Jordan Gaspar is the founder and managing partner of AF Ventures, a consumer fund investing in better-for-you consumer products, and the CEO and a board member of AF Acquisition Corp., a $224 million SPAC seeking a better-for-your-consumer asset.
Russ Prince: What is AF Ventures’ focus area? What type of portfolio companies are you looking for?
Jordan Gaspar: AF Ventures manages over 30 portfolio companies across the consumer products landscape of food and beverage, health and wellness, beauty and personal care, and pet care including a diverse array of categories such as plant-based and grain-free food, functional beverage, early childhood nutrition, personalization, and more.
AF Ventures is constantly on the hunt for disruptive brands, which have certain key value drivers. We’re looking for brands, which are authentic, have sustainably-minded products, strong retail velocities, category leading key performance indicators, visible channel expansion opportunities and a scalable supply chain.
AF Ventures targets investments between one and 10 million dollars into emerging growth consumer brands, which are generating between $5 million and $20 million of revenue at the time of investment with the expectation of growing at least 100% year-over-year.
We’ve seen tremendous success in discovering venture and growth-stage brands and helping them scale to become next generation market leaders. Last year was a landmark year for AF Ventures as our portfolio raised $250 million in aggregate. Our portfolio achieved almost 100% platform wide growth of the average gross annual revenue per holding as a result of the underlying asset quality, brand maturation, and evolution of our investment style.
Prince: How big is the global health and wellness industry, and why are you focused here?
Gaspar: The Global Health and Wellness Institute projects that the better-for-you consumer market is sized at $4.4T with further growth anticipated. Surveys and research from FMCG Gurus, Accenture Strategy Global Consumer, and Kerry found that 80% of consumers are seeking healthier food & beverage alternatives with 63% of purchases being influenced by a brand’s core mission, and 44% of purchasing decisions coinciding on stated clean labels on products.
Furthermore, their survey and research found that the growth of the market can be attributed to two key sectors—personal care & beauty products ($955B), healthy food & nutrition ($946B).
In 2020, $164 billion was invested by US VC firms. Just 3% of that, $4.5 billion, was directed towards consumer goods companies. Drilling a little deeper, of the nearly two-thousand active US VC funds, a mere 100+ are specifically focused on the food and beverage and broader consumer landscape.
The low volatility, defensive nature of consumer staples, and durability of the exit landscape, including strategic and financial sponsor acquisitions and IPOs and SPACs, make consumers an attractive investment strategy. The confluence of these dynamics has and will continue to allow for sustainable, long-term returns throughout market cycles.
Prince: From your position, what would you say will be a driving trend that investors should pay attention to in 2022?
Gaspar: Over the past decade, there has been a seismic shift in consumer spending preferences, where younger generations—especially those starting families—are devoting more of their disposable income to healthy living. While better-for-you brands are disrupting the general consumer-packaged goods industry, significant growth and innovation has taken place in the early childhood nutrition sector as consumers seek out healthier alternatives for their infants or children compared to what was previously available. According to a December 2020 Allied Market Research report, prior to the pandemic, the global baby food market was valued at $67.3 billion in 2019, and is expected to reach $96.3 billion by 2027.
Health concerns among parents continue to rise, especially following the US House of Representatives’ report of products lacking certain nutrients or being tainted with metals with expanded awareness for mothers reporting breastfeeding challenges and parents seeking solutions to prevent their children from developing allergies. Gen Z mom and dad are coming, and we anticipate they will prioritize consumption of healthy, sustainable, transparent products, which are mission aligned with their values and solve their parenting problems.
With early childhood nutrition seeing considerable focus, AF Ventures is perfectly positioned to capitalize on this emerging subsector including the recent backing of three leading companies providing nutrient-forward, high-quality solutions for parents with children: (1) Yumi, a Clean Label Project Purity Award Recipient whose direct-to-consumer organic, plant-based food service targets babies and toddlers with a proprietary predictive analytics model, (2) Ready. Set. Food!, a multi-national and healthcare backed platform addressing early allergen introduction, and (3) ByHeart, a vertically integrated, clinically validated, infant nutrition platform in the formula space.
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