Private equity firm Alliance Consumer Growth announced this week the close of its fourth fund at $350 million.
ACG managing partner Josh Goldin told NOSH that the fund was capped at $350 — an increase from its third fund at $210 million. The limited partners in the fund, Goldin said, were primarily returning investors comprised of family offices, high net worth individuals and families in the CPG space, as well as a handful of blue chip institutional investors.
The bicoastal firm, which has invested in brands including Way Better Snacks, Krave, Suja and most recently Clio, was originally formed in 2011 and invests in emerging brands in the food, beverage, beauty and restaurant space. Unlike some other funds, ACG only takes non-controlling, minority stakes in companies.
Goldin said the increased fund size will allow the group to have more flexibility to invest in more brands or to make larger or follow-on investments. However, he added, the type of company ACG looks to invest in has remained the same.
“I view Fund IV as the natural evolution of our business,” Goldin said. “We’re not deviating whatsoever from the core strategy that we’ve always had, which is to identify rising star, early-stage brands in food and beverage and other categories and be able to provide capital, and support and expertise to them to help them grow.”
Although ACG doesn’t have a “typical” investment company size or check amount, Goldin said the firm generally aligns with brands with sales between $10 to $90 million dollars. The sweet spot, he noted, is with companies operating within “large categories that are undergoing a shift from the 1.0 to the 2.0 [products].”
One example of this strategy, Goldin said, was ACG’s recent investment in Clio,which produces chocolate covered greek yogurt bars. By taking yogurt and making it portable and somewhat indulgent, Clio offers consumers new eating occasions to consume greek yogurt, a massive category that typically has one form factor: cups. Additionally, the product capitalizes on established trends such as high protein and gut health.
“More than anything, our strategy is dictated by our love of consumer brands and really disruptive brands that are doing something exciting, bringing incredible innovation and newness to a category.” Goldin said. “[We’re] trying to find companies that we’re really excited about, consumers are really excited about and retailers are excited about.”
Although ACG has only invested in one beverage brand, Suja, Goldin said that the category is a focus for the firm, noting that the team reviews dozens of beverage brands a year.
Much has changed in the seven years since ACG’s first fund, particularly an increase in both brands in the market as well new investment firms. Although the latter has resulted in more competition for deals Goldin said he heartened to see the increased support for the industry. The most exciting change, he noted, has been in the products themselves.
“Categories that were once viewed as niche-y or fringe-y are now viewed as mainstream,” Goldin said. “The natural food industry has had a massive impact on society and changing the quality of products people are getting. [The natural food industry] is really being the catalyst to change industries and create trends.”