PowerPlant Partners Closes $330 Million Fund III To Focus On Growth-Stage Consumer Companies

PowerPlant Partners will shift from investing in early-stage consumer businesses to solely funding growth-stage companies in consumer technology, service and enablement upon closing $330 million in its third fund, also known as PPV Fund III.

The move will help the firm grow its platform in the consumer-wellness space and offer a more integrated network for its expanding portfolio, including Beyond Meat and OWYN, says the vegan food and beverage-focused VC.

PPV Fund III has so far made four investments in healthy and sustainable consumer companies, including Miyoko’s Creamery, Liquid Death, Partake Brewing and SYSTM Foods — a roll-up vehicle that recently acquired and combined Chameleon Cold-Brew and REBBL. It aims to invest between $15-40 million in target companies generating $10-75 million in annual revenue moving forward as active, primarily minority, investors.

Shorter Path To Profitability

Daniel Gluck, who cofounded and co-manages PowerPlant Partners, alongside Mark Rampolla, explains how it’s necessary to create their “first true growth equity fund” because it has become increasingly difficult to carve out a clear path to commercialization for early-stage CPG.

“Risk adjusted returns are exceedingly important to us,” he said. “We have transitioned to focus on larger, more established growth companies, with a direct path to profitability in one to three years.”

Gluck notes how PowerPlant Partners will remain focusing on investing in the longevity of people and the planet by mitigating climate change, preserving biodiversity, and promoting healthier and more sustainable lifestyles as it targets more tech-enabled consumer brands in its new fund.

“We have always invested in businesses that put human and planetary life at the center of business, and every single one of our portfolio companies is already embracing this theme,” Gluck told me. “We are taking our proven platform in the consumer-wellness space, leveraging it to tangential sectors, and offering a more integrated and synergistic network for our portfolio companies and partners. Through our expansion, we will bring our portfolio companies an unparalleled level of insight and support.”

Future Plans For SYSTM Foods Amid Market Volatility

While continued market volatility caused by factors such as inflation and supply chain constraints has made it tough for institutions to raise funds, PowerPlant Partners’ secular investing thesis has helped the firm garnered a group of committed limited partners, Gluck believes.

“Our LPs identified this opportunity early on and have been nothing but supportive,” he said. “While it is a difficult fundraising environment, our LPs understood that we offer an undeniable opportunity to back next-generation companies that are better for people and the planet.”

However, the challenging macro environment has also seen legacy consumer companies divest a slew of emerging brands partly to narrow down their business focus and increase operational efficiency. These deals are typically offered at heavily discounted valuations, which could become potential buying targets for SYSTM Foods, similar to Chameleon Cold-Brew it previously bought from Nestlé.

“This is a perfect example of our ability to capitalize on the current market volatility while simultaneously sourcing investments that fit our people and planetary health investment thesis,” Gluck explained. “At the time of acquisition, combined gross revenue trailing 12 months for Chameleon and REBBL was strong, despite that SYSTM Foods acquired Chameleon for an attractive valuation. Our Series A in SYSTM Foods represents a majority ownership of the combined Chameleon and REBBL entity.”

Since it closed the deal, SYSTM Foods has received a significant amount of inbound interest, according to Gluck, and will continue to acquire and grow leading food and beverage brands that aim to “bring innovative formulations to market in a sustainable, socially conscious manner.”

“The team is highly capable of acquiring new brands and we will have more to share in Q4 and Q1 2023,” Gluck said.