of our brands goes on a Slack channel. So they can pinging us whenever.

[00:33:30] This morning one of my founders just texted, she’s an early riser, has texted, has

[00:33:34] called me before at six in the morning. Wow. Just to, she’s had an issue and she wanted to run something past me. And people know we’re that accessible. We, we talk about ourselves as being kind of servant investors in that respect.

[00:33:46] It’s part of our culture to respond in all sorts of formats when our founders need us.

[00:33:53] Rohit: You know what, the fact that they call you proactively, it’s a very feminine trait. Men don’t ask for [00:34:00] directions. So, I think invest in women because they’ll always ask for help, but that’s just so amazing. So I would, that was my next,

[00:34:06] Cristina: they always say that good news travels by email and bad news travels by phone.

[00:34:11] So usually it’s pick up the phone and call because there’s an issue. But that’s fine. We always tell our founders, the only problem we cannot help you solve

[00:34:19] is the one that we don’t know about. So please let us know ,the earlier you can, the earlier we could try to help you figure it out when

[00:34:25] maybe there’s still something that can be done.

[00:34:28] So having that fear of not wanting to tell your investor, I get it. You don’t wanna look like you’re not in control. Or that you don’t have a solution.

[00:34:37] Most people like to wait to talk about a problem until they have a plan. Okay, here’s the problem, but then here’s my plan, here’s how I’m gonna address it.

[00:34:44] But sometimes you don’t have time for that. If it’s a product issue if it’s some kind of malfunction, if it’s missing a Sephora launch date, there’s certain things that you might not have the time to sit back and react and have a plan for, and you just wanna get help from people who’ve been there before.[00:35:00]

[00:35:00] Absolutely.

[00:35:00] Rohit: No. Absolutely. That was very informative. We have talked about selection, we spoke about interest, then dating, then selection. Now let’s talk about what happens after you get a grant in your portfolio. What’s that process like in phases, with milestones, whatever.

[00:35:18] Cristina: So obviously once they’re in the portfolio, there’s a whole onboarding process, just so that they’re on, like I said, slack channels and we set up monthly touch bases.

[00:35:29] The biggest thing for us to get into a cadence on early is financial review. A lot of our founders, a lot of our brands, are small, they may not have finance in-house. A lot of them outsource their finance. And so for us, it’s, let’s get into a monthly cadence of reviewing your financials and getting into the habit of reviewing actuals versus last year versus budget or reforecast, wherever they are.

[00:35:51] And let’s go through that every month where we can ask our questions ’cause it’s our ability to forecast like maybe something’s going on here, or this looks off [00:36:00] to us based on what we know. They may not notice that. And so it’s our opportunity to call things out so that they can address something that could

[00:36:06] potentially be underlying, they’re not aware of.

[00:36:08] And then just talk about performance and bigger strategic conversations. So that’s happens on a monthly basis in addition to the ad hoc, combos we have, the six and

[00:36:16] 6:00 AM morning chats, but then it’s getting into the cadence of the board meetings and putting those in place and getting those set up,

[00:36:23] and what is the board, meaning how should it be structured and what should a

[00:36:27] presentation look like and all that stuff.

[00:36:29] So we spent a lot of time getting them up to speed on that and putting together those best practices. And then it’s, what are the big goals that you have and making sure that we have plans,

[00:36:38] whether that’s launching a retailer or that’s launching a major product or growing your

[00:36:43] awareness or whatever the case may be.

[00:36:45] We try to identify those strategic projects with them and we’re their partner along the way. And then the last thing is, we have, a lot of horsepower in our team. Firstly, so I mentioned a lot of analysis that we could do to help them whether it’s sell through data

[00:36:57] or just financial data, DTC metrics, et cetera.

[00:36:59] [00:37:00] And then it’s going through our platform, what are our resources that they may need? Whether that’s advice on retail strategy, whether that’s brand, whether that’s talent

[00:37:09] and organizational design, whatever it is, who do we have in our network that we could bring on? So we always evaluate that with them and

[00:37:16] those are like the key things I would say. And once they’re in the family. They talk to each other, which we love too because that’s the other thing, right? You have inherited now a whole family of other beauty brands that are going through

[00:37:28] the same things you’re going through.

[00:37:30] So it’s good to be able to commiserate with other founders that are part of our portfolio.

[00:37:35] Rohit: Absolutely amazing. The fact that you said now they’re part of the family, because it gave me a lead for my next

[00:37:40] question I already had in my mind when you were talking, there’s more substance to

[00:37:43] the question that I’m gonna ask you now.

[00:37:45] So now that you have invested money, you have done the strategizing, you are advising they have to work on their priority, their focus list, and then they’re also part of the family. I, this is just my thinking and tell me if I’m wrong,

[00:37:59] I think [00:38:00] now it comes down just to the founder and the team. Because everything else is there now. Money is there. You obviously saw a differentiated idea. It might need some tweaking. I don’t deny that. That’s a work in progress. But I think all of that is channeled through the founder.

[00:38:13] So what are those top one to two traits of founder or signs, which you have to work

[00:38:20] on the most, or which are an absolute. Like a sign of a winner, so to say, when you reach this process, this

[00:38:27] Cristina: stage.

[00:38:29] Oh gosh. Okay. In terms of the things that we, I would say that scare us the most when we see it, that we have to

[00:38:36] maybe work on a little bit is when a founder will say, nod their head, say, yep, I agree, understood,

[00:38:44] I’m in alignment, and then nothing happens.

[00:38:47] Or they actually don’t agree, but don’t wanna upset or disappoint you, but then they don’t act on the advice and the guidance that we thought we all agreed on that could be a [00:39:00]challenge. I’d rather them upfront say, I disagree and let’s talk about it. And this is why I fundamentally feel different than you do.

[00:39:09] And which I would wanna hear why they fundamentally feel different. So that would be one where it’s it’s not, it’s a little bit more passive. And so you have to get it out of them. So those situations I don’t love because then you just walk away thinking,

[00:39:22] okay, we’re good, and then you’re not.

[00:39:25] I would say another mentality sometimes that I think founders have, either, that they place on

[00:39:32] themselves or they may be placed or it’s placed upon them because they have other investors,

[00:39:36] we’re not the only investor on people’s cap tables. Sometimes we are. We love it. That’s what we prefer.

[00:39:42] But, oftentimes we come into rounds and there could be a lot of other investors on the cap table that have

[00:39:47] given different advice who don’t know beauty as well and it might not be the best advice, but it’s this, we gotta grow, we gotta grow, we gotta expand we gotta expand distribution, we gotta expand products,

[00:39:57] and all I hear is proliferation. [00:40:00] Proliferation of distribution, proliferation of product assortment.

[00:40:03] And both of those things can be really difficult when you’re a small brand because, one, it’s capital intensive to be able to launch products and to open other retailers. And two, you’re not demonstrating productivity.

[00:40:15] You’re not demonstrating, that you could actually sell and be meaningful to a key retailer if you’re focused on all these other ones and none of them really matter that much. You don’t matter that much to them, or you’re not showing productivity of your SKU assortment. And you have a

[00:40:32] hundreds of products, which can happen in some categories like makeup, where

[00:40:35] there’s a lot of shades and all that stuff. Not to digress, but when there’s that mentality of I gotta grow, growth at all costs, I think

[00:40:42] that’s an issue too. In today’s world, thankfully, and we’ve preached this to our portfolio, everyone’s a little bit more focused now on capital efficiency and profitability and, maybe sacrificing some growth for the sake of

[00:40:54] driving profitable growth.

[00:40:56] So that’s good. But it’s hard. You’re a founder. You don’t wanna say no, [00:41:00] you wanna say yes to every single purchase order, right?

[00:41:02] That’s who you are. You don’t wanna turn something down. So fighting that, I think with them, helping them get past that. So those are two characteristics I guess, that give us pause.

[00:41:11] I think the winning ones, gosh, there’s so many. But I would say that, the drive, we talked about, how important having, being laser focused and having very strong passion and drive towards achieving that very specific goal is such a winning characteristic.

[00:41:33] Lack of focus can be something that founders struggle with, and I get it, you’re dealing with a hundred fires and you have all these things and you wanna accomplish them all. But when you’re really laser-focused on something, you have your strategic

[00:41:46] priorities in place, you are data-driven and you reflect.

[00:41:51] Reflecting on what worked, what didn’t work, right? What are the wins? What are the learns and those characteristics we love about [00:42:00] founders. And then the ones that say, I acknowledge this is my superpower. I’m really good at this. I am not good at that, and I need to augment these things, and having the willingness to

[00:42:11] bring on people and letting them do their job.

[00:42:15] One is I acknowledge I’m not good at this. I wanna bring someone in. But then when those people come in, you have to let them be able to run with your baby. And that can be hard. So it’s that willingness to to let people who are smart, experienced, come in and execute.

[00:42:33] Rohit: Love it. Great points there.

[00:42:35] I think this will be of great help to all those who will watch and listen

[00:42:38] to this podcast, so obviously hunger is the core.

[00:42:44] You will only see it when the times get testing, when they’re really

[00:42:47] tested, you’ll see how hungry they’re, focus, I’m absolutely with you.

[00:42:51] It amazes my mind, that the first four did not work,

[00:42:55] the products, let me launch another four. I’m like, why do you think about why the first four?[00:43:00]

[00:43:00] The definition

[00:43:00] Cristina: of insanity, right?

[00:43:02] Rohit: But all of this, but for hunger is something, that you cannot instill in anyone.

[00:43:06] It’s impossible. Of course we talk about creating demand but I know what you mean is demand

[00:43:11] for the brand, the need has to be there. You cannot create that need. So you want to be in a category where the people are wanting to solve a problem. Now, apart from hunger, I think if there were just one word, could it be listen.

[00:43:24] People who listen, whether it’s awareness, listening to themselves, listening to you, I personally feel

[00:43:29] that, and this is just my take, like Fiona was an absolutely amazing listener when I spoke

[00:43:36] to her, in those few minutes, she was just quiet. She listened. She’s very quiet.

[00:43:42] She’s very quiet. Like it’s, I still remember that. It must have been a few years. And of course, men

[00:43:47] are not as inclined to listen as women are. So that’s why women do better in any job or any business like Kevin O’Leary says.

[00:43:53] And no disrespect to Rich.

[00:43:54] Cristina: No, he’s smart. He’s surrounded himself with women. He is, what does that say, right? Yeah, exactly.

[00:43:59] Rohit: [00:44:00] Exactly. So even Kevin O’Leary says that his women founders do much better than

[00:44:04] they, they outsmart the male counterparts. So now coming to

[00:44:07] if somebody were to think of what’s the application process like?

[00:44:11] If I have to go with True Beauty Ventures, I get this versus something else. I know you spoke about your differentiation right at the start, but even when writing an application,

[00:44:20] how can they either craft an application that is a fit or, for those founders who might be a fit, but do not know how to craft an application for True Beauty Ventures.

[00:44:29] And how does that take place? Like they just reach out to you cold or they’re like, do they fill up forms,

[00:44:34] yeah,

[00:44:35] Cristina: I would say It’s tough because we get a lot of cold intros. We look at everything. But as I mentioned, there’s 1400. It’s really hard to respond to every single one.

[00:44:45] So sometimes if it’s, we don’t get a response right away, try again, but maybe try a different way. Founder referrals, we like a lot. So if there’s somebody in our portfolio that you’re connected with coming in through [00:45:00] referral is helpful. And one way to put it in front of us.

[00:45:03] I also think I love, we, when we get inbounds from people, especially those that we’ve never met

[00:45:08] before, it’s always really helpful to have a deck. Not asking for confidential information, but something that really lays out the brand and story

[00:45:17] tells the brand for us, because then we can go through and,

[00:45:20] especially if you’re launching a product or creating a brand that’s solving a need in a new category that’s nuanced and like we have to, we’re not as close to, but that’s not squarely in beauty.

[00:45:33] It’s really helpful to have that laid out and contextualized as to what exactly

[00:45:37] you’re trying to solve and why you. Why are you fit to do that? The earlier that you are launching, the less proof of concept you have. The more reliant we are on who the person is and their background, their expertise,

[00:45:53] the people that they’re, that they have advising them or if they’re lucky enough to have a

[00:45:57] couple team members, who those people are.[00:46:00]

[00:46:00] I think that’s really important. Any accolades and awards or recognitions you’ve gotten in the industry are always great. We try to read everything, but we may miss stuff.

[00:46:10] So sending that to again, show that you’re, there’s not only a product market fit, but that there’s that

[00:46:17] real demand for what you have to offer. I think that’s also compelling.

[00:46:22] And like I said try once, try again. Just because you don’t get a response or you get a no, it doesn’t mean it’s a no forever. It could just be a no, not, no, not now, because it doesn’t fit our criteria at the

[00:46:33] exact moment and what we’re looking for.

[00:46:35] Or at the stage at which you’re at, we don’t feel comfortable coming in.

[00:46:39] Rohit: No, does not always mean no. One last question, Cristina, I know you gotta go. So how early and how late can someone apply to you?

[00:46:48] And do you attend pitch days too with accelerators, where people can see the dates, where you’ll

[00:46:54] be at, where they can apply to and present to you?

[00:46:58] Cristina: Yes. So we, to answer [00:47:00] the second question first, we do participate in some accelerators. Currently Rich and I are both part of the Ulta Muse Accelerator, which is excellent.

[00:47:10] If that’s something of interest. And and then we have our own Bridge Mentorship Program with Beauty Independent.

[00:47:15] So if you are looking to become funding ready. But quite frankly, it’s more about building a viable beauty business.

[00:47:24] It’s less about, it is about funding. ’cause ultimately that’s your goal. But investors ultimately wanna see something that’s scalable and that is investible.

[00:47:33] So, we spend a lot of time on so many parts of the business, and I think most, a

[00:47:37] lot of our mentees get great value from it.

[00:47:39] However, there’s only three spots per cohort, so it is very competitive. I’ve also told people keep trying. Again, it doesn’t mean it’s a no forever. But that’s, those are really two interesting ways.

[00:47:51] And from a stage perspective, like I said before, we’re stage agnostic, so we have looked at, we’ve done everything from a pre-revenue seed investment to [00:48:00] a series C.

[00:48:01] We are not limited by necessarily the size or stage. We’re just trying to invest into brands that are at an inflection point of breakout growth.

[00:48:09] And we wanna do the best deals in the space that we can. So, if you are early, doesn’t, again, we could tell you, listen, this is not a fit. Even if you’re early for various reasons, but sometimes, we’ve invested pre-revenue, but they,

[00:48:22] that brand was launching with Sephora, even before we invested. We are able to hedge the fact that it’s so risky so early by the fact that they’re launching with a major retailer.

[00:48:32] So I would say in general, if you’ve got some kind of retail partner engaged,

[00:48:38] that makes us feel much more comfortable. So you’re. In a better position if you are D T C only, again, it doesn’t mean it’s a no, but it could

[00:48:47] be a, no, not now, but, still apply and reach out to us, especially if you can demonstrate

[00:48:52] real traction and demand, organic demand.

[00:48:54] That’s the other thing, it’s not about how much you’ve been able to acquire and

[00:48:58] pay for customers to, to [00:49:00] try your product. It’s how much you’ve created that demand organically.

[00:49:04] Rohit: Absolutely. Cristina, you were absolutely amazing. I enjoyed, thank you, every second and minute of, what great answers .And your background,

[00:49:13] absolutely well-rounded professional, I have to say, I should call you an entrepreneur, not a professional. Very well-rounded , you understand things from such different perspective, and I think that’s the key. And the same applies for Rich, and obviously he has a great network as well.

[00:49:28] And I can see that you have amazing relationships with your portfolio founders because

[00:49:33] of the respect that you get from them. And obviously it comes down to the substance you add, not just the investment, but also everything that you know in terms of running a business profitably and scaling it up.

[00:49:43] Thank you so much. It was an absolute pleasure speaking to you. Thank

[00:49:46] Cristina: you.

[00:49:46] Thank you for your great questions and for having me. It was a pleasure.

[00:49:51] Thank

[00:49:51] Rohit: you. I wish you all the best. Yeah, thank you.

[00:49:57] [00:50:00]

[00:50:24] ​

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