By Zachery Eanes
The News & Observer (Raleigh, N.C.)
WWR Article Summary (tl;dr) Jenny Bonchak, CEO of “Slingshot Coffee” says John Replogle (the former CEO of Burt’s Bees) serves as an investor and mentor. Early on she says he helped the company think through what value meant to a potential consumer and how to structure that in terms of pricing her products.
RALEIGH
The Triangle is known for its software and and biotechnology startups — but John Replogle, the former CEO of Burt’s Bees and Seventh Generation, thinks it has a chance to become a hotbed for consumer goods companies.
That’s why he helped start One Better Ventures, a Raleigh-based venture capital firm that is aiming to foster a cohort of promising consumer-product startups across the Triangle.
In its first two years, One Better Ventures has made six investments worth $50 million, ranging from infusions of capital at Durham-based Disruptive Enterprises, a company making food products for the ketogenic diet, to Raleigh’s Slingshot Coffee, which makes premium cold brew coffee drinks.
“We invest in purpose-driven companies and we work very actively with those companies,” Replogle said, noting his fund looks for companies pushing sustainable practices or promoting healthier lifestyles. “We are not the typical venture-capital or private-equity group. We help leadership set strategies and solve problems.”
The firm is made up of leadership alumni from cleaning products company Seventh Generation and personal-care products maker Burt’s Bees, a company that the state of North Carolina recruited away from Maine to Durham in 1999.
After working at Burt’s, many of its executives remained in the area; Replogle, who went on to lead Seventh Generation, commuted from Raleigh to New England for that job.
Beyond its core team, the fund has a network of 100 limited partners who choose the companies they invest in.
“There is no capital commitment,” Replogle said. “Unlike other funds where you invest money and don’t get a say in what the fund puts money in, we have a number of (limited partners) that have been in every deal, but we have some that have cherry picked.”
A ‘Platinum’ Rolodex
With its background in the retail industry, the group believes it can call upon its experience and connections to supercharge the growth of the companies it invests in — a few of which are located in New England and Virginia as well.
Retail can be a connections game. With limited space on the shelves of a grocery or convenience store, the jostling to even appear in a store can be intense and require months of negotiations.
That’s where the connections of One Better Ventures — whose team had experience getting Burt’s Bees products on shelves across America — comes in handy.
Mike Hockenberry, the CEO of Disruptive Enterprises, said that deep bench of connections has helped speed along his company’s growth.
“I would say John and those guys have a platinum Rolodex,” Hockenberry said. “They have a tremendous amount of contacts. Anytime you are working on something, they know someone somewhere that could help.”
In fact, it was a connection to Replogle that got Hockenberry, a former lead buyer at retail giant Target, to relocate to the Triangle. Replogle recruited him away from Target to run Scivation, a Durham-based company that made nutrition supplements, which was sold in 2017.
Hockenberry and his team then stuck around and started Disruptive, which makes food products and supplements for the low-carb keto diet, such as the brands KetoLogic and FBOMB. The company raised $7.75 million from One Better Ventures earlier this year.
To illustrate the benefits of One Better Ventures, Hockenberry said his co-founder Mike McCandless tells a story of an early brainstorming session, when it was suggested the company reach out to Nike about a potential deal. McCandless joked about how futile it would be for him to try to find someone at the sporting goods company to take him seriously.
Replogle got his phone out and in 20 minutes set up a meeting between the team and a connection of his at Nike.
“We have a powerful network,” Replogle said. “We can help them from talent and recruitment, to brand strategy to brand positioning work, to distribution. We have top retail relationships both in brick and mortar and e-commerce retailers.”
Letting entrepreneurs be themselves
One Better Ventures also helps young entrepreneurs learn the ropes of the retail industry.
For Slingshot Coffee, Replogle was an early investor and a mentor. He helped the company determine how to price its products at first, said Jenny Bonchak, CEO of Slingshot.
“I was crafting an ultra-premium product that I felt had a specific value attached to it,” Bonchak said. “But he helped me think through what value meant to a potential consumer and how you structure that value and bring in other players like distributors. … There were a lot of things I didn’t realize about how much a distributor would take off the top.”
However, Bonchak said, the quality she most values about One Better Ventures is the independence they give her. She said the firm doesn’t control her decisions just because they have invested and offered advice.
“They are there when you need them,” she said. “But they also trust my perspective.”
Slingshot is riding a fast pace of growth, having signed deals with grocery stores like Whole Foods and Publix.
In August, the company raised $2 million, including from Coca-Cola’s venture capital arm, an injection of cash that will help the firm expand nationally, beef up its e-commerce standing by selling on Amazon and — most importantly, Bonchak said — begin offering a benefits package to its employees.
High-growth startups
Replogle pointed out that in addition to Slingshot, both Murphy’s Natural, which makes DEET-free mosquito repellent, and Disruptive Enterprises are growing at a rapid pace. Revenue tripled then doubled the past two years at Disruptive, Hockenberry said. Replogle said that revenue was in the tens of millions of dollars.
One Better Ventures is helping another Raleigh startup, FilterEasy, go through a branding change to the name Second Nature and an expansion of its products.
The company, which was founded by two N.C. State students, has raised more than $18 million and offers a subscription service that regularly sends a new home air filter when it is time to change it. The company is hoping to expand into more home maintenance items, such as water filters, said Thad Tarkington, CEO of Second Nature.
“We can still scale up consumer goods in the Triangle,” Replogle said, noting that the Triangle doesn’t have an anchor company that attracts consumer talent, like Austin has in Whole Foods or Minneapolis does with Target.
“I don’t think you need a billion-dollar enterprise to make it happen,” he said. “But you need a field of flowers to bloom. Let’s make a crop of 100 consumer-good companies that are thriving and a number of them will make it to $100 million revenue.”
For now, One Better Ventures will slow its pace of investment. “We started fast,” Replogle said, “but we will probably slow the pace over the next few years. We expect to make one to two deals per year. We don’t want the portfolio to get above 10 companies because we want to be able to give them a lot of attention.”
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
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