Former Dragons' Den star Arlene Dickinson is set to close her first venture capital fund to invest in consumer-packaged-goods startups after surpassing her $25-million fundraising goal.
The Calgary-based marketing communications entrepreneur and author said in an interview she has raised more than $26-million from investors including lead backer George Weston Ltd., Alberta's ATB Financial, Canada Goose CEO Dani Reiss, the F. Saputo Family Office of the Montreal cheese family, Toronto food distributor Retail Ready Foods Inc. and several wealthy families in Southern Ontario. Ms. Dickinson hopes to hit the $30-million level by the time the fund closes in a few weeks. For Weston, it is the conglomerate's first venture capital investment.
Closing a first fund – particularly one not geared toward technology or oil and gas companies – is tough in Canada, so hitting the target fund size 13 months after she began fundraising with some top-tier investors in tow is an impressive feat.
"It takes an investor who understands this space to appreciate it," said Ms. Dickinson, whose fund is focusing on startups in the food and beverage, beauty and health and wellness categories. "Many of my fund's limited partners are very successful Canadian entrepreneurs who quickly understood the opportunity which, in turn, helped me a great deal in the fundraising experience. They know consumers and retail and I believe they bring unparalleled expertise and experience to bear to the companies and entrepreneurs we invest in."
The consumer-packaged-goods space has proved ripe for disruption, with the arrival of countless new, venture-financed brands to challenge established players, particularly by offering new options that promote healthier eating and lifestyle choices such as organic or protein-enhanced offerings or by offering an alternative to conventional distribution by grocery store shelves with e-commerce-enabled home delivery options.
But while Ms. Dickinson won't be funding the next Google or Shopify Inc. or other tech plays, startups in the consumer-products space – long a busy sector for mergers and acquisitions – have created windfalls for early backers.
Last year Unilever PLC bought shaving products upstart Dollar Shave Club for $1-billion (U.S.), while in Canada, powder shake and nutrition bar maker Vega sold to dairy products giant WhiteWave Foods Co. for $550-million in 2015 and vitamin maker Jamieson Laboratories Ltd. was bought out in 2014 for $230-million by private equity firm CCMP Capital Advisors. Also in 2015, Compass Diversified Holdings of Connecticut paid $132.5-million for majority control of Winnipeg hemp food maker Manitoba Harvest. There have been a string of buyouts of independent craft brewers and upstart spirit makers in recent years, including global beer giant Anheuser-Busch InBev's purchase of Toronto's Mill Street Brewery in 2015. Meanwhile, several packaged goods makers and retailers have become active venture-capital investors in their sectors, including The Coca-Cola Co., Campbell Soup Co. and Nordstrom, Inc.
"There is an incredible amount of M&A and as a result there are a lot of strategic acquirers out there," Ms. Dickinson said.
Ms. Dickinson's fund is at least the third recent Canadian venture-capital firm to focus on consumer goods, along with Vancouver's Campfire Capital and Toronto-based BrandProject. Her fund, called District Ventures CPG-1 LP, trades heavily in its investor documents on her status as an iconic, successful entrepreneur following her eight seasons on Dragon's Den. Some of her investments through the show have prospered, including candy makers Action Candy Co. and OMG Inc., and Southern Ontario café chain Balzac's Coffee Roasters.
The fund will focus primarily on backing Canadian consumer-packaged-goods startups with products with distribution and a few million dollars in annual sales that are looking to raise up to $4-million in growth capital. "It has to be a proven product with legs," she said. Ms. Dickinson is investing $1-million personally and said the fund's portfolio companies will be able to tap into resources available through her District Ventures Accelerator in Calgary, which helps early-stage consumer-packaged-goods firms with a range of tasks.
Brandon Kou, former general manager of Steve Nash Enterprises, will serve as the fund's venture manager and Ron Duke, group chief financial officer of Ms. Dickinson's group of companies, will serve as a director, along with Philip Shaw, former chief executive officer of Weston-owned Ace Bakery.