Pre Brands has heard from a lot of potential investors about the importance of establishing a presence in the online distribution market, says the grass-fed beef company’s CFO, Jason Pinter.
“A lot of people in our network are really pushing us, and rightfully so, to think about how Pre Brands fits into the online channel,” Pinter says. “We want to go where the consumer is going. That might be online for a certain subset of consumers. It might be at the grocery store for another group shopping for beef products. We thought putting all of our chips into one basket was not the right thing to do.”
Pinter has more than 20 years of experience at Kraft Foods and Orbitz, as well as various technology organizations, helping companies through capital planning and allocation, market expansion and M&A, among other strategies.
His role at Pre Brands is to help scale the company and ultimately enable it to gain a national presence through both online distribution and sales in brick-and-mortar grocery stores.
“We’re really trying to build around what is a shifting dynamic in the marketplace around consumer preferences, health and wellness, and transparency,” Pinter says.
In this Dealmakers Q&A, we spoke with Pinter about the role dealmaking has played in Pre Brands’ early growth and some keys to creating alignment with investors and capital providers.
What are you looking for in an investor or capital provider?
As we’ve grown our business, we are working on developing and building new retail partnerships with brick-and-mortar retailers around the country. We’re also available online through our website and other online channels. We needed capital to support those growth plans, so we leveraged both equity and debt to help fund our working capital needs for accounts receivable and inventory.
From an equity standpoint, we’ve got a couple of key investors that have supported us. From the debt side, we are really looking for a solution and more of a partnership rather than just capital. We found both a solution and a key partner in Decathlon Capital, which has really taken the time to learn our business. We really valued their model on the debt side because it’s not dilutive like equity.
This has allowed us to repay the loan in a unique way based on a percentage of our revenue. As our revenue scales, we can scale that loan and how we repay it over time, which has been critical to our success. Early on, we could leverage the cash that we received through that facility toward building the business from a sales and marketing standpoint, as opposed to paying back large, fixed monthly payments to a debt provider.
How important is a coherent internal strategy when it comes to finding partners to help scale your business?
It’s super critical to think through different options. Find a network of trusted advisers that you can bounce your ideas off of or who can lend insight from previous experiences. Find people who have been through challenges or growth cycles similar to what you are encountering as a business leader. Have them share some of their insights along the way. ‘Hey, you're thinking about bringing in new capital to fund your growth plans. Here are some things to think about.’
Some investors are going to want more of a say in how you’re allocating that capital. Some investors are going to put some restrictive covenants on your business. How can you gather some of those insights from your network or through trusted advisers to really help you think through those challenges?
Take the time to clearly articulate your business, your plan, your strategy and what you’re working on and how you can leverage potential new capital or cash to drive growth. I’ve seen teams struggle with how they articulate and share those plans. So think about what your plans are and leave some leeway for potential road bumps, because obviously things don’t always go according to plan. Have that down on paper and be able to share that with potential investors on the equity or debt side.
I frequently have contact with investors in the market. I very quickly try to get an understanding on what their investment thesis is early on in the process to make sure that we’re not going down a road that will be unproductive.