Healthy Living and Consumer Venture Capital, Consulting and Investment Banking

How Angel Investing has Changed in 2009

2009-11-04T14:12:00.005-05:00

The New York Times recently had an extremely well-done article called "The New Rules of Angel Investing." I agree with everything in it as it accurately portrays what I am seeing in the market.

Here's are some snippets from the article:

Angels are still financing deals, but at lower valuations and with more specific milestones. They have grown more picky and less tolerant of risk.....There has been a sea change in risk sensitivity; the more self-sufficiency a company demonstrates, the less risky it appears.....Entrepreneurs should find ways to finance their own growth: working without salary, moonlighting, seeking grants, running lean operations and focusing on an aspect of the business that can generate revenue.

Over the past year, I have also noticed the changes the article points out. Angels will still invest, but more and more, only at realistic valuations and when they see a clear path to profitability. Many angels have been burned over the past year through the economic meltdown in their private company investments. Valuations went down; cram-down rounds occurred; VCs went pay-to-play...it got ugly at times. That said, many investments that were made are still good and above water. Capital efficient companies that have weathered the storm by conserving cash and/or getting to (or close) to profitability are doing well and are likely to be rewarded. And those that are still early-stage, loss-making companies can still get funded and are getting funded....but the rules (and valuations) are not what they were a year or two ago. Passive angels (what's the price?) are more and more becoming active (I'll tell you what the price and terms are). For angel returns, this is not a bad development. For companies, reality may not be a bad thing as well. We all know, that above everything, cash is king and capital is good.

Comprehesive One-Day Seminar on Financing Natural and Specialty Products Companies & Networking Event

2009-10-13T16:02:00.007-04:00

Early Bird Reduced Rate expires on Oct. 27th

Royal River Associates and The Natural Products Consulting Institute have organized a comprehensive one-day seminar on Financing Your Natural or Specialty Products Company to be held on November 10, 2009 in Burlington, MA.

Getting your company capitalized is perhaps the most difficult, time-consuming and frustrating part of building a business. This full-day workshop will serve to demystify the terms and process, while providing insights and tips on how you can improve your odds of successfully obtaining financing.

You will hear directly from industry-leading entrepreneurs who raised venture capital and then grew and sold their companies, investment bankers, venture capital investors and other industry experts.

Topics include:

Determining your financing needs;
Expected presentation materials (PPT, model, business plan);
Structuring deals and negotiation tactics;
Understanding term sheets;
Issues and trade offs with Friends and Family rounds, angel investors, debt and venture capital;
Working with investment bankers;
Building value in your company;
Valuation methodologies;
Exit stratiegies;
and more....

The seminar Will be led by Bob Burke and Michael Burgmaier.

Bob Burke is co-author of The Natural Products Field Manual, and The Sales Manager's Handbook. Bob is a consultant in the natural and specialty products industry and former VP of Sales and Corporate Development at Stonyfield Farm. Michael Burgmaier is an investment banker in the food & beverage / Healthy Living sectors.

Special guest speakers will be:

Pete Lescoe, Founder and CEO, FoodShouldTasteGood
Nancy Rosenzweig, former CEO, The Natural Dentist
Nicolas McCoy, CFA, Managing Director, Silverwood Partners Investment Bankers;
David Thibodeau, Managing Director in Canaccord Adams' Investment Banking Group; and
Andrew Whitman, Managing Partner, 2X CONSUMER PRODUCTS GROWTH PARTNERS.

The seminar will be help on November 10, 2009 at the Hilton Garden Inn in Burlington, MA.

The specialty introductory rate is $599.

If you register by Oct. 27, 2009, take the early bird discount and save $100
Additional discounts are available for additional people from the same company.

For more information, please visit: http://npcinstitute.com/Financing%20seminar.htm to see the registration form. You are also welcome to call 978-975-9902 or email Bob Burke.

Nutrition Capital Network next week in San Francisco

2009-10-13T10:24:00.002-04:00

The pre-eminent bi-annual gathering of companies looking for capital in the nutrition/Health & Wellness field and investors (venture capital, private equity and strategic) is next week in San Francisco (Oct. 20/21). This is the fifth full Nutrition Capital Network Event (or "NCN V" in the shorthand); I've been to the previous four and the event is always well worth it. It's a fantastic networking opportunity for both the companies and investors. This fall's line-up looks outstanding:

Snapshots of Confirmed NCN V Presenters

$80-100 mil natural & organic packaged, prepared foods and snacks
$30-50 mil in natural packaged snacks
$15-20 mil bar manufacturer and international brand
$15-20 mil in green convenience restaurants
$10-15 mil in acai juices, smoothies and shots
$10-15 mil unique product delivering nutrients and flavors through straws
$8-10 mil in calorie controlled meal delivery service and brand
$8-10 mil in organic flour and gluten-free baking supplier
$5-10 mil in branded meats preserving heritage breeds
$5-10 mil in natural sauces and spreads
$5-10 mil organic & vegan casual restaurants & catering
$3-5 mil in gluten-free snacks and baking mixes
$3-5 mil in premium organic coffee
$3-5 mil in natural lo-cal soda
$2-3 mil healthy lifestyle food and supplement brand for Hispanics
$2-3 mil sports nutrition brand
$2-3 mil in organic and artisan breads
$1-2 mill in gluten free snacks and cookies
$1 mil in patented sunscreen and skincare products
Clinically proven supplement for atherosclerosis
Herbal supplement targeted for immunity, energy & jetlag
Technology for unique frozen fruit & vegetable confection

Expo East Reflections - My Winners

2009-09-29T13:39:00.018-04:00

Last week was all Boston…a Board meeting on Tuesday, Canaccord Adams Healthy Living conference on Wednesday, and walking the floors of Expo East Thursday, Friday and Saturday. Today I thought I’d provide some reflections on what I saw at Canaccord and Expo. First, everyone was talking about how much smaller Expo was than previous years. Sustainable Food News reported today that traffic was down 20%, to 21,000 people and there were 1500 exhibiting booths. In March, Expo West reportedly had 53,000 attendees. Some companies said that they had great shows while others said that the show was a relative disappointment for them. Some of the notable missing companies included Hain Celestial Group, Nature’s Path, Amy’s Kitchen and Annie’s Homegrown. In fact, with Amy’s not there, one of my portfolio companies, Rustic Crust, seemed to become the de-facto in-house restaurant. While half the booths serve food, there’s only so many cookies, raw honey, chips and drinks you can sample, so as a VP of Marketing from Stonyfield Farm put it to me, “Rustic had the only food of sustenance” at the show. It showed….Rustic sampled over 650 pizzas – about twice the normal amount. Company President Brad Sterl reported “the show traffic was good in our aisle. We had a lot of independents come by but very few chain accounts seemed to be attending. Without Amy’s at the show, we were the feeders.” Let’s hope that those who survived on Rustic for a few days (which embarrassingly included me!), turn that into purchases. It’s really good pizza…

Here are some of my favorites from the show:

FoodShouldTasteGood -- The current rock star of the industry. Founder and CEO Pete Lescoe has a terrific product, an A team, amazing growth and has stayed real to boot. My family has been buying a bag of these chips each week for almost two years….I can see that we are not alone. The chips are great (all flavors too -- mean that), but my favorites are Multigrain, Sweet Potato and The Works. Forget the Everything Bagel, The Works FoodShouldTasteGood chip is the wave of my future. Sherbrooke Capital led the company's Series A round....a home-run in the making for John Giannuzzi.

Solixir – On Saturday, I spent about an hour talking with Solixir founder Scott Lerner. Solixir is a line of all-natural, sparkling botanical beverages. The three Solixir’s I tasted (awaken, relax and restore) had 50-60 calories/12 oz can and tasted great. Solixir started earlier this year with a national launch in Whole Foods Market. I like Scott’s approach to building this brand and company – keep an eye out for this one.

Red’s All Natural – while there was a lot of focus on the

star power of Brendan Synnot whose Burrito Investment Group acquired/invested in Phil’s Fresh Food to create a new frozen burrito company (Evol -- great branding, by the way), I think the best burrito on the floor belonged to Mike Adair’s Red’s All Natural. This was the first frozen burrito I ever had that could give joints in San Francisco’s Mission a run for their money. I can’t wait until they get some distribution near me (requested it this morning…). If I have to eat in the office five days a week, there better be five Red’s burritos in my freezer….

Cell-nique – The King of the Green Drinks: 95% organic; 31 superfoods and botanical herbs. Founder Dan Ratner has a winner here. Whole Foods Market is rolling out at $3.99 (I hear that big chains tend to be in the $3.39-3.99 range, with some smaller stores at $4.99) – at the-premium end, but so worth it....my wife and I are thinking about incorporating a daily dose of Cell-nique into our regimen and for our kids….time to start buying by the case... I didn’t realize that I drank around $40 worth of Cell-nique at the show…thanks Dan. Now to begin the payback….and which flavor to choose….there were all so good….

thinkThin – When I studied for the GMATs back in 1998, I remember that my bar of choice those days was Think (it may have been a subconscious self-threat – “think already…can’t you get this right?”) But for some reason, they disappeared from my diet….distribution? Packaging? New competitors? Well, I just happened to try the thinkThin bars at the show and was very impressed: great-taste, nice re-branding, low sugar….a stand out in the bar crowd.

Putney Pasta – The new Chicken Pomodoro skillet meal is amazing. All-natural, antibiotic-free chicken, bowtie pasta, mozzarella and broccoli in an incredible marinara sauce. Outstanding. And a complete value – Whole Foods sells these skillet meals for two for $8.99. That’s only $4.50 for a true, restaurant quality meal. I’d pay $20 for an adult serving of this easily at a restaurant….and come back. This stuff is great.

Blake's All Natural -- This to me is "the Amy's Kitchen with meat" (meaning how

most of the country eats). Blake's had some great new mac n' cheese and turkey products and Chris Licata also unveiled a strong new re-branding look. This is frozen comfort food done right.

Late July – I saw CEO Nicole Bernard Dawes present at the Canaccord Adams event – this is a great growth-company story and the products are terrific. You can see the passion for organic, healthy and tasty products for children in Nicole and the brand (nothing is better than Late July on Cape Cod…). These packages will continue to show up in the back seat of my minivan for years to come….

Sweetriot – I’ve seen sweetriot at shows for years, but this was the first time I really tasted the product. You could eat an endless amount of chocolate at a Expo show, but sweetriot stood out for me. They have great-tasting products and strong merchandising. I was a big fan of the "unbar."

Guru – As they say “100% Natural..100% Crap Free.” Nothing like telling it like it is. Guru is a mainstay in the all-natural energy drink market. Now they’ve created four new SKUs – and they are good-tasting with a nice look. I particularly liked the Green Tea Iced Tea.

One Day Seminar: Financing Your Natural or Specialty Products Company

2009-09-22T22:59:00.006-04:00

Getting your company capitalized is perhaps the most difficult, time-consuming and frustrating part of building your business.

On November 10, Bob Burke and I will be leading an important one-day seminar on how to raise capital for your natural or specialty products company. It will be a packed, full-day seminar from 9am-4:30pm in Burlington, MA (easy shuttle from Logan Airport in Boston). We'll have a lot of important content to share and we're putting together an impressive group of speakers, including industry-leading entrepeneurs who raised venture captial and then grew and sold their companies, investment bankers, investos and other industry experts.

Confirmed speakers as of 9/22 include:

Pete Lescoe, Founder and CEO, FoodShouldTasteGood (funded by Sherbrooke Capital)
Nancy Rosenzweig, Former CEO, The Natural Dentist (funded by Burrill & Co., and others)
Nicholas McCoy, CFA, Managing Director, Silverwood Partners Investment Bankers
David Thibodeau, Managing Director in Canaccord Adams' Investment Banking Group.
Andrew Whitman, Managing Partner, 2x CONSUMER PRODUCTS GROWTH PARTNERS

WITH MORE TO BE ANNOUNCED SOON….

To sign up, please go here.

Topics to be covered include:

How do I determine my financing needs?
What is the best source of capital to align with my needs?
What’s the game plan for my business and my time horizon?
Finding early-stage capital (Friends & Family; Banks/Loan; Angel Investors/Groups; What terms should I expect?)
Demystifying valuation (Methodologies; Understanding equity; What matters/what doesn’t?
VC Financing (Who do I approach? And how?; Anatomy of a term sheet; What to expect when working with a VC; Control, veto rights, dilution
Other Private Equity…
Do I go alone or get professional help?
Role of the investment banker (Terms, fees; Materials (business plan, sample presentation, financials)
Creating value (Distribution; Brand Building; Building out the team; Positioning for exit; Strategic buyer or financial buyer)

Led by industry veterans Bob Burke & Michael Burgmaier, the seminar will de-mystify the terms and the process and provide insights and tips on how you can improve your odds to successfully obtaining the financing you need.

Conference/Show Week; Expo East & Canaccord Adams' Healthy Living

2009-09-21T09:16:00.008-04:00

This is a great week for the Natural Products/Healthy Living industry in Boston this week, and I'm excited to be there. This Wednesday, Canaccord Adams is hosting their annual "Healthy Living Conference," which consists of public and private company presentations. Putney Pasta President Rick McKelvey and I will be giving a presentation on The Natural Pasta Co. d/b/a/ Putney Pasta. We'll be talking about our market-leading all-natural skillet meals. The new Chicken Pomodoro item makes its debut at Expo East this week -- if you are there, try it at the booth. Last year, Putney won "Best New Product" from New England with their Chicken Alfredo Skillet (which is now the #1 all-natural skillet meal in the entire category!).

Thursday through Saturday is the Natural Products Expo East (Boston Convention Center). I'll be there with multiple hats on: representing CEI Community Ventures' companies The Rustic Crust & Putney Pasta and working on some current investment banking deals (sell side and private placement) with Silverwood Partners. The two Expo shows (East in the Fall and West in the Spring) are terrific shows - companies display their products for buyers, and every year, more and more industry consultants, bankers and investors also walk the show, looking for clients and the next big thing....

Here are some of the companies presenting at Canaccord Adams conference:

Calavo Growers
Diedrich Coffee
Green Mountain Coffee Roasters
Hain Celestial Group
Health Fitness Corp.
Herbalife
Inventure Group
Jamba Juice (I lived off of these when I lived in the Bay Area)
REED's Microbrew
Schiff Nutrition
Smart Balance
United Natural Foods (UNFI)
Whole foods Market
Attune Foods
Charter Baking Company, Inc.
Colorscience
Corazonas Foods, Inc.
FoodShouldTasteGood, Inc.
Late July Snacks, LLC
MonaVie
Putney Pasta
Sunflower Farmers Markets
The Natural Dentist
Van's Natural Foods, Inc.

I'll write about what I see at the show and conference in then next few weeks....

If you're going to be at Expo or the conference and you'd like to connect, drop me an email at "mike" followed by "@royalriverassociates.com" ....

How to Approach a VC

2009-08-06T11:35:00.009-04:00

Everyone always wants to know how to access venture capital:

Can I just call?
Should I submit my plan through a website or via email?
Should I use a banker?
Should I get a referral?

Just cold-calling is unlikely to work. Most calls are screened and if the VC doesn't know who you are, they are unlikely to pick up. Just like you, VCs are stretched for time. Talking to Joe I Don't Know doesn't fit into the schedule unfortunately. And if you do get through, the VC (again, like almost anyone), will likely be looking for a good segue to end the call, referring you to someone/something else. Over the transom business plan submissions also rarely do anything. Referrals are very helpful (lawyers, portfolio CEOs, LinkedIn connections...) and bankers (see below in detail) can also be a good path. I rarely punt to other blogs, but Mark Suster from GRP Partners has a great post on how to approach VCs. I suggest reading it.

I have been a VC since 2004 with CEI Community Ventures. The fund was an extremely small fund -- $10MM. We could only invest up to $1MM in any one business -- and that was over the life of our investment. That meant that our initial investment was anywhere in the $300-600K range, with the balance reserved for potential follow-on investments. We invested in very early-stage companies (pre-revenue up to trailing twelve month sales of $1MM). We did nine deals and led eight of them. That means that we priced, structured and syndicated each company's Series A round. As many of these companies did not have expertise or experience in raising capital, we often got involved with putting together the materials:

Investor Deck (Power Point)
Business Plan
Executive Summary
Financial Pro-Forma Model

As any entrepreneur knows, this is a lot of work. Then when we had the materials ready, we went to work on syndication -- in some case looking for angel investors to invest alongside our fund and also looking for other, smaller funds to co-invest with us. As the companies grew and it came time for Series B, we would update the materials and head back to the market again. Depending on the company's growth, we'd be out again looking for angels/small funds or larger funds, if the growth and capital requirements warranted it. For a portfolio company, this is a no-cost huge value add. And at times, raising capital for portfolio companies became a full-time job (ask my wife, she knows...).

One of the most-overlooked paths is using an investment banker. As a VC, I often even over-looked this option. Although no one liks to pay fees, the value from those fees (getting capital, often at one of the best-possible valuations) is huge. As I am also now an investment banker (through Silverwood Partners -- no affiliation to this blog though), I can readily see how this makes raising capital much easier for companies. When I talk with companies, they typically may know 5-10 potential funds that fit their needs. Natural products companies know Greenmont Partners, Sherbrooke Capital, Encore Consumer Capital, VMG Partners and perhas a few more...then their well begins to run dry.

Over the past five years, I have developed a database that now has over 200 organized funds, family offices, and "pass-the-hat" investment groups that invest in consumer-based businesses; and when I work on private placements, the list often grows by another 10 or so... Of course the database has capital sources with many areas of focus: early-stage, late-stage, food & beverage, natural products, apparel, health services...so the first step is to widdle down the database to match the company's criteria and needs. But the point is that a banker will know vastly more potential sources of capital than the average entrepreneur.

Bankers also do a good job of making a market. Entrepreneurs are busy, and raising capital almost always falls into the lap of the CEO, who also has 75 other day-to-day responsibilities. As a result, raising capital can never receive the attention it requires to do the best job possible. I've seen too many capital raises take a very long time. Initial inquiries to various funds may stretch out over a two-to-four month period. But after time, any deal will start to look old -- and no VC likes an old deal...why is it old? Because no one likes it? What do others know that I don't know? Bankers will create a market. We'll first create the list of capital sources to contact and then we'll do it all at once -- everyone knows the pressure is on to respond and act, or the opportunity will pass the VC by. We also know how to talk to VCs ... many entrepeneurs will often say the wrong thing that could kill a deal from the outset (outragous valuation expectations....I will run the company no matter what....I don't want a partner, I just want money...).

Another important point is that relationships matter. As a VC and a banker, I talk with other VCs on a peer level. I've known many for years and have developed (I hope!) a good reputation in the market. VCs in this space are good friends of mine. I like calling them and seeing them. If I pitch a deal to them, I'm also catching up with an old friend -- or making new ones.

VCs or Angels? Sometimes early-stage entrepreneurs will ponder whether they should take capital from a VC (at a lower valuation) or from angels. One often overlooked reason to take money from a VC is the networks that open up for capital raising for the current rounds and future rounds. As a VC, I work for our fund's companies. I do whatever I need to do to make them succeed. And I can use my networks that I use in my banking work to help raise capital for portfolio companies.

Real trends and Real Beneftis: Green Tea and Gluten Free

2009-07-10T08:19:00.015-04:00

Science and food. Health and food. Functional benefits. Disease prevention. Disease avoidance. These are all key phrases with food today. Today's post quickly focuses on two big ones in this arena: Green Tea and Gluten Free.

My green tea obsession continues to get validated

I've written in the past of my obsession with green tea. Studies keep coming out around the benefits....I'm not stopping my 3-4 cups a day as green tea can:

Help prevent cancer as it is packed with antioxidants. A study based in Arizona is being conducted to see if a certain green tea extract can prevent cervical cancer (June 2009;

Lead to weight loss;

Promote healthy skin;

Enhance mental focus (I'm putting this to the test as I just downed cup before engaging on writing today);

Boost immune systems and destroys the bacteria that cause strep throat and cavities; and

and much more...

Gluten free is here to stay for the long run

I've also touched on gluten free (GF) in the past as I live in a gluten free house and continue to learn about more and more gluten free (GF) people. These trends are also real.

A new study released last week says that Celiac disease may now impact 1 in 100 people in the US -- a quadrupling since the 1950s.

Also last week, Betty Crocker (General Mills) announced a new gluten free line of mixes (see WSJ article). Wow.

Here are my thoughts on some of the best gluten free brands/products out there:

Pizza crusts: Hands down, the winner is Rustic Crust. These are fabulous -- two to a pack, shelf stable, affordable and taste great. You can buy them direct on Rustic's website and at more and more retailers across the country.

Cake/Cookie Mixes: Cherrybrook Kitchen takes the top spot here. This company has premium products that are both allergen-free and gluten-free. When it comes time to make cookies or a cake for a birth day party (in school or at home), every parent -- whether they have a GF child or one with a food allergy -- should be using a product like Cherrybrook. How is it fair for someone to bring in cupcakes from home that some kids in the class can not eat? Be inclusive and fair and use a product like Cherrybrook.

General baking mix: Pamela's gets high marks here. We use it to replace flour and it works well.

Other interesting brands and products out there include: Kind Bars (while not marketed primarily as gluten free, they are...and they are a huge hit in my house -- also a very high-profile recent investment by the private equity group VMG Partners-- a very competitive deal that earned a hefty valuation -- I bet they do well on the deal); Mary's Gone Crackers (the crackers and 'twigs" are great with hummus and salsa -- funded by the venture capital fund Greenmont Capital Partners); Arico Foods has had a nice growth story - see "40 Under 40" story in the Natural Foods Merchandiser; Sami's Bakery has the best gluten free bread in the market -- frozen all the way from Florida (9/9/09 UPDATE: I am sad to report that Sami's bread is not gluten free; although it is sold in the gluten free sections of many retailers, it is clearly not gluten free and people with gluten sensitivities may be best served by staying way form this bread)....; Bakery on Main has the best cereal -- their granola is far and away the best on the market -- even my 1-year old likes it.

There are obviously many more gluten free brands out there: Gluten Free Pantry -- can't get a better URL (they are funded by the Claridge Food Group) ....., and Kinnikinnick from Canada is a clear leader in the space -- although their overall branding/packaging could use some upgrading. Their recent frozen doughnuts are a huge improvement (and taste great). If you think I've missed some big ones, please let me know.

Growth is Good: New Natural Products Industry Data Released

2009-06-12T09:10:00.009-04:00

There is great new industry data on the natural products industry available in the June 2009 Natural Foods Merchandiser. You can download the industry data overview, by clicking here.

Some interesting highlights:

Natural products were a $68 billion category in 2008 -- up $6 Billion (around 10%) from 2007.

People are finally beginning to understand (in a big way) the need for Vitamin D -- sales in 2008 were up 94%. There has been a lot published in the science about the many beneficial effects of Vitamin D over the past few years and it is taking hold. I take 2000 IU / day religiously. I live in Maine, maybe I should be taking 20,000?

Sales via the internet were up 22% to $1.4B. Still a small overall part, but great growth. And for companies that can sell direct -- nice margin impacts.

The anti-aging and personal care category was flat.

Beer was up 11%, with 22% of the category now organic. A shout out to my friend Jon Cadoux from Peak Organic (also based in Portland, Maine) -- Peak makes some great organic beer. US craft brewing is a $6.3 billion industry, up 10.5% over last year. I'm also a big fan of Geary's, which is also based in the craft brewing capital of the world, Portland, Maine. Maybe that's also why we need so much Vitamin D....we're inside drinking beer too much....

NFM states that private label sales were - up only 5% and forecasts 7% growth in 2009. This is much smaller than I thought, given the economy and what I've seen elsewhere. Milk makes up 31% of natural private label sales with other dairy accounting for 29%. I guess a cow is a cow -- that's 60% of all natural private label sales. Private label salty snacks were a mere 2% of overall private label sales. Despite what some people say, brands still matter immensely.

Energy bar sales continue to grow: up to $61 million from $57 in 2007. Although Clif Bara and Lara Bars are #1 and #2 respectively in the category, I'm a big fan of Kind bars (recently invested in by VMG Partners, a private equity/venture capital firm in the Bay Area) and a newer entrant, Kardea. Kardea's bars are very interesting. They taste great, and through plant sterols, have beneficial health effects. Functional foods are very much the path of the future.

Gluten Free was up an amazing 28% to $1.6 billion. I can believe this easily. We have turned into a gluten free house. We don't have a celiac in the house, but someone in our family has a thyroid problem directly related to the intake of gluten. I meet a new person every week that is gluten free, it seems. One of our portfolio companies, The Rustic Crust, has an amazing Gluten Free Pizza Crust. Check out Rustic's new profile on Facebook and sign up to get a coupon. You can also order Rustic's crusts direct via their website.

This is a great, growth industry. Nice to avoid the doom and gloom out there everywhere else.

Recent Healthy Living Investment News

2009-05-18T09:49:00.007-04:00

Venture capital markets remain tight, but the health and wellness/health living trends are real, and the opportunities for solid businesses, first-movers, science-based products and strong brands remain.

Here is some news from some recent deals in this space:

Espresso Fitness (supplier/developer of interactive cardio systems) received $14 million in debt and equity (announced Dec. 2008). The round included debt from Silicon Valley Bank and equity from Sierra Ventures, Physic Ventures and Enterprise Partners Venture Capital.
Lifefactory Inc. completed a $750,000 round of seed funding from Greenhouse Capital Partners in March 2009 to support designing and manufacturing of green consumer products, such as BPA-free baby bottles.
Plum Organics became part of Catamount Ventures' Nest Collective in Feb. 2009. Plum markets and distributes processed food products to the infant and kids segments.
Sweet Leaf Tea landed $15.6 million from Nestle for a 35% stake in the company. My personal bet is that we see a radical brand redesign soon....just a guess. I found the following summary on this transaction and space from a 3/31/09 Nutrition Capital Network newsletter: "Last year Sweet Leaf Tea completed a round of funding from Catterton Partners, which committed $18 million of growth capital. Ready to drink teas, including organic, green and rooibos, have been a focus for big food and beverage companies seeking to expand their health & wellness offerings. In February 2008 Coca-Cola acquired a 40% interest in The Honest Tea Company, a niche manufacturer of certified organic RTD teas. Last summer, PepsiCo and Unilever announced a licensing agreement to manufacture, market and distribute Starbucks' premium RTD Tazo Tea."
Phil's Fresh Foods received an investment from Brendan Synnott's (Survivor/Bear Naked fame) Burrito Investment Group (BIG). From what I can tell, the company has been quickly re-branded as Evol. Again, NCN further reports: "BIG has secured the right to fund an additional $2 million to finalize the first tranche of the transaction. Additionally, BIG has the right to fully fund a second tranche. Phil's Fresh Foods, which was founded in 2001, increased sales 33% to $1.6 million in 2008 and has a 2009 goal of $6 million as the company plans mainstream supermarket expansion, according to a newspaper article posted on its website."

Trifecta! Healthy Living Venture Capital, Investment Banking and Consulting

2009-05-11T09:57:00.006-04:00

I've been joking lately that no one told me when you move to Maine, you end up with several, concurrent jobs. Well, five years after relocating to Portland from Boston, I now carry three business cards:

Silverwood Partners (Investment Banking), Managing Director Advisor
Royal River Associates (Consulting), Principal/Founder
CEI Community Ventures (Venture Capital), Principal

Most of my work (under all three hats) is focused on the Healthy Living sector (which I generally defined as driven by consumer trends espousing healthy, active and sustainable living -- such as nutrition, natural/organic foods, active sports, fitness, wellness, weight management, sustainable living...). This is a sector for which I have great passion and where I have focused the majority of my career building expertise and contacts over the past few years. That said, under Royal River Associates, I will also entertain an occasional growth strategy project of a more general nature, per my Bain & Co. background.

How did I end up with more than one job? I moved to Vacationland in 2004 to join a venture capital firm, CEI Community Ventures. The fund started operations in March 2003, which means that it will last until 2013. It's a relatively small fund, and I am one of two investment professionals. We made investments in nine companies, seven of which are currently active. Since September 2007, the fund has been fully invested (no investments in new companies; only follow-on investments in current portfolio companies, to the extent the fund has remaining capital reserved for those companies). Venture capital firms are operated by management companies (CEI Community Ventures, Inc. -- in this case -- manages CEI Community Ventures Fund LLC). When a fund is fully invested, the management company typically raises a new, follow-on fund. This means that the management company (and its employees) manage two funds simultaneously (mange out the first while investing the second) and take management fees from both. In the current economic environment, raising follow-on funds may take longer than in typical times. So, while I continue to manage my responsibilities with the portfolio of CEI Community Ventures, I am broadening my repertoire with both investment banking and consulting, in order to stay active in the market.

To do this I founded Royal River Associates (RRA), a consulting firm, earlier this year. Before entering venture capital, I was a management consultant with Bain & Co., Inc., regarded as one of the best consulting firms in the world for which to work. It was a terrific training ground. With RRA, I work with both early-stage and later-stage companies on a variety of issues (growth strategy, business planning, financial planning, etc.). But if I just did RRA, I would no be able to help companies with one of their most important needs and the thing that I have spent the majority of the last five years doing: assisting companies raise capital and advising companies on the sell side to achieve liquidity for management and investors. That is where Silverwood Partners comes in.

I am very happy to announce that I have joined Silverwood Partners as a Managing Director Advisor (see press release). Silverwood Partners is a sector-focused investment bank that provides M&A and private capital raising advisory services. The firm delivers acquisition, divestiture or corporate sale advisory, strategic-financial advisory and institutional financing services to companies in targeted business sectors. My focus with Silverwood will be consumer in general, and Healthy Living consumer in particular. My crash courses to pass the Series 7 and Series 63 exams are now over (success! and not fun) and I am now applying my deep industry relationships with the venture capital and private equity industry as well as angel investor and strategic buyer/investor contacts to work.

And I can do it all from the great state of Maine...

Win a $1,000 Shopping Spree from ISIS

2009-05-03T22:48:00.004-04:00

A quick post here as one of our portfolio companies has a new contest with some strong payback. Simply join ISIS’ email list to be entered for a chance to win a $1,000 shopping spree from ISIS! No purchase is required, but make sure you enter by May 15^th. Click here to sign up.

ISIS makes amazing women's apparel -- rainwear, sportswear, jackets....ISIS has become a huge hit in my house....my wife has around seven jackets and vests...and the eighth is on the way.

Good luck!

CEI Community Ventures in the Wall Street Journal

2009-04-21T22:26:00.005-04:00

My partner at CEI Community Ventures, Michael Gurau, was quoted in the Wall Street Journal today. Karen Mills, who was recently confirmed as the new Administrator of the US Small Business Administration, used to work with the Board of our fund. She will be a terrific asset for the SBA and for the future of SBA-backed equity programs. Here's an article about her from Business Week. Congratulations to Michael and Karen.

Stonyfield Farm Entrepreneurship Institute

2009-04-16T12:59:00.005-04:00

Tomorrow, I will be a Respondent on the Finance Panel at the 5th Annual Stonyfield Entrepeneurship Summit at UNH. Four years ago, together with Brad Sterl from Rustic Crust, I was the Finance "Case Study" at the Institute. This was before CEI Community Ventures' initial investment in Rustic, when Brad and I were solidifying our relationship as prospective investor/founder and had a signed term sheet, but still had to raise additional outside equity to complete the minimum amount required for Rustic's Series A round.

The Institute, billed as a "boot camp" for entrepreneurs, is described as "an interactive, intimate venue for networking, storytelling and problem solving." It's a unique forum featuring case studies in finance, marketing and organizational development. The Case Study entrepreneurs are described by the Institute as a "few brave souls selected to sit on the “hot seat” to have cases they submitted ahead of time explored by professional respondents and fellow participants." Everything said in the room stays in the room. And everyone is there to help and support, providing constructive criticism and ideas to help the entrepreneurs.

Tonight features Seventh Generation Chief Inspired Protagonist/Founder Jeffrey Hollender, providing the "Tales from the Trenches" of the remarkable Seventh Generation growth story.

This year's forum is fully booked, but if you'd like to go in the future, send an email to Michael Swack at Michael.Swack@unh.edu to make sure you are informed of future summits.

Nutrition Capital Network -- coming soon to NYC

2009-04-07T23:06:00.003-04:00

For investors (funds and individuals), I highly recommend attending the Nutrition Capital Network meeting, coming up in NYC on April 20/21. This will be the fourth NCN meeting and I've been to the previous three; they've been getting better and better. The format is simple: On April 20th there is a networking session and dinner -- a mixer for the investors and the 22 companies (selected from the 60-100 formal applications) invited to participate. Those companies each get 10 minutes to pitch their company on April 21. For those of you who have been to "pitch fests" and are now groaning, this one is well run and well screened. The 10-minute limit is strict (although I'm up for an eight-limit myself) and the program moves quickly. And the companies are good; in fact, I've noticed a quality improvement in each of the previous three meetings. This year, the presenters are described in the NCN materials as:

$30 million botanical supplement manufacturer
$12 million scalable local fresh foods and produce business
$5-10 million value-added produce brand
$5-10 million in food testing/lab services
$5-10 million specialty & natural food brand
$5-10 million natural functional chocolate company
$3-5 million in sustainable non-toxic baby products
$3-5 million specialty tea company
$3-5 million claim-based functional fruit juice business
$3-5-million high-growth natural personal care brand
$3-5-million integrated essential oil brand
$1-3 million supplements and functional foods for kids
$1-3 million natural sunscreen brand
Developer of functional, renewable plant proteins
Biotech development of patented condition-specific products
Proprietary enzymatic extraction process for nutritional oils
Proprietary cultivation process for DHA ingredients

If you are thinking of attending but still not sure, send me an email at mcb@ceicommunityventures.com and I can answer any questions. As you can tell, I'm a big fan.

It's not only good for seeing companies, but also for networking with fellow investors. I've built many great relationships in the industry from people that I have met at NCN events. I'll be in NYC in a few weeks and am already looking forward to it. This is a great indsutry with great people -- both in the companies and with investor groups.

Here's a list of some previous NCN investor attendees:

2x Consumer Products Growth Partners
AEA Investors LLC
Aisling Capital
Avrio Ventures
Bruckmann, Rosser, Sherrill & Co.
Burrill & Co.
CEI Community Ventures Inc.
Charterhouse Group, Inc.
Coca-Cola Company
Danisco
Dean Foods/ White Wave Foods
Del Monte Foods
Encore Consumer Capital
Fonterra
Friedman Fleischer & Lowe
General MIlls
Gerber (Nestlé)
Glanbia Nutritionals
Greenmont Capital Partners
Highland Consumer Fund
Hilco Equity Management, LLC
HSBC Capital (USA) Inc.
Hunt Private Equity Group, Inc.
Inventages
Kellogg Company
Kerry
Kraft Foods
Lonza AG
Mars Health & Nutrition U.S.
Maveron
Nestlé
North Castle Partners
Novus International Inc.
Otsuka Pharmaceutical Co., Ltd.
Pepsico
Prolog Ventures
Quaker Oats QTG Technical Center
Quilvest USA, Inc.
Redwood Securities Group, Inc.
Rosewood Capital
RSF Capital Management
Sea Change Management, LLC
Sherbrooke Capital
SJF Ventures
Tate & Lyle Ventures
The Dannon Company
TSG Consumer Partners
VMG Partner

Whole Foods has a Sense of Humor

2009-04-06T21:11:00.004-04:00

On April 1, 2009, the above image was taken from the home page of Whole Foods Market's web site. It's great to see the chain having a sense of humor over the "Whole Paycheck" nickname. The New York Times had an article last summer titled "Whole Foods Looks for a Fresh Image in Lean Times" that examined whether or not the nickname was deserved. The chain does get a much better distribution deal through UNFI and can offer better value for some natural/organic products than you might find elsewhere. For example, Putney Pasta's killer Skillet Meals sell at Whole Foods for $8.99 -- I've seen them in other places for sometimes over $10 and once over $11.

Healthy Living & Weight Loss: Take Two

2009-03-31T08:07:00.003-04:00

In January, I wrote about my story with weight loss. Last summer, I finally getting serious about those extra pounds I'd been carrying around for a few years.

Since I wrote the post, I've been contacted by two great friends who also lost significant weight and want to share their stories. It's also fascinating to me how the typical food Americans eat is so terrible. Case in point is an article saw yesterday with some good science on how fructose can lead to obesity. Personally, I find any food with high fructose corn syrup to be addictive -- if I have any, I want more. And after I eat anything with it (I don't any more), I always feel a bit ill after. The science now backs up the addictive sensation -- the research shows that the way that fructose is metabolized in the brain can lead to increased food intake and obesity. Some good comments from the article:

“We feel that these findings may have particular relevance to the massive increase in the use of high fructose sweeteners (both high fructose corn syrup and table sugar) in virtually all sweetened foods, most notably soft drinks,” said lead researcher M. Daniel Lane from The Johns Hopkins University School of Medicine.

“I hasten to point out that the situation is probably most critical with the younger population, particularly in the USA, where many children receive enormous amounts of fructose in soft drinks which they consume continuously and acutely. This would be expected to lead to substantial blood levels of fructose, as well as glucose.”

My weight loss plan is relatively simple:

Eat smaller amounts
Exercise: SPIN 2x/week plus one run; push-ups a few times/week.
No sugar or sweets
More fruits and vegetables
As little processed food as possible
Snack on nuts and KIND bars
Drink green tea with honey (here's a great write-up on the benefits)

It has worked for me -- I'm down 25 pounds from where I was last July. I think I'll feel a little better about myself this summer at the beach....

As for the stories from my friends, the first person is someone I've worked with in the past who lost 60 pounds last year. Again, it's simple diet and exercise....his plan:

It's not a real revelation or anything but eating less, more healthy meals and stepping up my exercise. The shocking thing was I have always done cardio but wasn't doing it hard enough or long enough. So, 6 days a week of intense cardio... one hour 4 days, 30 minutes two days. On those two days I only do 30, I also do strength training.

Eating, I haven't eliminated anything, I just don't overeat. I have added a lot of good fats (nuts, nut butters, olives, dark chocolate, and avocados) and that really staves off hunger. I eat 4 meals a day all similar in size (400 to 500 calories). I've cut back on fatty meats, fried foods, and non whole grains. I've also added a lot more dairy- yogurts, low fat milks and cheeses which I haven't really eaten for years b/c I thought I was lactose intolerant (turns out I'm not). Two big things is I've cut back my alcohol to about two drinks a week from about 10 drinks. And we don't eat out much anymore which is a huge thing in my opinion. The food that is served out is so bad for you even if you think it is good for your (get the book Eat This, Not That for you and your kids). Salads at Panerra or CPK might have 2000 calories and 80 grams of fat and you think you're eating healthy. Most places use so many oils, butters, salt you are losing the battle from the moment you sit down. We have two or three big cookbooks that list calories in meals and we follow those recipes diligently. Bottom line is the worst home cooking though is nothing compared to what you get out at restaurants.

The bottom line is I have had to change my whole way of thinking about and it has a required a much needed lifestyle change.

The second story is from a good friend of mine from business school. Like me, he actually works in the Health & Wellness space, but being busy let's the basics fall by the wayside.

hey – loved the blog about weight loss. i went through a similar thing after a fairly uncomplimentary photo taken just after christmas of me.

did pretty much the same as you. cut out mocha’s and pastries. lunch is spinach, raw mushrooms, ground flax, handful of nuts and balsamic. pretty much on a vegan diet and avoiding fats, juice etc. SPIN is in and i lost 15lbs in 7 weeks. probably another 10 to go and while i’ve relaxed a couple rules, i feel better now than i had done for a long time. clothes actually fit too!

well done – we’ll have a nice salad next week then.

Healthy Living Venture Capital Thoughts: Industry, Investors, Valuation, Terms

2009-03-23T10:04:00.011-04:00

Today I am following up on a recent blog where I mentioned that I would write more on what I see as happening in the natural products / healthy living venture capital space after the Natural Products Expo West earlier this month.

Later this week, I hope to make an announcement about a new affilition that I have which will allow me to raise capital for companies outside of the CEI Community Ventures portfolio (I will still retain my full role at CEI Community Ventures though). Stay tuned for more....

Today's discussion has some of my thoughts on...

What's happening with the industry?
Are deals getting done?
What should companies be thinking about?
What's new with deal terms?

The short answer is that the industry is still growing, but at a lesser rate (12.5% in 2008) and it is a strong place to be, but micro-trends are important to look at. Some important micro-trends:

Retailers are responding to the economy by offering more value, that translates into retailers like Whole Foods Market selling multi-pack products typically reserved for club stores (three Kashi cereal boxes bundled together, Rustic Crust pizza kit boxes [three crusts and sauce packs together]) and moving more and more products to private label.
Customers are asking themselves if the extra cost for organic is worth it for all products and in some cases are trading down from organic to natural or natural to conventional. A mother may say that organic milk is a necessity, but maybe not organic oats.
Probiotics are hot-- another reflection of the continued movement towards functional foods. There are now 20 probiotic strains used in dietary supplements and functional foods or in mainstream food products. Click here for a very good, recent 12-page report on probiotics. As stated above, probiotics are really a part of the move towards functional foods. If a food has antioxidants, can improve cholesterol, reduce blood pressure, improve cardio health, it's on trend. One great example are nutraceutical drinks -- up anther 9% in 2008.
Allergen-free / gluten free living is growing fast and here to stay. This is not a fad, but here for the long term. More and more children, and especially adults, are learning about food allergies and realizing that they have one or several. Gluten Free sales hit $1.4 billion in 2008 in the US and are predicted to grow another 30% or so in 2009. Sales could hit $2.6 billion by 2012.

On the investment side, the industry is getting more professional and there are more and more entrants (dedicated venture capital funds to healthy living, traditional funds looking to do deals in the space, family offices, angel investors, larger private equity funds with capital to deploy and interest in the industry and fundless sponsors looking to do deals). One might think that more capital in the space might mean that valuations will remain high. That's not the case. Although there may be more entrants in the space competing for deals, many funds are still gun shy at the moment due to the economy or what they might be seeing in the rest of their portfolio. And there is still a large dearth in early-stage financing available (for companies doing less than $3MM in sales). This is difficult capital to access. Many funds are bargain hunting at the moment -- looking for companies at/near profitability with current investors who are tired or out of capital.

What does this mean for terms: Valuations are down and downside protection is in. In some cases, valuations are down as much as 40-50% of where they were a year ago, but in many cases down 20-30% might be the norm. Companies should be aware of this and prepared for it. I have seen too many entrepreneurs hold out for that elusive valuation and kill the company in the proces -- literally walking away with nothing. Entrepreneurs may all think that they deserve the 2-3X+ sales valuation, but very few will get it today. Too many entrepreneurs compare themselves to the metrics of deals lie Izze, Vitamin Water, Fuze and Stacy's Pita Chips, not realizing that pretty much only beverages and salty snacks get the highest valuations (Pepsi/Coke or Frito Lay can blow out distribution overnight to the near 150,000 convenience stores in the US and turn a $20MM business into a $200MM business). Another outlier can be personal care, primarily due to Burt's Bees. But personal care has 60-80% margins and that deal was a relative outlier in a different economy and should be recognized as such. The following summarizes comments I made publicly at an investor forum at Expo West:

Understand that raising capital in today's market is difficult, but it can be done. How you act during the process and your expectations will impact your chances of success or failure;
Think about raising less capital now than they may have originally thought -- prove the model and prove yourself;
Proof elements might include:

- Profitability: Many companies should think about getting to profitability as soon as possible (less topline focused); don't abandon the topline as investors use that as a marker for future valuation, but understand that you should make your current capital take you as far and long as possible in today's environment;

- Show success: Create a "healthy" business that an investor can extrapolate from (go "deep" not "wide"). Get a key retailer like Publix, Kroger, Wegman's, Whole Food Market signed up and blow it out of the water. Show that you are a "must have" for others and that you can scale and be big and profitable. Don't dilute your precious capital on getting to 5000 doors overnight, neglecting the fact that your product needs to be more than a shelf warmer for you to stay alive;
Get realistic on valuation. Overall, valuations are down. That said, there are companies out there still getting great valuations for true home runs that have some solid proof points accomplished;
Be prepared to provide downside protection to investors; set it to measurable metrics and milestones (if you say that you are going to achieve something -- whether it be revenue, ebitda, number of retailers, product velocity), then do it. If you fail, then acknowledge the investor should be compensated; and
Realize that you have one chance to prove and retain credibility: so be realistic in what you say you will achieve.

In essence, prove that your business model can scale, customers will love the product and you can be a profitable company that acquirers must have. Deals are getting done in the market today, the more realistic you can be an demonstrate that you are in it for the equity (not current pay) and that you are looking for a partner and mutual success, the better off you'll be.

Natural Product Market Data from Expo West & free issue of Nutrition Business Journal

2009-03-17T16:21:00.017-04:00

Friends from the Nutrition Business Journal (NBJ) have been gracious in allowing me to share some great industry presentations (some great data in here) given this year at Expo West.

In addition, NBJ is willing to give a free sample issue of NBJ ($199 value). Click here to get the free issue. If you decide to buy a subscription, NBJ has told me that if you type "CEI" next to your name when you sign up they will take $50 off one of a 2009 web seminar of your choice.

Click here to get the following presentations:

NBJ: State of the Industry -- Patrick Rea

Leading off the State of the Industry panel, Patrick sets the stage with the numbers – quantifying and forecasting out the growth NBJ is currently predicting for the U.S. nutrition industry. In addition, he examines the health and wellness of the U.S. nutrition industry financial markets, the emotional state of the industry and what to expect at Natural Products Expo West.

Patrick Rea is Publisher and Editorial Director of Nutrition Business Journal (NBJ) a market research, publishing and consulting firm serving the nutrition, natural products and alternative health care industries. Rea is also the Co-Chair of The NBJ Summit, an exclusive retreat for C-level executives in the nutrition industry. Rea joined Nutrition Business Journal in 1999 as Research Director, where he led NBJ's research and consulting activities. In 2005 through 2007, Rea served as Director of eMedia for New Hope Natural Media.

NBJ State of the Industry -- Carlotta Mast

In Carlotta’s presentation, she outlines the issues and trends that will significantly impact the U.S. nutrition industry in 2009. From regulatory challenges, product development opportunities and new ingredient launches, Carlotta speaks from her experience as Editor of Nutrition Business Journal.

A graduate of the Medill School of Journalism at Northwestern University, Carlotta has 15 years of business and health writing and research experience. Prior to joining Nutrition Business Journal as editor in March 2008, she was a senior analyst with The Kelsey Group and a long-time contributor to Delicious Living magazine and other health publications.

Hot Changes in the Market -- Bob Burke

In this presentation, Bob presents his admittedly unscientific, but most interesting state of new products in the natural products industry. Always the most entertaining and new product focused part of the State of the Industry panel, Bob gets input from leading retail and distributor buyers and brokers and presents emerging categories, products, brands and where they are seeing growing consumer interest.

As a consultant since 1998, Bob Burke provides assistance in strategic planning, growth strategies, writing sales, marketing and business plans, budgeting, pricing, building distribution, broker selection and management, organizational development, strategic options, export plans, branding and trade spending management. He is also the co-author and co-publisher of the Natural Products Field Manual, Fourth Edition, Staking out Space on the Supermarket Shelf, and The Sales Manager’s Handbook.

Industry Retail Trends -- Mike Movitz, SPINS

In this deck of slides, Michael digs deep into the nuance and subtlety of the retail market for natural products. Comparing independent natural retailers, Whole Foods and the Food/Drug/Mass channel (thanks to a partnership with Nielsen), Mike’s presentation debunks many myths about a downturn in the natural products industry.

As Vice President of Business Development for SPINS, Michael Movitz has 17 years natural products industry experience across retail, manufacturer, broker, and information supplier companies. He currently supports SPINS’ client development team to solve clients’ strategic and tactical business objectives. Michael is also responsible for facilitating SPINS’ new service development and service enhancements; developing strategic agreements with SPINS partners; and assisting in the development of industry macro trend reporting across retail, consumer & product segments.

Expo West 2009: What Recession?

2009-03-12T09:21:00.007-04:00

Last week I was at the Natural Products Expo West in Anaheim, CA. I'll post more later on some more detailed observations, but I did not want to delay any more in getting some intitial thoughts posted.

What recession? The natural/organic industry grew 11% in 2008 and projects to grow at 8% in 2009 (Natural Business Journal presentation). Yes, a growth industry not related to government, healthcare or bankruptcy attorneys. Projected growth is down from previous projections, but we're still talking close to double-digit growth. The positive vibes from the show floor and companies is real and palpable. That said, there are some real trends inside the industry that do reflect the current economy:

Private label growing fast: Natural/organic (N/O)private label was up 71% in 2008 and will likely see similar growth this year. 36% of N/O consumers say they are spending less.
Value packs are in: My friend Bob Burke reports that value size packages are increasing. Multi-product packs that used to be reserved for club stores like Costco are now finding their way into chains like Whole Foods Market. To see Bob's great "What's Hot" presentation from Expo, click here.
Consumers are trading down from organic to natural: 52% of N/O consumers are buying less due to cost.

Expo is Big, and Still Getting Bigger: There were 1900 exhibitor booths (same as previous year) and attendance was up to 53,000 from 50,000. This is a big show. I walked the floor with intermittent meetings on Friday and Saturday for a combined 16 hours and didn't even get to go through every aisle -- I think I saw around 65% of the show. Unfortunately, I think I need three days to do the show justice.

In the next few weeka I plan to blog more on the following topic from Expo and the industry:

Venture Capital/Deals in the space: What's happening? What should companies be thinking about? What's new with deal terms?

For those with companies in the industry, I am also available now to consult for companies and to assist with raising capital. See Royal River Associates for more detail. The Case Studies section is new.

The Benefits of Long Flights: Case Studies now live on Royal River Associates

2009-03-05T00:55:00.010-05:00

When you have a flight across the country, it's amazing how much work you can get done (assuming it's not a redeye, of course). It's a stark reminder how many intrusions we have in our daily work routine from the internet, email, phone, co-workers, the coffee maker.... When you are forced to stay in one space for six hours, a lot can get accomplished. Today I flew from Portland, ME to Los Angeles, CA for the Natural Products Expo West. I've come to love six hour flights. I let my inbox build up in the few days before as I know I'll have time to go through it from top to bottom and reply to emails, file away and delete. I build a "to read" folder and ignore the week prior to the flight.

With a 4am wake-up call today (1am PST, I should be telling myself), I can't say I worked all six hours of flight time today, but after my double-bag green tea at Dulles (there is no direct flight west of DC from Portland, ME and regular readers will remember that I am addicted to green tea with honey), the second flight leg of the trip was all work.

Today's work was continued work on my new consulting firm,

Royal River Associates.

It's amazing to see how little it can cost to start a company -- I incorporated online, designed a logo for $60 online, got 500 business cards online for $30 and a baseball cap with my logo for $10. And I've spent around $150 to get my domain name, build my web site and get hosting/email services in place. I don't think I had to spend even $600 to get everything in place.

Today's main task on the flight was to design and write the Case Studies section of my web site. I wanted to effectively demonstrate the work I've done with both smaller, early-stage companies in venture capital and the larger, later-stage/mature companies that I worked with when I was with Bain & Co., Inc. I'm not 100% satisfied with the end product, but it works for now. I wanted to get the section of the site live before Expo started as I hope to make contact with many prospective clients.

Check out the Case Studies section of the site and provide some candid feedback. Web creation is like writing. When I was at graduate school at Duke, I learned a valuable lesson about writing: "There is no such thing as good writing; only good re-writing." Life is the same way. We start where we are, and then we try and improve from there.

Health & Wellness: Still Growing --Expo West this week

2009-03-03T14:31:00.008-05:00

I'll be at the Natural Products Expo West this week. Send me an email at mcb@ceicommunityventures.com if you'd like to touch base. Expo West is now one of the largest tradeshows in the US -- with over 3000 exhibitors and over 50,000 attendees. I'll be there looking at interesting new companies and products and in support of Putney Pasta and Rustic Crust. One of the first companies that I am working with under Royal River Associates (RRA), Blake's All Natural, will also be there. If you have a natural products company and are looking for assistance, perhaps RRA can help you. I'm hoping to write some of the Case Studies for the RRA website on the plane ride out to California -- perhaps the stories of how I've worked with Putney and Rustic over the past few years in creating the brands, developing the teams, crating new product lines, raising capital, etc... And some of the strategic work I've done for larger, Fortune 500 companies when I was a Consultant at Bain & Co., Inc.

One thing is for sure, even in this deep recession, natural/organic foods is still a growth industry. I saw an article today from Sustainable Food News (I highly recommend this daily online newsletter) that growth in the US organic sector has fallen, but still remains a strong double-digit 12.5%.

Available for Consulting Now: Royal River Associates

2009-03-02T09:57:00.008-05:00

In addition to doing venture capital at CEI Community Ventures, I have also just launched a new consulting firm, Royal River Associates (RRA). I am now available for hire to do consulting projects or on a retainer basis for companies -- both large and small. I plan to use my experience as a management consultant from Bain & Co. with my venture experience to help companies in a variety of ways.

On my website (a definite v 1.0), I list some sample services that RRA can perform:

Growth Strategy Development and Training
Business Plan Development
Advanced Modeling
Financial Analysis
Detailed, Bottom-up Pro-Forma Development (Growth Plans)
Business Analysis (Operations, Cost Structure, ROI, etc…)
Team Development
Needs Assessments
Board Advisor
Management Mentoring
Presentation Development (PowerPoint for Investors, Sales Materials, Training, etc.)
Capital Formation Advice/Direction
Marketing/Branding Assistance
Strategic Roadmap
Part-Time Operating Roles

I'm excited about this next chapter of my career and look forward to start working with some new businesses.

One area of focus will certainly remain Health & Wellness/Natural Products. I'll be out at the Natural Products Expo West this week, so if you'd like to meet out at Expo, send me an email at mike@royalriverassociates.com.

Foneshow in the Boston Globe

2009-02-01T08:43:00.007-05:00

One of our portfolio companies that I am a huge fan of, Foneshow, is featured in today's Boston Globe.

The article talks about several startups in the new media space, but leads with Foneshow and gives it good air time. To read the article, click here: Media Entrepreneurs Test new Ways to Get the Message Across.

Here's some of my favorite new Foneshow content:

- CNN Marketplace Update

- President Obama's Weekly Radio Address (image above)

- Comic Wonder Audio Joke of the Day

- MLB Radio Daily (very excited that Varitek is back with the Sox....bring on the season and end this winter....)

If you'd like to learn more about Foneshow, let me know. I'm a big user and have blogged about Foneshow several times.

Now if we could only have the Boston Red Sox do a five-minute post-game summary and publish through Foneshow....that would be the BEST!

Living, Not Just Investing, Health and Wellness

2009-01-28T10:04:00.010-05:00

This is a longer post than usual, but it took a long time to make happen, so I had to tell the story.

Over the past few years, through CEI Community Ventures, I've been an active investor in the Health & Wellness space. Our fund has led deals in four natural products companies: Be Products Co. (Be Fine Food Skin Care), The Rustic Crust, Putney Pasta and Bar Harbor Foods (Look's Gourmet Food Co).

Part of the thesis in investing in these companies is that Americans are becoming increasingly aware of the importance of what they put in and on their bodies. America has an obesity epidemic. We eat junk and too much of it; a diet of high fructose corn syrup, processed foods, salt, sugar, candy, sweets, trans fats, artificial colors, preservatives and pesticides have become the norm. As a nation, we are too fat and too sick; we exercise too little; we're addicted to medications to alleviate symptoms and fail to address the root cause. Diabetes is on the rise. And all of this means that we pay more than ever for "health care" -- really "sick care" and fail to see the results we should. And we should know better. A health care system would be linked and incentivized to address prevention, not treatment. Follow the money. The dollars are in drugs, doctor visits, cheap food with low-quality ingredients.

What is interesting though is that while things are getting bad on the health side of the house, awareness of what needs to happen to change things is also increasing. Natural/organic food and personal care consumption and use continues to grow. The movement is real. "Buying green" is a long-term trend that is here to stay.

My problem: I know all abut the but was failing to fully live up to it. I eat natural/organic when I can, but with my job, I spend a of of time on the road – literally on the road driving from company to company and other travel, meaning hotels, restaurants and C-stores. As a result, I eat out a lot – a difficult thing to do healthily. When the late-afternoon meeting organizer brings out the ubiquitous cookie tray, it's hard to say no to the sugar rush. Fizzy juice (sugar) drinks or VitaminWater taste a lot better than water. But they are sugar. Not god for you.... So each year, it seems that another two-to-three pounds were added to my frame. Over the course of five years or so, this added up to some pretty unattractive numbers. But the “wake up” moment for me came this past June when I saw a doctor for an annual physical and had my cholesterol checked. Up until this time, I’d never had a problem so while I was not happy with the extra pounds, it did not feel threatening. But this time my cholesterol came back at a number where the doctor said it was time to monitor it and if it got worse, we’d talk medication. WHAT? Medication? No way. Give me a foreign substance to deal with a symptom, not address the cause and lead to other side effects? It was time to get real -- and I knew it.

Every six months or so for the past few years, I get on a health kick talk. Talk was the problem though. No action. I go running a few times, eat some fruit…and then forget about it. No more. It was time to walk (perhaps run) the talk.

So I devised a program. It was simple. I had rules. I had to follow them. I have three kids and want to be around for a very, very long time – and be fit and active for those years. The call from the doctor with the cholesterol number was on June 30, 2008. That day, the changes began.

Over time, we all pick up tidbits of advice and information from many sources. From those, we create something that can work for us. Here’s what I decided to do to lose around 15 pounds (or whatever was needed to get my cholesterol down):

· No food after dinner, ever: Snacking after dinner kills. You don’t really need it.

· No sweets, ever: Cookies kill. When I have one, I want another. Sugar is bad for us. It depresses the immune system. Sugar should be avoided at all costs.

· Smaller portions: My wife always says I that no matter what, I eat what’s on my plate. The problem is that’s usually way to much – esp. if you are eating out at a restaurant. Size does matter.

· Salads every day for lunch: Lettuce, veggies and a protein like chicken or herring (yes, I ate Bar Harbor herring a lot…)

· Get real with vitamins: Vitamin D and Cor-Omega (omega 3) every morning. I just put an outlook reminder in my calendar every day for 8am. I don’t dismiss it until I take the vitamins. Yes, I am a person that needs to check off lists and write things down.

· Drink green tea – a lot of it: Green tea is catching on and the benefits seem to be immense. I brew around three cups a day with a little honey. When on the road, I buy water and green tea only. My personal favorite is Honest Tea. But even Lipton and Snapple have green teas. But while the Lipton/Snapple versions have no high fructose corn syrup, they are still way to sweet with to much sugar. Fuze also has a god green tea. No more coffee means no more cream. I'm sure this adds up...

· No baked goods. It’s very easy to get a scone or muffin at the coffee shop. Not a good idea. I never eat any baked goods besides bread for a sandwich. They’re not necessary.

· Eat whole foods. I used to eat a lot of organic, processed “energy bars” for snacks. They are organic, right? So they are healthy. Not necessarily. Like cookies, when I had one, I wanted another. They did not fill me up. An organic chocolate chip/peanut butter bar is really a mid-day dessert. I switched to a new bar called Kind that is essentially nuts and fruit. Whole Foods. I eat less and feel full. I also snack on nuts a lot – almonds are one of my best friend now. Walnuts are also good. Raw and no salt. Just a handful. For breakfast, I eat whole oat outmeal with blueberries, cinammon and a little maple syrup (no brown sugar). I soak the oatmeal the night before in some yogurt -- it tastes better, is easier to cook and healthier.

· Exercise: You can’t get really healthy with either all diet changes or all exercise changes. I started running around three times a week. I also started doing pushups. I had not done these for years and was disgusted that I tired out at around 20-25. That number was a lot higher in high school and college…

· Measure it. I always tell my companies that metrics matter. If you don’t record it and show it graphically, it isn’t real. So I decided to weigh myself consistently on the same scale at the same time of the day over time. I created a spreadsheet (geek, yes I know – I was a Consultant atB ain & Co., what do you expect?) to record, by date, my weight, the exercise I did and the number of pushups I did. I then graphed the weight numbers (the graphic at the top of this post).

Results: I lost a half a pound in the first five days. A little disappointing as I like results, and quickly. A typical VC perhaps. Then I lost two pounds in the next three days -- this was more like it! Now we’re talking. Measuring the numbers and and writing them down makes it very real – and mad me want to keep going. Eighteen days later (the end of July) I had dropped another five pounds. Now it was getting addictive. You know what I learned? This isn’t that hard. Actions add up. By the end of August I had lost another seven pounds. I was now 16 pounds lighter than I had been just two months prior, had theoretically reached my goal and was only five pounds away from my high school weight when I worked out all the time and had two-a-days with football. And now I could easily do 50-60 pushups at a time. Amazing. No time to stop there. The Fall was coming up and I was afraid the winter would lead to no more running and put me back up, so I signed up for a SPIN class. This was one of the best things I ever did – I started spinning on Sept. 9 – by the end of Sept. I was at that high school weight, which had been a distant goal (pipe dream, more likely) of mine for over 10 years, and I could do sets of pushups back-to-back that added up to about 100 pushups. I now SPIN twice a week at a 6am class. I love it.

But the real goal remained unknown: what had happened to my cholesterol? The results came back in early September…and they were awesome. My cholesterol had fallen 57 points. My HDL (good cholesterol) had gone up five points. My doctor said he was amazed by this HDL change in such a short period of time. He called my a “poster child.” I liked that. My LDL fell 54 points. My jeans went from a 38 waist to a 34. I had a ton more energy. This is great.

Today's diet: My doctor worried about my ability to sustain my strict plan. I said (and believe) that this is really now a long-term lifestyle change. I really don’t need cookies and ice cream. I'm very aware of what I eat and the consequences of everything that goes into your body. And once you stop eating junk, you honestly don’t really want it. My doctor suggested I try and have a dessert as a reward one time/week. Feels dangerous to me... but now that I've reached a good weight, I have put a few things back in my diet that I completely removed before: I had originally had no dairy or peanut butter. Now I occasionally have some cheese and peanut butter. I have salads a few times a week for lunch and usually with dinner, but I eat a larger variety of foods. I’ll even have a small dessert once and a while. But I strictly monitor my weight. If it goes up, time to get back to strict. I’ve reached a goal and I’m not letting go of it. My diet still has fundamentally changed and some rules remain, such as no food after dinner, smaller portions, more whole foods, etc... I don't think I'll ever eat ice cream again as long as I live and I'm actually quite happy about it. Odd, I know.

A new way of living: I’ve now settled in, more or less, around my high school weight. I’d like to lose five pounds or so more, but that’s it. And I don't feel in a rush to get there. This is a long-term lifestyle change. My wife bought me a heart rate monitor watch for my birthday and my resting heart rate is 41. Websites say that the resting heart rate of a well-trained athlete is under 50. I can certainly say that’s not how I felt six months ago in June. Lance Armstrong had his down to 31-32. I'm not there yet, but feeling good...

And I continue to learn about what I should eat and why. Last week I saw a study that green tea can help lead to weight loss. I guess I agree. I also think the nut-based energy bars are a big deal in this overall equation.

I’m now living what I know and have somewhat preached. Life is much better this way. I just turned 39 but feel younger than I did at 30. I'm not afraid of 40 - bring it on!