Does branding have a place in early stage VC?
Kelley Arena on how aesthetic signals do (and don’t!) drive investment decisions
CHERRY ON TOP 🍒 is our monthly newsletter exploring the ins and outs of everything that modern businesses need to truly shine. We dive into topics that live at the intersection of our two companies – ORCHARD STREET, a venture studio + angel fund & DALY, a comms+ agency – as both help founders get the best ideas out into the world, through outstanding operations, comms, and culture-building.Ally here! Good branding can help you raise eyebrows. But can it help you raise capital?
It’s no surprise that branding is super important to us at Daly and Orchard Street. But what role a company’s branding should play in VC decision-making — especially amongst early-stage brands — is another question entirely.
We tapped one of our favorite VC minds, Kelley Arena, to help us dig into the answer.
What’s clear from our conversation with Kelley is that, if a company’s numbers don’t match its looks — i.e. all style, no substance — they’re likely not getting very far. You know, like what our moms used to tell us: “it’s what’s on the inside that counts.”
Our chat with Kelley takes us on a journey, from CAC and pitching tips to soft launches and ~acoustic cigs~. It was a real treat to get a peek into what’s exciting her right now, and where her red flags are planted.
Let’s get into it!
What consumer industry is most exciting to you right now — from an investor’s standpoint, but also personally?
Kelley Arena: I'm excited to see how functional medicine and longevity are going mainstream, and how the advancement of AI and technology is allowing it to happen.
We've seen early adoption with the biohackers and the tech bros, but I'm interested in how aggregating our health data from across the health platforms that we use every day (like our menstrual tracking apps, Oura Rings, tech-integrated scales, brain bloodwork, and self-reported data) can aggregate into something that's meaningful.
A few companies are doing this really well. SuperPower has an incredible UX, and I think will dominate the space with the right price point. Human.health is another company that's doing this really well for folks with chronic illnesses. I'm excited about integrating all of this segregated data that we have on our health and being able to make useful diagnostic sense of it all.
This will trickle into how we consume. I still see a gap between all of the health information available to us — both personal data and healthcare advice given via experts/podcasts/social media — and how we fold it into our daily lives without information and consumer overwhelm. This is an exciting use case for AI: to inform our consumer purchases in a way that makes sense, without the consumer having to hold and synthesize the immense abundance of information.
What brands do you admire from a visual perspective (either companies you invest in, or ones that are generally on your radar!)
KA: This company called NOAT has me really excited. This is a ridiculous sentence, but it's a better-for-you ZYN. As folks are trying to wean off of vapes and looking for other nicotine alternatives, this one stands out from the rest. It's beautifully branded and so visually appealing that you can't help but wonder what's in the package.
I'm not abdicating for any new vices (I have plenty). But I am keen on exploring alternatives for some of the nastier habits that we all know are bad for us, like smoking and vaping. Honestly, I'd rather rip an acoustic cig than a vape, and I'm secretly known to pop a Zyn when I really want to lock in and go into work mode — but I just learned that Zyn are made from microplastics and a bunch of other fillers. I kind of love this sleek alternative to any of the above, and the branding is slick and unobtrusive.
Others I love:
Experiment Beauty for its next level formulations paired with its funky, weird, organic brand aesthetic.
I personally will never get over the Rhode lip gloss phone case. I never really see it in the wild, but that doesn't matter. That was one of the most genius bits of tactile functional creative I have ever witnessed.
Sleep or Die is a new sleep brand that nailed the brand visuals and knows its audience — and is co-building with them so well.
4AM’s irreverent “fuck it, drink martinis then wear these eye patches” branding is a breath of fresh air in a beauty brand landscape that’s packed with 14-step routines and too much perfection.
The Alice Mushrooms tin always gives me a thrill when I get it out of my bag.
What role (if any) does a company’s aesthetic presence play in your early analysis of whether they’re a fit for you to invest in?
KA: It certainly plays a part, particularly because I'm investing in things that are marketed directly to the consumer. That said, I don’t love to invest in categories where the brand is the only defining feature, and the product is an afterthought. I see a lot of this: slick branding, but the product is white-labeled, unoriginal, and unprotectable.
For the record, one can have a booming business using this methodology — copycat products with better or more niche branding and visuals can absolutely work. But as an investor, I’m thinking about acquisition. What exit is possible for a brand without anything protectable? I want to see product-obsessed founders, with a strong sense of who their ideal customer profile is.
What’s one non-obvious detail that you think that not enough founders are paying attention to? Conversely, what’s something you see founders investing too much time in, that really doesn’t matter to you at all as an investor?
KA: I don’t think it's wise to invest a ton of time, energy, and money into brand and creative visuals before you are in-market. This is a hot take, I suppose, but I have a few brands in my portfolio that created incredible products, and initially, their brand identity was quite hazy — spun up on Canva or with a quick graphic design job.
After you are in-market, you get so much information, so I am a huge fan of just getting the product out there. Just go. Launch before you launch. Let the product be the thing that helps you iterate. Get to know your customers intimately: why are they buying? What are their pain points? What other brands do they buy? What do they need? What is the throughline between them all? Use them as a focus group and build with them. Rework the brand, visuals, and roadmap as you get smarter about your customer. Then launch again! Life is just soft launching then hard launching better — and then doing it again.
What do you think is the most important thing for a founder to get right when pitching to investors — either at the Series A stage that Golden Hour Ventures invests at, or earlier, to get them ready for you down the line?
KA: Pitching is such a skill — it’s like ice skating. It only works when it feels effortless. Truthfully, fundraising is just building relationships. The metrics and fundamentals have to be there, of course, but at the earliest stages, a founder is pitching themselves. They are answering the questions: why does this company need to exist, and why am I the one to build it?
I become a better investor by surrounding myself with incredible founders and have thus honed my screening process. I want founders that can't imagine doing anything else but build their business, and I want them to know their business intimately, identifying their red flags before I do. The best founders are relentlessly self aware; they know their limitations and challenges, and ask for help to fill in the gaps.
Have you seen cases where strong aesthetic signals gave a false sense of traction—i.e. where a company led with a strong sense of brand, but the fundamentals lagged? Are there any red flags you keep an eye out for that suggest a brand is more style than substance?
KA: I look to numbers to back up the story behind the brand. I want strong margins that can hold up in omnichannel distribution, and marketing that blends organic customer acquisition with search and paid. Are you growing, but lighting cash on fire on marketing? That isn’t a fundamentally strong business. I want to know your CAC (customer acquisitions cost) but I also want to know the why behind your CAC. On what channels are you acquiring your customer and then after you do, are they sticky? If they aren’t coming back: why?
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The Cherry on Top: Can we all make a promise to be original? Whether you're a brand, founder, investor, or just a human trying to figure it out, the pervasiveness of social media and AI is creating an environment where everyone is optimizing themselves into clones. I'm talking to myself here too. Let creation be hard, create the space for it. Close the apps, ignore half this advice, and build from your actual lived experience instead. Bringing your wholly unique specific lens to the table — that's what keeps things interesting.
Kelley Arena is the founder of Golden Hour Ventures, investing in consumer brands built to change the status quo.
Such smart succinct advice for any founder. Thank you, Kelley!
Thanks for saving me a lot of grief! And money. Branding can come a bit later when we get some feedback from the market. If we can only talk Alex into it😜
Thanks!