Non-public fairness agency VMG Companions introduced the shut of an $850 million fund, VMG Progress Fund V, in keeping with a press launch despatched to Meals Dive. This brings the San Francisco-based agency’s whole property below administration to roughly $2.6 billion.
VMG will present early-stage funding, in addition to startup help to portfolio firms. It gives steerage on methods, from scaling model consciousness to optimizing manufacturing and provide chain operations.
As well as, VMG experiences it has considerably exited the entire portfolio firms in its VMG Companions I and VMG Companions II funds. It additionally introduced the third exit from its VMG Companions III fund.
Based in 2005, VMG has backed among the largest CPG manufacturers to this point together with Variety, Naked Snacks, Pirate Manufacturers, Excellent Bar, Day by day Harvest and extra. With a brand new $850 million below administration, the personal fairness agency will undoubtedly be trying so as to add new burgeoning manufacturers to its fold.
VMG has a knack for putting bets on startups poised to seize a rising shopper pattern. It has invested in direct-to-consumer practical substances shake maker Day by day Harvest, kombucha maker Humm, low/no-sugar confection maker Lily’s and premium meat snack maker Vermont Smoke & Treatment.
Working with a non-public fairness agency presents startup manufacturers a distinct alternative in comparison with enterprise capital companies or in-house incubators that meals producers provide. This consists of being insulated from shareholder calls for and infrequently a extra gradual timeline towards making an exit. This will alleviate among the stress that comes with working with a standard VC agency, which is often on the lookout for fast returns. In-house incubator packages could include plenty of strings or particular necessities from the meals producer on the helm.
VMG has a monitor report of turning small-scale startups into family names and presents startups extra than simply capital. In 2019, for instance, VMG helped revamp Popchips’ picture after the model confronted criticism for a racial incident involving then-backer Ashton Kutcher. It was additionally sued for misusing the time period pure and settled the swimsuit for $2.1 million in money and $300,000 in vouchers. VMG began by naming Popchips because the inaugural model for its then-newly launched Velocity Snack Manufacturers platform, which gives capital and help to rising snack startups.
The chance to work with VMG would open plenty of doorways for a startup seeking to construct its model and scale its product. In 2018, it backed glowing flavored water maker Spindrift with $20 million. The model went on to create its first nationwide TV marketing campaign and prolonged its retail community to main grocers like Entire Meals and Kroger, in addition to Starbucks. What possible drew VMG to Spindrift’s capital desk, nevertheless, was the model’s meteoric progress. It grew its income 1,000% within the three years main as much as the funding. It additionally possible noticed the rising tide of customers’ thirst for flavored glowing water drinks.
VMG could have some stiffer competitors on the subject of signing probably the most promising startups. Established meals producers are hungry to get new manufacturers that meet shifting shopper demand below their roof. Mondelez just lately launched an early-stage snack accelerator referred to as SnackFutures. It has been taking an aggressive strategy to acquisitions and investments in early-stage manufacturers. Different main manufacturers with enterprise capital funding arms embrace Danone, PepsiCo, Nestlé and Basic Mills.