Selva Ventures
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Selva Ventures

Introduction to Selva Ventures

Investing in Brands that Make Their Consumers’ Lives Better

Selva Ventures was founded in 2019 with an ambitious mission: to invest in brands that make their consumers’ lives better. We believe that health and wellness is one of the most important pillars of the consumer economy. Healthier people are happier, more productive, live longer and cost less to our healthcare system. For many people, living healthier lives is complicated, confusing, expensive and inconvenient; we hope to play a part in changing that.

To us, making consumers’ lives better means better ingredients, better function and better emotional connection with the consumer. It means nutrition, personal care and technology with high quality inputs that the consumer can trust; it means products that deliver on their promises with real efficacy; and it means experiences that the consumer can truly engage with, making their wellness journey fulfilling rather than a chore. We know one thing for sure: when healthy habits are engaging, rewarding and fun they are far more likely to stick and therefore have a lasting impact.

We know one thing for sure: when healthy habits are engaging, rewarding and fun they are far more likely to stick and therefore have a lasting impact.

We named our firm ‘Selva’, inspired by the Spanish word for ‘Rainforest’, because in many ways the rainforest embodies our mission. The rainforest is the world’s greatest incubator of life; rainforests provide more than 25% of the earth’s oxygen, more than 40% of its species, and are the world’s largest producer of natural medicines.

The rainforest also symbolizes the difficulty of our task: to find the one in a hundred brands that will penetrate to the masses. While an aerial view of a rainforest will show a dense canopy, that canopy is actually the third of four layers in the ecosystem. The fourth, the emergent layer, are those rare trees (less than 1% of the ecosystem) that grow above the canopy; our goal is to find these unique game changers early, long before it is obvious, and help them reach their potential. Our respect for and focus on this emergent layer is depicted by the blue ‘tree’ running through our logo, passing by the lower three green layers below.

Our logo depicts a leaf (as a nod to the rainforest) but also can be unpacked to show a tree from the emergent layer (in blue) penetrating the lower three layers of the rainforest (in green).

Why We Exist

Our firm came to be to solve a unique and acute need that is present in the ecosystem of emerging consumer brands. While the growth and buyout stages of consumer private equity are flush with world class firms, the earliest stage of investment remains incredibly fragmented. Seed and Series A stage branded consumer goods companies often struggle to raise capital from strategic investors in spite of compelling product, market and early traction.

Ask entrepreneurs about this and they will commonly tell you that consumer funds will tell them they’re “too early”, traditional venture firms will say they “don’t do consumer products” and so their early financing rounds are funded by angel investors and family offices. These are wonderful supporters, but they rarely have the time or resources to move the needle for the Company. The opportunity to specialize in supporting unique brands at this attractive stage of their journey was (and continues to be) the inspiration of Selva Ventures.

Our Thesis

The Wellness Economy is Booming

The wellness economy is absolutely booming worldwide, a market of $4.5 trillion that represents 6% of total global economic output. People are demanding better products to put in, on and around their bodies, and better experiences that make healthier living easier and more fun. Wellness has culturally surpassed traditional luxury brands as the way younger people want to spend and exhibit their wealth. This is a massive generational shift.

Younger brands are uniquely meeting consumer needs with valuable innovation, and in doing so are driving the wellness economy forward

People are demanding innovation in the foods they eat, the fitness routines they pursue, the clothing they wear and the gadgets they use to keep score of and engage in their wellness journeys. Who has created the innovation to meet these evolving consumer needs? Brands that did not exist a decade or two ago.

Barriers to Entry are Falling

While incumbents have focused on cost and margins, the barriers to entry have slowly eroded allowing young companies to use new channels and variable cost structures to exploit their deep insights of the consumer. If you wanted to build a consumer products company in 2005, you would have had high fixed costs in product manufacturing, marketing & hiring.

Many of the structural barriers to launching a consumer products company have crumbled as a largely variable cost structure is available to startups out of the gate

Today, brands have access to specialty contract manufacturers who will lower their minimum order quantity, social media to reach consumers with surgical precision, eCommerce platforms (Shopify and Amazon) to monetize their traffic and agencies to access talent from the outset. So much of the startup costs can be variable early on, so a small seed round can have you up and running in the market quite efficiently.

Success is Happening Faster

The success stories are now so much faster than “the old days”. Social media has created virality and pop culture has fueled it, but retailers have played a very important role in providing scale. For decades, the country’s largest retailers (Walmart, Target, Costco, Kroger) demanded proof of success in smaller channels in order to give shelf-space to a brand. The result was a 5–10 year slog to build national distribution: prove yourself in a farmer’s market, then natural retail, then Whole Foods, then Safeway, and only then will mass retail embrace you.

Today, mass retailers are skipping that whole process thanks to the unlocks of company data. Shopify, Amazon and social data can provide a powerful signal to the retailer that consumers of an emerging brand live near their stores and fit their demographics. The result has been Walmart, Target and Costco going all-in on certain small brands, providing access to the masses and creating explosive growth in the process.

Legacy Incumbents Can’t Keep Up

In spite of their endless resources, large incumbents are not built to meet these consumer needs. They have actually accepted this long ago, and as they lose market share to smaller brands they are consistently allocating R&D capital towards M&A. If this dynamic sounds familiar, think back to the acquisition environment of large and specialty pharmaceuticals over the past 20 years.

Source: S&P Capital IQ & Pitchbook; Note: Deal volume (in $) is understated due to majority of deals not having announced deal size

This dynamic is happening everywhere in wellness, especially consumer packaged goods: food, beverage, personal care, beauty, vitamins and pet. Legacy incumbents have turned M&A into their growth engine. Acquirers can focus on what they’re good at: sales and distribution; and then leave the risk taking and innovation to the entrepreneurs. Besides, those same entrepreneurs could not possibly create those same innovations within the walls of legacy incumbents: too many bosses to impress, too many committees to clear, too much concern with quarterly earnings to make non-consensus long-term bets.

Looking Forward

We see a golden age of consumer products on the horizon, driven by our society’s continuous learning about what we need to live healthier lives. We view entrepreneurship as the answer to solving the problems we know about and the problems we will soon discover. We are proud to partner with these amazing founders to give them capital, strategic resources, network, advice and moral support, and in doing so we hope to play a role in making consumers’ lives better.

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Kiva Dickinson

Kiva Dickinson

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Consumer Investor / Founder of Selva Ventures / Proud Canadian Living in San Francisco