Investor at BAM Ventures
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BAM Ventures is a Los Angeles-based firm of experienced operators investing in disruptive consumer companies like The Honest Company, LegalZoom, and ShoeDazzle.
I took a bit of a circuitous route to venture. Not necessarily the traditional investment banking or PM at a tech startup into into the investing side that you see. I grew up in Connecticut, I was politics major. I thought that I was going to go and be a lawyer. I spent a year as a paralegal and just pretty quickly realized that was not for me. I had the opportunity to move out to LA and joined a family office of 2 brothers who had had a career in traditional financial services and moved out to LA to start a small production company. We eventually built into a full scale movie studio. We'd be investing in tech, media and entertainment focused startups and private equity deals alongside the studio, leveraging our learnings from the operating business into our investment thesis. I decided to go to business school. I ran our student run impact fund. I interned at Slow Ventures. I tried to be as close to as and as active in the in the venture ecosystem as I could. I had the distinct pleasure of graduating in the spring of 2020 when the world was pretty much shut down, but was lucky enough to land at touchdown ventures, where I was for about 2 years. And then, I joined BAM about 2 years ago now, focused more on the pre-seed and seed consumer side of things.
We're a pre-seed and seed fund based here in LA, founded in 2014. The 2 partners at BAM are Brian Lee and Shamin Walsh. Shamin comes from Consumer and Logistics Investing, she's a first angel in Sweetgreen, early Flexport. Brian's an operator. He's a serial entrepreneur, co founder and CEO at a handful of different businesses, LegalZoom, ShoeDazzle, the Honest Company.
The thesis really comes out of the expertise and background of the partnership. The 3 buckets that we think about are consumer brands, consumer technology and commerce enablement. Anything B2B being built specifically for consumer facing businesses, as well as anything B2B2C that's touching, augmenting, influencing the consumer journey.
One of the things that I think is pretty unique about BAM at this point is we continue to invest across physical products and software. We're investing across everything that people are spending their time and their money on, as well as all the businesses that help those companies run. And so we wind up with a really unique flywheel from an information gathering, diligence, knowledge perspective that our portfolio can help diligence itself.
On the CPG side, we like to see strong unit economics, good velocity, great sell through, door count expansion. A business with awesome margins where products selling really, really quickly. There was a narrative that was really hard to generate venture scale returns in consumer product goods. If you look at exit activity in the category, it's typically happening in the 300 million dollar valuation range. When you're raising traditional venture capital, the return profile at a 300 million exit actually doesn't work. You may make money, but you're not making the multiples on invested capital that your LP base is really demanding and expecting of you. When we think about CPG businesses and where there's opportunity, we're thinking about scale of the market opportunity and what this thing can sell for, but also what the capitalization of the business is going to need to be between when we're entering and when we're exiting. If you enter a business at a 5 million post money valuation, they don't raise any money and they sell for 100 million, everyone's going home happy.
Something like 15 percent of Americans use a digital banking platform today. When you look at the category as a whole, it's a place that a lot of people see incredible potential. When we think about consumer fintech in particular, it's about customer acquisition. How do we build product for specific demographic groups to either include them or how do we unlock them? We're seeing a more targeted verticalized approach from a demographic group. People are building platforms that are more targeted.
If you think about the dominant industries here, it's marketing, it's Hollywood. what is LA good at? It's good at storytelling. It's good at brand building. It's good at narrative. Part of the reason that you see really strong consumer and brand coming out of LA is because of the talent drop. The dominant industry draws so much of that high quality talent on the creative side that other industries in Los Angeles are able to pull from. One of the things that is really unique about the LA ecosystem is fund sizes have stayed smaller here. And so it's an incredibly collaborative environment. People want to take full rounds when they have conviction in a business. A rising tide is going to lift all boats and that there really is the opportunity for all of us to win.
It's corny, but every business really is a snowflake. Everything's going to be different. We understand that every business's journey is different. Something that's going to require a bunch of years of R&D versus food and beverage brand.
Two things are necessary for us. Team and founder. We spend an incredible amount of time trying to understand the people that we're backing. We're backing the person to go and figure out what the right thing to build is and take that market feedback and iterate and pivot. Their aptitude to execute, really deep market understanding, really deep customer understanding, knowing your business inside and out.
The other necessary condition for me is market size. Big markets with a lot of friction. It's not that the current experience is terrible. It's just that, the experience they're going to be able to deliver is going to make the current experience feel terrible. If there are enough people with enough pain, eventually you can figure out how to get them to pay you money for whatever you're doing.
I don't think there's a universal answer to this, depends on the specific marketplace. One true answer that is always the case is you don't want to build either side of the marketplace too far ahead of the other. If you fill your marketplace with demand and there's no supply, that demand's not going to stay because you can't buy anything. If you fill the supply side and there's absolutely no demand, the people that you're asking to come and sell, they're going to shut off that stick it. I think balance is always a key component. It's about understanding what the two sides of the marketplace actually are and how they interact with one another.
I'm currently actually super excited about CPG. A lot of people have run in the opposite direction. What that's led to is really interesting and attractive pricing. Valuations have come back down and the vast majority of founders, even at pre-seed, are saying, we're raising this money so that we're profitable. If you can become profitable with the 1st fundraising, it opens up the whole world of opportunity and allows you to understand how to scale that business most appropriately.
The classic why now question. It's one of those things that you can always talk yourself into. Why now? If someone's building a product, you'd be like, Oh yeah, I read this one McKinsey report about how consumer sentiment is shifting in such a way. And so obviously this is going to work, even though it didn't work five years ago, 10 years ago, 15 years ago. Being really grounded and honest in where and why you think the timing is right for something is super critical. And another one is, why me? The whole job at pre seed investing is basically coming up with all things that could go wrong and weighing them against the things that could go right. Just being honest with how you're evaluating the risk and the reward side of things.
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