Can (tech-enabled) food brands scale to $200 million in revenues in five years?

Written by Saskia Hoebée & Ivan Farneti.

At Five Seasons Ventures we have been investing in European food(tech) brands for the last few years, and we had the opportunity to find and invest in four companies that grew to the $200m revenue mark in less than 5 years from our first Series A cheque. While these four companies ought to be considered exceptional — in a sector that rarely displays this sort of growth — there are common elements that explain such a performance. When we evaluate the growth and return potential for our next investments, we learned to pay particular attention to these three factors:

1. Create a New Consumer Trend or disrupt a Large Total Addressable Market (TAM).

It is hard (impossible) to grow a business quickly with a product that people buy (and eat) once a year.

Successful challenger food brands either identify dormant but large categories which are ripe for innovation (this was the case for Just Spices), or they create a brand new category (like scent-based water system air up, or fresh petfood company Butternut Box) with untapped demand potential. Either way, a trendy sector with large market potential needs to generate high frequency of purchase, high AOV and potentially high gross margins to be truly attractive (more on this in another post). With these three drivers working, the company can both afford the cost of customer acquisition and keep growing while maintaining control over the bottom line.

2. Design and Implement a Tech-and-Social-Media-Enabled Omnichannel Playbook

Driving fast-growing consumer brands is a young founder’s sport.

Once a promising market is identified, the most efficient way to achieve quick growth is by leveraging technology and social media to create a large D2C customer base in the home market, then expand omnichannel, and finally repeat this internationally. This playbook, implemented perfectly by snacking brand Koro, emphasizes several key elements, rarely found in mature food businesses:

• Direct-to-Consumer (DTC) Channel: Establishing a strong online presence through e-commerce enables companies to engage early and directly with consumers, gather feedback, and build brand awareness and loyalty. Category buyers at retailers will appreciate the brand awareness and knowledge of customers, which helps brands to negotiate the right deals with the right retailers.
• Social Media Engagement: Utilizing platforms like Instagram and TikTok not only increases brand visibility but also fosters community engagement and brand virality. Compelling content, influencer partnerships, and targeted advertising help drive traffic and sales. It also builds a digital marketing team that is a valuable asset in the eyes of any future investor or acquirer, especially if the key acquisition metrics are proven to be scalable.
• Data-Driven Insights: Analysing consumer behaviour and preferences through digital tools allows companies to refine their offerings and tailor their marketing strategies effectively, such as A/B testing for the most effective promotional discount. Some of these data-driven insights can cross over from the digital channel and support commercial actions in retail, too. A few of our best performing consumer brand companies have highly quantitative people in their marketing and leadership teams.

3. Ability to Attract the Right Investors to Create a Halo Effect

Money is money, but smart money is better.

Investment plays a crucial role in quickly scaling a new business to hundreds of millions in only a few years. Inevitably, the most successful food(tech) companies attract investors who not only provide capital but also work to create a “halo effect” around the brand and support the strategy. The investment by a specialist investor can bring validation: the signal is helpful for recruiting talent, for example, but also to attract the right later-stage investors. An investor’s reputation and track record matters to get attention and fast track responses from other investors (a fast no is better than a slow no). Over the years, at Five Seasons, we have been building trusted relationships and have syndicated investments with other top performing consumer funds to double-down on fast growing companies, with the likes of Coefficient (Koro and Just Spices), General Atlantic and L-Catterton (Butternut Box) and Felix (Yfood), amongst others. While an investor’s reputation and network play a role in creating this “halo effect”, an investor’s ability to craft the narrative and prepare a path with strategic acquirers is, perhaps, the most important benefit the correct investor can bring to a company.

Conclusion

The path from zero to $200 million in five years is challenging, and not a prerogative of just any company, even accounting for the founders’ ambition. But by strategically addressing trendy sectors, executing a sequential omnichannel strategy, and attracting the right investors, consumer food companies can achieve remarkable growth and generate outstanding financial returns.