Since traditional venture investment has been focused on applications, web platforms, and business services, this trade-off made sense for many fund managers. Bucking that trend made attracting capital significantly more difficult, but we believe it also offers an untapped opportunity for investment that will generate valuable returns for the fund's investors.
What barriers have you faced in raising a fund?
Creating a fund that approaches a rather mature field of investment definitely can yield some feedback, especially as an investor who is a younger woman. To me, these barriers were both expected and motivational. I find it incredibly important as an investor to have conviction beyond your thesis while still being willing to examine a contrary point of view, and I was never persuaded by skepticism I came across.
You've invested in four startups so far. What was it about these startups that made you want to invest? What do you look for?
Coming from consumer products VC investing, I have a major affinity for brands and see them as especially well-adapted for a space that is largely moving from a hidden area out into the open. I also have several opinions about subcategories of vice in the short term which these investments fit in to. For example, I feel strongly about the growth of CBD usage in skincare and drugstore products, experience focused alcohol with powerful brand identity, and measured or dosed cannabis consumption.
Do VCs investing in this space have any unique responsibility? Looking at Juul for example, which has received a lot of backlash for targeting youth and for the uncertainty surrounding the role of their products in teens developing lung disease, but has raised more than $14 billion to date. When are VCs responsible for behavior and when are they not?
VC responsibility in the vice space is highlighted mostly because of the controversial nature of the products—when one talks about fossil fuels, alcohol producers, cigarette companies, echo-chamber news, manufacturers who rely on cheap labor, producers of single-use plastics, etc.—we rarely talk about the investors. Every investment has social consequences. Not just the ones from social impact funds or vice funds.
As an investor, it's important to support companies that have healthy relationships with society and can maintain this in the long-term. For me, that often involves dealing with founders who have a strong ethical and moral compass, are knowledgeable about regulations, and have a view on how they might change over time, and who care deeply about building a positive and long-lasting relationship with their customers. I don't see the responsibility of a vice investor as larger than that of another investor, however, I do feel that the space is unique for bringing these moral questions to the forefront.
The case of JUUL is quite divisive, and one I don't have a major opinion to add on. There's absolutely questions that need to be asked about underage use, and whether the product was designed to appeal to underage users. In these sorts of cases, VCs bear some responsibility for negative behavior when they support founders and decisions which go against the interests of society.
Where is the line in supporting vices versus supporting founders in the vice space?
There isn't a line. Our founders are the people we think are best suited to represent the vice space as a whole. We search for founders who we think will succeed in expanding the appeal of the vice space, growing it far beyond the size of a socially isolated market. For example, in CBD we look for founders who have the ability to turn CBD products into a mass-market item and can sell to individuals completely uninterested in cannabis and associated THC products.