Consumer Growth Investing
This is pretty niche, but would be very interested in hearing any consumer growth investors (or buyout investors as well) and their insights into what you look for in a consumer company. What kind of metrics are important?
Catterton probably the most prominent pure-play consumer
Looks like they have a useful insights section. Do you have any as to what growth consumer investors would look for in companies/potential investments?
Not a growth investor nor senior but have been researching consumer for a while so here are my 2 cents.
Could apply to a lot of industries but specifically true for consumer :
Track record of the founders is obviously key but I feel like we are at a point were you could look at a consumer business almost the same as you would look at a SaaS i.e. recurring revenue from customers, average basket, churn, willingness to recommand, etc. Good CRM and analytics is a game changer.
Marketing-heavy by nature (although some exceptions), global reach is the goal but easier say than done. Ability to follow trends or be an outlier and take a somehow fake quiet-luxury under the radar approach. There are so many way to succeed or to fail miserably in the consumer space if your strategy plan isn't flexible enough to follow customers hypes.
Sad truth is the network from the fund/founders can really turn the company in a huge success or a complete failure. That's why you will see more operating partners and people with strategy/corporate background compared to other industries
I don’t work there but Invus is pretty clued up on retail and brands.
There are metrics like sales per square foot, sales per door, 4 wall EBITDA, and various capacity and foot traffic metrics too. The idea for physical stores is if you can nail a concept in one location and a market can exist for this in other locations then you are good to go and scale rapidly.
Beyond this, for both physical stores and individual brands, investors want to assess if there is truly a positioning gap in the market in terms of product and branding. Then it takes a lot of qualitative work and gut feel to assess if the market is primed to scale. Retail is detail and this means a lot of factors based on gut feel and experience are discussed.
Lastly, experienced investors know that catching a lucky break in retail products is big, something as simple as a celebrity is randomly seen to consume a brand’s product on camera has driven the success behind some companies. So there is some risk tolerance for a company seemingly having all the right ingredients and then just not catching on with consumers.
For consumer growth, it’s all about brand strength, solid unit economics, and scalability. Key things to watch:
• Revenue growth – Needs to be strong, ideally 20%+ YoY.
• Gross margins – Higher is better (50%+ for premium brands).
• LTV/CAC – You want at least 3x; shows efficient growth.
• Retention & repeat sales – Loyal customers = long-term value.
• Channel mix – How they sell (DTC, wholesale, retail) and if it’s sustainable.
• Organic growth – Strong brands rely less on paid ads.
For buyouts, it’s more about cash flow and EBITDA, but in growth investing, momentum and scalability are key.
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