In today´s over saturated consumer ecosystem venture capital funds that thrive are not the ones that focus on fleeting trends, but rather, on maximizing value by providing growth and momentum capital to visionary entrepreneurs and disruptive companies that develop innovative solutions for mass consumption.
This is the case of Manhattan based Blue Scorpion Investments, a fund that under Gautam Ahuja´s leadership has consolidated a profitable and environmentally friendly investment philosophy and accomplished a successful track record by identifying socially conscious companies that disrupt consumer behavior and providing strategic assistance as well as capital for growth.We spoke with Mr. Ahuja, and learned more about the revolutionary thinking behind his fund´s large scale success stories.
How did you first start your career in venture capital and investing?
While I was a Managing Director at Credit Suisse, I started investing my personal money into consumer startup companies since 2010 as I was restricted to trade public companies and had to find alternative ways to deploy my capital. I really enjoyed working with entrepreneurs and guiding them through business and finance decisions in order to help build their foundations to gain a strong growth trajectory with quick path to profitability. Seeing the entrepreneurs succeed with my help and them appreciating my added value, made me want to do this full time. By 2014 Investment Banking had evolved a lot and being a senior managing director, I was more involved with internal politics than revenue production and stopped loving my investment banking job. In addition, I saw that traditional VC funds were not really hands on with helping their entrepreneurs and I felt it was time to reinvent the VC game as it applies to consumer and at that point I decided it was time for me to move on and leave my banking career at my peak to start a career in VC. So I left Credit Suisse to start the fund with my business partner, Jamison Ernest who at that time was one of my closest friends and we were both investing personally together as we had complementary skill sets.
What has been the most challenging aspect of running Blue Scorpion?
The most challenging aspect about my job was raising capital for our first fund. Since both Jamison and I didn’t come from venture capital and didn’t have a dedicated fund to track returns, it was hard to convince people to give us capital. When we both quit our full time jobs, we thought raising money would be easy for us given we both came from the highest pedigree of what we did and teaming up was all we needed to do. I was a senior Managing Director and one of the highest producers at Credit Suisse in my group, and Jamison was known for his exceptional press worthy skill and execution in both creative and marketing for companies such as Diesel and Red Bull. But we didn’t give up and we were relentless in selling our vision over and over again. After countless rejections and almost one year into it, we finally were able to raise a decent size fund to execute on our vision and closed on our first fund on my birthday on Oct 14th, 2015. It was one of the best gifts I could ask for!
Can you share two projects or companies that have been big success stories for you?
I would say Quip and Thursday Boots have been very successful for us and we have been instrumental in adding value to both of them on top of deploying capital in them to help them grow very rapidly. Here are some examples on how we have helped both companies. On Quip, we were lead in their pre-series A and helped them secure their Series A lead which was Acme (formerly known as Sherpa Capital), we did their first brand partnership with Charity Water, and countless product placements with influencers and celebrities. We continue to help them and are now working on helping them secure their path to exit now that their revenue in 3 years is almost 20 times more annually. On Thursday Boots, we helped them secure a lot of influential co-investors, activated various marketing initiatives to boast their women's line that was weaker which was 10% of revenue when we invested and is now around 25% of revenue. In addition, both the revenue and team was growing exponentially so we helped them with the organizational structure and a system of delegation and accountability that would allow them to grow headcount without losing control and accountability.
Where do you see consumer trends moving to in 2020?
Here are some of the main highlights we see. A) We see continued innovation in new consumer product and services that are more specialized in a niche and better serve the customer than the past offerings. Since we already talked about Thursday Boots, they are an example of this. B) We see socially conscious consumer brands becoming more abundant as consumers have started demanding this. According to SAP, it shows that 52% of customers during the holiday sales period were willing to pay premium for socially conscious brands. C) Continued creation of new categories that create a new need for customers that we didn’t even know we needed until they emerge. Uber is an example of this, making it easier to commute without having need to drive, Peleton is another example where you can have your own exercise bike and join a class, and Quip is also a great example where oral care becomes thoughtless and is integrated with products, subscriptions and care.
Can you share a piece of advice for entrepreneurs looking to secure investment capital?
My biggest advice is to look for investment partners who can really solve the problems they are facing and are willing to go the extra mile to help them succeed. Also, it's important to have investment partners who they get along with and can work with on a day to day basis, as end of day it's another form of relationship that lasts a long time. Another piece of advise on more the art of raising capital is, make sure the business is well thought out at each stage of capital raising and you have looked at it from various angles and tire kicked on the business plan so you can address all the concerns VCs have so the chance of them investing is high. Lastly make sure your business has a clear path to profitability as gone our days when just data and revenue growth will get you the capital.
