TrooRa Magazine
Cheers to Social and Human Investing
oat Rodeo Capital’s founders Fowler and Pelligrini invest in a variety of businesses, from makers of technology that supports the beverage industry to creators of alcoholic, non-alcoholic, and cannabis drinks. They like to think of themselves as consumer behavior experts.
“Beverage sales are externally motivated. What you drink, whether beer, wine, cocktails, alcohol substitutes or flavored health drinks, says a lot about you. So you choose beverages based on that.”
Fowler got his start through a business school internship at Gallo, which turned into a job. He always thought he’d become a management consultant, and thought of the beverage industry as an interesting business ecosystem. “It’s a three tiered system. There are the people who make beverages, distributors who get beverages to retailers, and then the retailers who sell them to consumers.” Fowler built out Gallo’s line of spirits, an accomplishment of which he is quite proud.
Pelligrini’s background is in finance and brand development, and Fowler says that they work and mesh quite well together. “In a partnership it’s very important you see the world in similar ways, even if you take different paths to arrive at those conclusions.”
What makes GR unique as investors is their operator backgrounds and deep industry expertise. Fowler and Pelligrini strive to be more than just money and pride themselves on being of service to the leadership teams that they invest in Depending on the company and its needs that can manifest in many forms – ranging from making distributor introductions to helping sharpen a creative brief and anywhere in between. Ideally GR becomes additional support beyond the executive team. This works best when the entrepreneur has a very clear mission and a vision of a future that WILL be true because they are going to create it. These are the entrepreneurs that we love to support – the ones who move faster when GR can open the doors that they were going to kick down anyways.
Pre-Covid, the market penetration rate for alcohol sold online was only two percent. Both Fowler and Pellegrini suspected that would increase over time because our phones and technology are changing our behavior. Then, of course, the pandemic drastically increased the share of every consumer behavior that took place online. “Sometimes, it’s better to be lucky than smart,” Fowler says.
During Covid, a number of people also learned how to create craft cocktails at home, providing more consumer demand for bartending supplies. Goat Rodeo invests in technology for the beverage industry, not just in beverage startups and brands.
One firm they’ve funded, Speakeasy, provides an online shopping cart system for any distillery. “Amazon really wants to sell booze online,” says Fowler. “And I don’t see why they can’t. If they can sell a head of lettuce that has to be shipped and preserved, they can sell booze or other drinks that have a lot longer shelf life.”
Now that places are opening up again, some firms are asking Goat Rodeo to help them translate their sudden online business success into success at a physical location. Goat Rodeo distinguishes itself from other firms by funding earlier in the business life cycle, including series A and B funding. And they pride themselves on providing advice and coaching as well as cash to help a startup get to scale.
“We like to get to a business early, so we can help them avoid as many mistakes as possible. But if they’re already established, we can still work with them so long as they’re willing to listen to us and make changes,” says Fowler.
When deciding whom to fund, Goat Rodeo looks for businesses with a digital component and strong unit economics (making money on each sale). “Lots of people get so excited to have their business up online that they don’t think about profit margins right away, thinking they’ll get customers first and make up lost cash with volume. But if you lose cash with every sale, volume won’t help,” says Fowler.
They get excited about ready-to-drink beverage businesses, about new trends in non-alcoholic beverages that taste like beer, wine, or liquor, and technology platforms that can help other businesses monetize what they offer.
“There’s a consumer awakening going on out there,” says Fowler. “People are looking for healthy food and beverages, for quality in what they ingest. We’re moving away from mass-produced food and beverages and towards a more mindful way of consuming.”
They advise prospective entrepreneurs coming to them to not be afraid of the conversation about funding. Also, to have passion, vision, and a solid business plan. “You can’t have fuzzy thinking on an Excel sheet,” says Fowler.
Some businesses they have funded have been quite creative. One firm “DRNXMYTH” attempts to track down the 100 best cocktails from bars around the world and make it possible for customers to order them and have them shipped to their doors. Zero Brewery produces nonalcoholic beer that also contains zero sugar, zero calories.
“These alcohol substitute drinks represent a fabulous new market, and we help startup founders in that space compete with Gatorade, Propel, and other non-alcoholic beverages,” says Fowler.
Another startup’s exciting idea involves harnessing the talents of a whole variety of people, usually women hoping for extra household income, to host mini-wine tasting events. “A lot of the beverage industry is built on field representatives, on in-person socializing, on field marketing, more than we realize,” says Fowler.
Goat Rodeo also takes social impact and giving back very seriously. “Most companies aim to donate one percent of their profits to charity, but really, that is such a minuscule portion of what can be done to make a lasting impact,” Fowler says. “We do our best to invest in female-led firms that pay everyone a living wage.”
He also mentioned the program One Hope, which allows participants to pick a charity of their choice which will receive ten million dollars, and then they schedule a series of tastings around that cause. All and all, Goat Rodeo is leading the world in the socially conscious way of investing in our futures.
