ComCap held its second successful DNVB (digitally native vertical brand) Forum in Los Angeles this week, and we wanted to share key highlights for those that couldn’t attend:
DNVB brands speaking included DSTLD, Winc, Italist.com, and Tipsy Elves. Respective leaders of these companies provided the following insights into their success:
- Provide a clear value proposition and customers will be willing to accept paying for returns.
- Customer surveys during the product development process can drive product success. Launch new products / collections with an SEO mindset from the beginning.
- There is an advantage in basing the business in California near advertising platforms like Snap and Instagram.
- As a marketplace, increasing selection and UX can increase transaction
Capital providers – including Lightspeed, Provenance, H.I.G Growth, and Brentwood Associates – discussed what they look for in DNVB investments:
- Focus on knowing your core customer and how to find more them – don’t try to be all things to all people.
- Stickiness is important in core demographic
- Gross margins of 50%+, which usually means having your own brand.
- LTV calculated as gross margin after fulfillment. Previously investors had looked for a 3x LTV/CAC ratio, now seeking 4x to 5x.
- Being breakeven is important – some investors have a preference for material EBITDA for larger deals, but can accept breakeven for a business with scale and growth even if that would be below their traditional investment threshold.
Outside experts – including General Growth Properties, Union Bank, Moovweb, W Promote, and others provided the following best practices advice to attendees:
- General Growth Properties has used the decline of some malls to re-purpose stores into more productive uses including fitness centers, grocery stores, and other uses. GGP offers consulting services to emerging online brands that are looking to explore physical retail opportunities.
- Union Bank is experienced with working with online and offline retailers at different sizes and with different capital structure needs. From inventory facilities to $10m GMV online companies to comprehensive $100m+ term loans.
- W Promote advises focusing on your best CLV segments. Bid up substantially for most productive customers, bid down 80% for least productive. Focus on Facebook properties given 26% of mobile time spent on these. Leverage 3rd party data (i.e. Epsilon) and don’t use aggregate cost per conversion number.
- Moovweb – largest mobile seller in the US after Amazon and eBay. The mobile consumer is complex, demanding and fickle – one misstep and bounce rates spike. Employ a joint technology and agency approach to rapidly test options – especially related to major sales or holidays.
ComCap LLC Announces Today the hiring of Steve Terry as a Managing Director in its San Francisco office.
Steve has been a technology investment banker for over twenty years. He began his investment banking career with Kidder Peabody’s M&A group in New York and moved to the Bay Area in 1995 to work with Robertson Stephens. He was fortunate to have had the chance to work with industry defining technology businesses in the early stages of their development such as Pixar and E*Trade, and was trained in the importance of positioning businesses such as these for the best possible reception by the capital markets
He has executed hundreds of transactions including: mergers, acquisitions, IPOs, private and public equity and debt issuances, including convertible bonds. He has worked at both large platform, full service investment banks such as Credit Suisse First Boston’s Technology Group led by Frank Quattrone, and smaller boutiques such as Montgomery & Co. Steve also worked at Battery Ventures as a Venture Partner. In that role, he oversaw all capital markets activities throughout the portfolio.
Aron Bohlig, ComCap LLC’s Managing Partner, commented: “We are proud to welcome Steve. With his decades of experience in advising middle market technology businesses and his extensive relationships throughout the technology ecosystem, he is a highly valuable addition to our San Francisco investment banking team. The appointment of Steve underscores our deep commitment to the opportunities we are experiencing throughout the digital retail value chain.”
Steve Terry added: “I am excited to join ComCap LLC’s investment banking team. The firm’s sector focus and the team’s operational backgrounds provide ComCap LLC’s clients a truly differentiated level of insight and service. Having advised countless entrepreneurs throughout my career, I look forward to leveraging my experience, contacts and understanding of the needs unique to middle market technology businesses to contribute aggressively to the continued success of ComCap LLC.”
Steve holds an MBA from the Red McCombs School of Business of the University of Texas at Austin, and a BBA in finance from Texas A&M University.