The Power of Partnership: Building Successful CPG Investor Relationships with Melissa Facchina
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In this episode, I’m joined by Melissa Facchina, co-founder of Siddhi Capital, who shares her journey of working with CPG brands and transitioning into investment. She emphasizes the importance of choosing the right business partner and aligning core values. Melissa discusses her criteria for partnering and investing in CPG businesses, highlights the changing landscape of investment, and offers advice for founders.
We also discuss Melissa’s approach to personal wellness and self-care and the significance of prioritizing health and wellbeing in order to effectively manage mental and emotional stress. And Melissa reflects on pushing her personal boundaries and the blend of luck, hard work, and passion that has contributed to her success.
Subscribe to The Food Means Business Podcast with Hudson Kitchen founder Djenaba Johnson-Jones to hear the personal stories and “secret ingredients” of abandoning your day job and starting a CPG food business.
In this episode, you will learn…
[01:28] About Melissa’s very early start working in CPG
[04:05] Her transition from operations to investing
[06:43] How she chose her Siddhi Capital business partner and what its like to raise $70 million on a one hour Zoom call
[11:46] Melissa’s core values and how they inform her business
[16:08] How she chooses brands to partner with and invest in
[24:23] What founders should look for in an investor
[28:40] About the changing investment landscape
[35:00] How Melissa manages stress and the importance of the clean eating, exercise, and sleep
Subscribe to the Food Means Business Podcast with Hudson Kitchen founder Djenaba Johnson-Jones to hear the personal stories and “secret ingredients” of abandoning your day job and starting a CPG food business.
Links mentioned in this episode…
Nikky Gryll, founder of Knack Public Relations
About Melissa Facchina:
Melissa Facchina is the co-founder and co-managing partner of Siddhi Capital. She has over 25 years of experience across the food and beverage manufacturing and services industries. Melissa started her career at Johanna Foods, Inc. and worked with Force Brands before venturing out on her own. Prior to starting Siddhi Capital, she worked alongside more than 420 high-growth and emerging food and beverage companies at Siddhi Ops, Inc., the premier outsourced operating firm that she launched in 2015. Currently, Melissa sits on the board of several CPG brands including Magic Spoon and Mid-Day Squares. She is also co-founded, and sits on the board of, the Women on Boards Project, a non-profit which was formed to ensure that board seats in the consumer packaged goods industry are filled by diverse women.
About Siddhi Capital:
Siddhi Capital is an operationally-focused food and beverage growth equity firm that combines investment and operating expertise to accelerate growth and unlock value for stakeholders. Siddhi invests in visionary entrepreneurs and companies that are reshaping the landscape of CPG and food.
CONNECT WITH MELISSA:
Visit the Siddhi Capital website
Follow Siddhi Capital on LinkedIn
Connect with Melissa Facchina on LinkedIn
STAY CONNECTED WITH DJENABA JOHNSON-JONES:
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Djenaba Johnson-Jones (00:01.012)
All right, Melissa, welcome to the Food Means Business podcast. I'm so happy you're here.
Melissa (00:05.562)
Oh, me too. Thanks so much for the invite.
Djenaba Johnson-Jones (00:08.036)
So of course, absolutely. We were connected through Nikki. She is amazing and so happy that I can get to know you through her, so that's great.
Melissa (00:18.378)
Totally. I will tell you, I like, um, never wanted to seek PR. And as our firm has grown and we've kind of started to have legs branch in a variety of directions I realized that I've lost the ability to articulate to enough people what we're doing and where we're going and Nikki's worked with so many of our companies So I picked him up. I was like I need help Direction and she was like nice to be like hello. I'll take care of you. And so yeah, super stoked about it. She's wonderful
Djenaba Johnson-Jones (00:31.108)
Mm-hmm.
Djenaba Johnson-Jones (00:41.315)
Hahaha
Djenaba Johnson-Jones (00:50.128)
Amazing. So I'd love for you to share with our listeners all about you. How did you get started working with CPG brands?
Melissa (00:57.518)
So I got an unfair start. My dad is an entrepreneur in food and beverage, very large scale. Ended up building the country's largest privately held juice manufacturing businesses. So I got a factory floor job at 11 years old, whether I wanted it or not. I assure you and anyone listening, I absolutely didn't want it.
Djenaba Johnson-Jones (01:17.871)
Hehehe
Melissa (01:24.046)
20 years later of being pulled on the floor and watching this business scale immensely, I am truly thrilled to have had it. It gave me a cheat code to what it meant to be an efficient operator, to understand what it meant to work with some of the best retailers in the world. To really, my love of food came there. And I think ultimately I realized probably about 12 years ago that our food system was broken. I hated the quality food that we, not that my family was necessarily providing, although I'll be the first to tell you I don't know that juice is the healthiest. But our nutrient dense abilities in food processing were deteriorating dramatically. And I wanted to be part of the solution. I realized I couldn't do that in a business the size of my dad's. That wasn't the problem he was looking to solve.
And so I left, didn't have a whole lot of confidence, quite frankly, wasn't sure what I was gonna do, or how I was gonna get there. Ultimately tripped into emerging food and beverage scene in New York City, fell in love with the founders that were peddling products that were so much better for you than what was on the shelf. And a theme emerged really rapidly, which was everyone was in love with their own product. Everyone could tell a retailer, or a consumer or a farmer's market frequenter, why they would want to sell their product or why someone would wanna buy it. But when you spoke to them about how they made it, they weren't sure how to move from kitchen to commercial kitchen to first co-manufacturing partner. They weren't sure how to set up the right trucks, how to negotiate the right warehousing structures.
Djenaba Johnson-Jones (03:06.137)
Mm-hmm.
Melissa (03:15.198)
even what their product ultimately costs at the end of the day. Everything south of sales and marketing in terms of operations, what was a black hole for a lot of people. And that happened to be the education that I just got via osmosis, genetics, and family business. And so I ended up launching an operating firm, Siddhi Ops, spent nearly a decade growing that business, growing 420 some odd food and beverage brands ultimately launched Siddhi Capital about three and a half or four years ago with my co-founders there and we are now a merged firm.
Djenaba Johnson-Jones (03:49.968)
So why go into investment from operations? Why not launch your own brand or do something else?
Melissa (03:57.406)
One, in all honesty, brand life is fricking hard. CPG life in general is hard, but being a brand founder, that takes some serious heart. People think that there's a one to three to five year success plan, that's generally inaccurate. We're talking 10, 15, 20 years for these people to build businesses that have material value. Two, in all honesty, my personality gets bored really easily. I don't know that I could focus on one thing and one thing only for that period of time. But, you know, that all of those things were satisfied in having the operational firm. Why I moved to being an investor was a couple things had happened a few years before I launched Siddhi Capital. One was some of what I consider to be the best investors in our industry were hiring us to do due diligence on their businesses before deploying capital. They thought they understood finance, but were sure they didn't fully understand how to look at a business in aggregate. And so at the end of the day, we had 44 different VCs, PEs, family offices, and sovereign wealth funds using us to diligence their deals. Anything as low as 500,000 up to 125 million in checks.
So that's the first thing. The second thing is I was getting asked on a very frequent basis to inject capital in businesses that were super high performing, some of the best businesses that you and I both know of. And at the time I did not have personal capital to be able to deploy to that magnitude. So I was missing out on great opportunities. Third and probably most important.
We were constantly being called to the boardroom as service partners who were helping these companies scale or operating them. But when we were attempting to tell the investors how they needed to pivot, thinking about these businesses, we didn't have the power, right? They were the check writers, we were the check receivers. And so ultimately we were getting silenced in favor of what the finance professionals thought, but a lot of them lacked the real CPG operating knowledge. So I was watching founders get kicked around the boardroom constantly, being driven to change their businesses in directions. They couldn't satisfy the direction of the investors. And then the next board meeting, the investor would kick the crap out of them for not hitting an unrealistic goal to begin with. And so that cycle showed itself so often that to get in front of that, I had to be the one writing the big check.
Djenaba Johnson-Jones (06:43.856)
And so how did you choose your partner? Like how did you guys come to know each other and decide to work together? Because like, you know, I don't have a partner in my business, but you know, if I had to, you know, find one, I don't know, like, what should I be, what were you looking for? You're kind of getting married in a sense. So give us a little bit of information about that.
Melissa (07:07.006)
It's such a good question. And had I been on your podcast like four or five years ago, and you would have asked a question like this, I would have told you there's not a shot in hell. I'll take a partner. Um, so, so that was the place I was coming from. Number one. Um, number two, I had made a decision for all the reasons we just discussed that I'd like to make a career change in that. I recognize that I'm not a classically trained finance professional. Um, I'm an operator.
Djenaba Johnson-Jones (07:16.546)
Hehehe
Melissa (07:35.966)
And so I didn't go to business school. I haven't been writing checks for a living for years. I didn't move from associate up to principal or VP in an investment firm, but I wanted to start an investment firm. And so that was a material gap for me as far as knowledge was concerned. My partner and his dad, who I consider both of them as my co-founding partners, even though the dad... who I will now say is the dad of both of us, doesn't really want to consider himself as a co-founder, but he is, it was his idea, quite frankly. They were one of the 44 groups using us for diligence and deal flow. And so I had gotten to know them via injecting their own personal capital in this space, what they cared about, what their ethos was, how they tended to look at the world and operate. And what I discovered is one of the things I care significantly about is forming real relationships with the management team and the company, not having a power struggle because I have the check. And in fact, many of my companies have the power. If they're performing well, they have the power over us just because we're the check holder. It doesn't matter. I want them to have that power. I want them to do well and be able to command the things they need to have in their business. Um, this was the same type of attitude that these guys had.
Djenaba Johnson-Jones (08:51.723)
Right.
Melissa (09:04.774)
And so, you know, as they were deploying capital and asking me for help in doing that in the space that I knew well, I kind of just started kicking around the concept of I need to understand what it means to raise an investment fund. Could you help me? And the advice I got from the dad, who, by the way, is not just a dad, he's the former CEO of Credit Suisse USA. He is a big, big dog in the space.
Djenaba Johnson-Jones (09:26.8)
There you go. He knows a little bit, a little something.
Melissa (09:33.662)
said to me one day, Melissa, you're not thinking big enough. Like I, and I always thought I was a big thinker. Okay. And he's like, you're thinking like this big, um, we need to think this big. And, and so it was his idea, uh, as I was just looking to explore getting educated to partner with bringing capital. Uh, I brought my operating firm and team who brought the capital, uh, and his friends with capital, um, and we would see what happened in fund one.
And I will tell you, we did a one hour Zoom phone call at the start of COVID. We raised a $70 million fund in an hour. People.
Djenaba Johnson-Jones (10:12.164)
That has to be unheard of, right? That's not normal.
Melissa (10:16.082)
It is not normal. And I also have gone on to say that it entirely destroyed my concept of what it meant to capital raise. I had always heard, that's right. I had always heard capital raising is so difficult. You spend years doing it. And I'm like, what's everybody talking about? This is so freaking easy. I ended up learning later, by the way, that as the macroeconomic climate changes and people have many places to inject their capital,
Djenaba Johnson-Jones (10:25.521)
You're like, well that's easy.
Melissa (10:46.038)
that it is a little bit harder. So knock on wood, I think we've had an easier time than most with our business model and the way we look at the world, but certainly I now agree capital raising is challenging. But so really, honestly, it was a synergy in the universe. It happened to come together at exactly the right time. My co-founder had just sold his business, which was a catering company and really... fell in love with what it meant to marry tech and food together. I loved food and obviously manufacturing. And so it was a very unique kind of setup where we don't step on each other's toes. And I think very quickly we realized that we have very different skill sets and very different interests. If I was merging two companies together, as I shared before, which meant one company was mine for years and one company was one I was co-founding,
Had he come in and said, I'd like to lead this entire thing with you and be in control of everything, even the other side that I don't know about, I don't think that would have sat well with me. Then his response was, I wanna do all the things I love, which is focusing on food and food tech and learning that world. You fricking run the people and the business. And I'm like, this is amazing. That's a partnership. We are four years in. I don't think I've ever had a fight or an argument, knock on wood that it doesn't come well.
Djenaba Johnson-Jones (11:53.196)
Right, right.
Djenaba Johnson-Jones (12:04.447)
Here we go. Yeah.
Djenaba Johnson-Jones (12:13.437)
Good.
Melissa (12:14.664)
But really it's because we married skill sets.
Djenaba Johnson-Jones (12:18.884)
So talk about core values a little bit. So interestingly, when I first opened, I've been in business for eight years, but I opened the kitchen four years ago, and I thought I knew what my core values were four years ago when we opened. And I was reading some Brene Brown thing, and she was like, your core values come from you, not necessarily from the business itself. And so I've kind of come to realize that at Hudson Kitchen, our core values are trust, respect, and personal responsibility. And it just kind of fits into what coming from me, but also being in a shared space, kind of that's what you need. Like we have open shelving. Like you got to know, you got to, you got to really trust the people that are in there and what's going on. So I'm wondering if you could talk a little bit about how you and your partner kind of came together and discuss what the core values of the company are.
Melissa (13:07.81)
So again, back to the cheat code, I feel like I've had a lot of cheats in my life. We took a lot of the ethos from the operating business. Because...
Djenaba Johnson-Jones (13:17.389)
Okay.
Melissa (13:18.982)
when we first merged, and we're still this way, we're about one third investors and two thirds operators. And so all those operators came from the city ops side of the equation, which meant we already had a fully formed business who was selling itself to the world, had a brand out there that people recognized and understood. And so to change that, was difficult and I didn't want to change it because that's what, to your point, I had built that ethos internally based on who I was. We've had to change it a little bit to fit into investment mandates and compliance and make sure that we are fiduciaries. So I will say first and foremost, to be totally honest with you, being a fiduciary and an appropriate fiduciary is absolutely a core value of mine and our firms. For me, I cannot believe I pinch myself every freaking day. I cannot believe that people in
Djenaba Johnson-Jones (13:48.729)
Right.
Melissa (14:12.344)
me with the amount of capital that they have entrusted us with already. I am extraordinarily grateful for that and I as a result of that owe them a tremendous amount of respect back in what they've provided us. So that's the first thing and that was not there on the operating side, it didn't have to. But aside from that everything else is inherited and I would say first is transparency.
Djenaba Johnson-Jones (14:29.657)
Mm, right, right.
Melissa (14:37.378)
I like to be a transparent leader for the, I'll say for the most part. Do we share every single detail all the time? No, of course, I don't want to instill panic or accidentally create excitement where excitement shouldn't be, right? So like there's always a deviation, but for the most part, I like to be super upfront. If I'm asked a question, I'm always transparent about the answer. I like transparency with our portfolio companies. We have the best relationships when people come to us and say, here's, all the freaking hot water we got ourselves in. How can you help me get out of that? That's awesome. I'll do anything I can to help you get out of that. But if you blindside us and don't tell us that this is going on, I now feel like you're hiding something from us and I can't shut you. So transparency is key. I think I try and operate from a place of empathy all the time.
Djenaba Johnson-Jones (15:08.588)
Yeah. Yep.
Djenaba Johnson-Jones (15:13.776)
course.
Djenaba Johnson-Jones (15:19.952)
Right, right.
Melissa (15:29.91)
I'm sure I fail sometimes as a leader. I'm sure I fail sometimes as an investor, but for the most part, I try and ask myself what's happening on the other side of the fence? How can I be supportive to the places these people wanna go in their life? Whether that's folks working at Citi or whether that's folks that are taking capital from Citi or are clients of Citi, because we have those too. If we're not helping you progress, then you shouldn't be here with us because we're not doing you a favor. It's a two-way street. And, you know, I think probably the last one is it goes along with transparency, but I think it's directness and honesty. I have found that most of the time I've gotten in hot water when I've been afraid to have hard conversations or have gone around in a circle just to step around something, and it actually doesn't help someone to step around. So I want that back.
Djenaba Johnson-Jones (16:20.848)
Mm-hmm. Right.
Melissa (16:26.194)
And I'll be honest with you, I, as a leader, have struggled with that. I've got a strong personality. I'm pretty kind of in your face sometimes. I mean, not like negatively in your face, not like really in your face. You know, I'm super like loud and boisterous. And so I think I have an intimidating vibe. I want transparency, or sorry, honesty back. So I try and give honesty, but it's challenging to always get that back. So I think I try and lead with that as a result to hope to get.
Djenaba Johnson-Jones (16:35.728)
I'm gonna go.
Djenaba Johnson-Jones (16:57.184)
So, what types of businesses are you looking to partner with? And then also, to piggyback on that, what types of founders? There's got to be a particular type of person that you are not just attracted to them as a person and who they are, and then also the business that they've started. I'm just curious about that.
Melissa (17:16.222)
Yeah. So, um, it's a multi-step question and I'll take one step back while answering that. So, um, Citi is a firm that is a blended firm. We are an investment firm, first and foremost. You've heard me mention we have in-house operators. That does not mean we have an operating partner who looks at your business from 30,000, you know, feet up and gives you a little
Djenaba Johnson-Jones (17:22.64)
Sure.
Melissa (17:44.278)
These are people who go in your business and often take on the roles to clean it up or support their role. They might be the ones actually restructuring your entire warehousing plan. Actually be the ones setting up new co-manufacturing partners. Actually be the ones launching new SKUs or innovation or negotiating for your IP or sending your trucks or buying procurement, whatever it is, right? They're actually going in and doing that work.
Djenaba Johnson-Jones (17:50.7)
Oh, okay.
Djenaba Johnson-Jones (17:56.42)
Hmm.
Djenaba Johnson-Jones (18:09.199)
Right.
Melissa (18:11.698)
our sales leaders might actually be sitting down with your sales team going through your full plan and understanding is this achievable or not achievable and what do we need to do to execute it. And so that type of investor really isn't a thing in our space. It's a thing in all other spaces, but in our space, people don't have the depth of operating capability and team that we have. And so that requires us to look at businesses a little bit differently.
Djenaba Johnson-Jones (18:21.38)
Great.
Djenaba Johnson-Jones (18:30.756)
Okay.
Melissa (18:42.054)
One is we need to have founders and management teams who actually want that support. Some who are afraid of investors based on the way investors have behaved in the past to them are closed. They don't want to share information with their investors. They're terrified to be judged. I get all that. And quite frankly, in our first dating with companies that we care about partnering with, I say to them, look, you're going to go through the most extensive diligence you've ever gone through in your life.
Djenaba Johnson-Jones (18:50.362)
Mm-hmm.
Melissa (19:10.954)
Like we are gonna put you through hell with that. I just want you to know that, heads up, we will work with you. If you tell us you don't have this information, no problem, just let us know that. Don't create it on the fly because it's not gonna be right. Like we'll work through it. But if there's skeletons in the closet, let's talk about it, because we're gonna find them. And if you don't talk to me about it, I now think you're hiding stuff again.
Djenaba Johnson-Jones (19:15.193)
Mm.
Djenaba Johnson-Jones (19:24.958)
Great.
Djenaba Johnson-Jones (19:32.749)
Right.
Djenaba Johnson-Jones (19:36.976)
Hmm.
Melissa (19:37.918)
And so when we come at it from that perspective and my response is always saying I'm not going to dog your valuation for it I'm not going to think you're a bad leader. I'm not going to try and take control of your business I just want to know what's up. So we know if we can actually fix it, right? It's not this capital It's also team support and so we that has been very well received by a lot of authors And when we create that level of trust from the beginning
Djenaba Johnson-Jones (19:44.451)
Right.
Djenaba Johnson-Jones (19:51.982)
Right.
Right. Amazing.
Mm-hmm.
Melissa (20:03.178)
And then they see the type of work that our team can do or the diligence it uncovers. I'll tell you nine times out of 10 at the end of a diligence before we write a check, the founder comes back and says to me, wow, you know our business as well or better than I know my business.
Djenaba Johnson-Jones (20:17.753)
which is amazing. Like how, like everyone should be doing that. Like you should know what you're kind of what you're getting into. That's great.
Melissa (20:21.718)
Totally. And when I started by telling you we were hired by 44 different firms in this space, we still do diligence work for firms in this space. We do. Because I think other investment firms have realized they maybe can't find that level of detail otherwise. We don't do it for everyone anymore, but we definitely still do it for select partners.
Djenaba Johnson-Jones (20:31.561)
Oh, you do, okay.
Djenaba Johnson-Jones (20:39.225)
me.
Melissa (20:44.894)
So that's the first thing is we need openness and we need folks to understand we're gonna be in your business to help you, not on top of your business to judge you. The second thing I'll share is we have a very wide array of investing capability and criteria here. We operate from a handful of different funds. We've got some scout funds that are very early stage. They are meant to inject $125,000 to $500,000 in a clip.
in companies that are truly concept phase or just getting the market. Mainly that's been in food tech, foods of the future. We're not talking about plant-based, we're talking about actual technologies, precision fermentation, cellular agriculture, things like that. We are starting a CPG Scout Fund, which will be much more broad, health, beauty, wellness, personal care, PET. And so those are very early.
Djenaba Johnson-Jones (21:28.93)
Mm-hmm.
Melissa (21:40.538)
And we want to get in early. We want to understand the trends in the market. We want to be able to provide our scaling expertise so that these founders and businesses have the right foundation from the beginning. Our next stage funds though, are much later stage growth equity funds, where we tend to write five to $15 million first checks. Lifetime value could be anywhere between 10 and $20 million. These businesses are doing ideally 15 to 20 million in top line revenue up to about 150 million. So much later stage. And, you know, our team obviously works very differently on both sides of those equations. We don't wanna give up, a lot of investors move up the upstream. We don't wanna give up the early stage stuff cause we think that's where, frankly, where we've caught some of our best investments.
Djenaba Johnson-Jones (22:34.832)
Got it. Can you talk about, this is just me not knowing anything about investment, like wondering like, how do you, how, what is the communication like between you and the brand that you're working with? Meaning like you've done your due diligence, you've made the decision to write a check, check gets written and, and then what happens? Like is it a, on a quarterly basis we're checking in with you? Is it a, I know everybody's needs are different based on kind of like what you've kind of found in the diligence, but just curious as to how it, how that works.
Melissa (23:03.106)
So there's a couple of different things. So one is if you're inside of our system as a service business, meaning we have our team inside your company, which doesn't happen by the way, all the time in every company we have, nor does it happen.
Djenaba Johnson-Jones (23:10.914)
Mm-hmm.
Melissa (23:16.358)
in perpetuity. So there are some companies we've been part of for years and now have stepped out of and just have a traditional investor role. There are some we have a traditional investor role in and then have stepped into multiple years later. So it depends on where they are in that cycle. If our team is inside your business on a daily basis, we're getting information back from those people all the time. And so we can be very, very reactive.
Djenaba Johnson-Jones (23:23.469)
Right.
Melissa (23:40.674)
quickly if we see something going astray and make sure that we're getting the management teams on the line quickly and try and get something moving to fix a scenario or take advantage of something. But if it's a traditional investment relationship where we don't have that.
Because we're full of operators, we do have what I would like to call monthly check-ins with our founders or management teams, with all the relevant kind of stakeholders on our side. So, if they're a self-manufactured business, we have a VP of manufacturing who joins those calls. You know, if they're not, we don't necessarily need that unless they're moving co-men.
Djenaba Johnson-Jones (24:05.485)
Mm-hmm.
Melissa (24:21.454)
Um, but so it depends on where they are in the lifecycle of their business. We've got the right stakeholders that come to those meetings. We are meeting though, internally about our companies on a weekly basis. And so we go over all of our main investments every week in order to get in front of what we think might be challenges and, and ultimately pull these brands in as we see them. But I would say, yes, there's always a quarterly board meeting cycle. Um,
Djenaba Johnson-Jones (24:32.72)
guy.
Djenaba Johnson-Jones (24:37.535)
Mm-hmm.
Melissa (24:49.178)
And in between there, there's usually a monthly check-in and sometimes it's just mentorship. There are times where I just connect, I obviously don't have the privilege of time to connect with all of our founders all the time. But some of those that I do, it might just be mentorship. And it might be as simple as like, dude, I'm fricking building a company too. And holy crap, I just ran into this thing?
Djenaba Johnson-Jones (25:00.131)
Mm-hmm.
Djenaba Johnson-Jones (25:13.238)
Yeah.
Melissa (25:15.282)
Like, I want to give you a heads up because I think this is going to happen to you soon, right? And people forget that, that people who are building investment firms are also founders and also have the same trajectory of experiences that you have. But I would say we probably are in touch with our companies more than I've seen most investors be attached to. Or usually they have one or two that they're...
Djenaba Johnson-Jones (25:26.202)
Yes.
Yes.
Djenaba Johnson-Jones (25:38.701)
Mm-hmm.
Melissa (25:42.23)
that they think are important based on the amount of capital they've deployed, we've probably got 15 to 20 that we are touching all the time.
Djenaba Johnson-Jones (25:50.776)
it. So what should founders look for in investment? Like I look at it as like, it's like you're interviewing for a job, right? It's like, they're both, it's a reciprocal relationship. You both need to be getting something out of it. So from, from like a founder's perspective, what questions should they ask? Should they be looking for an investor?
Melissa (26:08.438)
Well, first, thanks for saying that. And thanks for saying that on the job front also. I start every single interview I have with, I need to make sure this is a two-way street because if it just be getting something from you, this thing gonna work. And so it is exactly the same. Today's macroeconomic climate is unfortunate because it is driving founders and companies to partner with any money that's available for them.
Djenaba Johnson-Jones (26:20.505)
Right.
Melissa (26:37.374)
And so they don't have the control. And frankly, even companies that are doing well don't really have the control. But you should, I think your first investors, I would say, are probably your most important initially because they can make or break your ability to move to the next stage of your business. It's the same with who you put on your board initially. I have seen...
amazing first investors who are supportive, get it, know that you're not going to hit plan every freaking quarter, which by the way, I'll just tell you right now, please hit plan more often than not. And please, but I don't give a crap. If you miss one quarter, I look at the big picture and I care much more about the fact that you understand why you miss the plan. I care much more about the fact that we're making edits to that because no one's ever going to be perfect and forecast correctly 100% of the time.
Djenaba Johnson-Jones (27:15.32)
Hahaha!
Djenaba Johnson-Jones (27:20.912)
Right.
Melissa (27:33.514)
So I've seen early stage investors who get all of that and who are supportive. And then I've seen ones who frankly don't really get it and put onerous terms on the backgrounds of capital for these businesses, which make it very challenging to bring in the growth equity investor behind it. It makes it look like there's a problem with the company.
Melissa (27:55.858)
So I would tell you, choose your first investors wisely. Please do not just go after the money. That is a critical decision. After that, I think like, yes, dating is critical. Like you need to understand how someone behaves in multiple scenarios. And you know, we date for a long time quite frankly, probably a shorter time than some of the other growth equity investors because we believe in our diligence so much, but that diligence period.
Djenaba Johnson-Jones (28:25.759)
What's the timeframe? Like what are you thinking about for a date?
Melissa (28:28.77)
So the very early checks that we're talking about in the spell funds, those have virtually no dating period. We are excited about the business. We either are excited or not excited about the founder. If we're not excited, we're not writing a check. But if we're excited about the prospect, it's in our world such a little amount of capital, we are absolutely happy to take that risk and see how the business performs and then potentially fund from there. When we're talking about the much larger checks,
Djenaba Johnson-Jones (28:31.574)
Mm-hmm.
Okay, okay.
Djenaba Johnson-Jones (28:40.356)
Sure. Right, right, right.
Djenaba Johnson-Jones (28:54.286)
Okay.
Melissa (28:56.746)
I mean, that's a three to four month true diligence cycle. And before diligence even starts, we've probably been having the conversation anywhere between two and four months. So, you know, it can take three quarters of a year really to get there. And there are some firms out there who date people for years, right? They just wanna keep knowing them as they move through the cycle. And I think that's fine. We're talking about large amounts of capital here.
Djenaba Johnson-Jones (29:00.525)
Mm.
Djenaba Johnson-Jones (29:19.)
Yep. Great.
Melissa (29:24.262)
But you know, my recommendation is that you understand what your investor cares about. Because we all care about things. What are the things you care about? And they're going to say, well, I care about a return on my capital. No shit. We all care about a return on capital. Okay. But like, how do you care about that? Do you care about the bottom line? Do you care about margin? Do you care about contribution margin? Do you care about top line growth?
Djenaba Johnson-Jones (29:29.296)
Great. Mm-hmm.
Djenaba Johnson-Jones (29:38.651)
Right, right.
Melissa (29:50.434)
Do you care that I have a team that is constantly growing? Do you care that I'm a CEO? Like, what do you care about in the evolution of that? And you don't be afraid to ask those questions. And don't be afraid to ask, like, what, you can write the first check, but what makes you write the second check? Or the third check? How do I keep in your inner circle so that I can make sure that I keep getting funding from you? Because the investor you know often, that's in my opinion,
Djenaba Johnson-Jones (30:08.613)
Mm. Right.
Melissa (30:19.358)
I think is better than the investor you don't.
Djenaba Johnson-Jones (30:21.452)
Right, right, because you've established that relationship. They've seen you grow the business, so it's easier to get the check. So what does the landscape look like now? I kind of read a little bit, and I'm like, it's getting a little bit harder to get investment for CPG brands. Is that true, or what kind of, what does the landscape look like now?
Melissa (30:43.623)
The climate has changed dramatically. But I first want to say it has not just changed for CPG. It has changed in almost every industry that I've had conversations around. And so what you have to understand is most people don't understand how people get capital to invest. And so what happens is you have a group of either angel investors who invest
Djenaba Johnson-Jones (30:51.717)
Hmm.
Melissa (31:11.338)
very small amounts of their personal capital. You have the next group up, which is high net worth or ultra high net worth individual, who writes bigger checks of their own capital. You have the next stage of that, which is a family office. They're still deploying their own capital, but they're doing it in much larger amounts, and they generally have a team helping them to evaluate diversity and where they're putting it. But all that group there is investing their own capital.
So you can ultimately get an answer from them faster. And you know that if they tell you that they're committing capital, they likely have it to commit because it's coming from their own bank account. Then you move to the next stage, which is VC and PE funding. Those folks have to raise capital from people. And so when you go and raise capital from either the angels, the high net worth individuals or the family offices or institutions or pension funds,
Djenaba Johnson-Jones (31:49.828)
Great. Okay.
Djenaba Johnson-Jones (32:02.372)
Mm-hmm.
Melissa (32:09.298)
or banks or whatever, all of these big places who want to give capital to expand, all those people have mandates on returns. They all also have to get cash from the people who have liquidity. And so if you have something that interrupts an economic cycle, like high interest rates, which by the way, someone can go and put their money and get a five or five and a half percent ticket and not have any risk at all.
Djenaba Johnson-Jones (32:35.44)
Mm-hmm. Right.
Melissa (32:38.046)
Why would they risk it for something else right now? They probably shouldn't, okay? Two, if you have companies that these institutions have deployed capital in, but those companies have stagnated in growth and they're not being acquired, money isn't returning to the funds, which then returns to the individuals that allows them to reinvest in other people's funds. So things, and then we have things that are like World Wars, right? And that create...
total fear. So what has happened is the people who are investing in the institutions or the funds have held on to their capital, or they're not getting it returned fast enough. Or look at what just happened in the stock market. It's literally, I don't know what direction I'm going, but either way, I don't know what the mirror is. And so the point is all it's done is gone straight up. And as a result of that, you're getting a nice return.
Djenaba Johnson-Jones (33:26.498)
Yeah.
Melissa (33:35.95)
I think like the Dow Jones returned like 19% last year or something crazy like that. So like point is they're getting money in from elsewhere. They don't need to take the risk. As a result of that, the funds that invest in you do not have the liquidity to invest. They're not getting it incoming. Second, they might have companies already in their portfolio that are dealing with a macroeconomic climate that's very difficult. And so now
Djenaba Johnson-Jones (33:40.497)
Yeah.
Djenaba Johnson-Jones (33:51.066)
Hmm.
Melissa (34:03.634)
money that I might have thought I could put into a new company, I can't. I now have to support the companies that are in my portfolio, which means that new company isn't going to get the money for me. And this is just investing across the board. This is not CPG. Okay. That's the first thing everyone needs to understand. The second thing, for sure. The second thing is CPG specifically has changed dramatically and it's a valuation of value.
Djenaba Johnson-Jones (34:18.244)
Mm-hmm.
That was helpful. Thank you.
Melissa (34:31.866)
It used to be that growth at all costs and top line sales garnered you whatever valuation and exit potential you could dream of. People got smart, honestly, and I'm thankful they have. We are not running nonprofits. We are running businesses. Okay. And businesses have a definition and likely that definition is cashflow. And so you have.
to be able to build a bottom line that gets a business to self-sustainability or profitability and not a growth at all cost model. My empathy is back with the founders who started their businesses and raised capital in an environment initially where they were told to dump everything into the top line and then the rug got pulled out from under them. They had high valuations
Djenaba Johnson-Jones (35:18.247)
Mm-hmm.
Melissa (35:31.65)
did or did not meet those valuations, but at today's times, they definitely don't meet them. And their bottom line is not strong. And as a result of that, people have said, hang on, you gotta change your whole business model. You now actually need to have strength of your bottom line and margin and contribution margin. Slow down the growth. And they're going, wait a minute, I don't know how to do that. I built a whole team that was focused on growth. I don't have a heavy finance and ops team. I have a heavy sales and marketing team.
I've already dumped all the 10, 15, $20 million in cash I've raised in the top line. What do you want me to do? How do I get the money to strengthen the bottom line? And investors are coming in and saying, no problem, we'll give you the money. But by the way, that $100 million valuation you have now only worth 50. We'll give you money on that 50. And founders are going, what do I do? How do I do that? I'm getting totally diluted for that. And so the market needed to change. The problem is those who've gotten stuck in the,
Djenaba Johnson-Jones (36:24.308)
Mm-hmm.
Melissa (36:29.582)
crosshairs in the last few years are having to rapidly change their business model and Rapidly suck up what these new terms are and my advice to any founder in that is please align with an investor who understands that you need to be incentivized and Make a pool of equity available to you to earn back so that you're okay Taking the dilution because you know, it's gonna come back to you a little bit in earning moving your business in the right direction
Djenaba Johnson-Jones (36:59.384)
That was so helpful. Thank you. Thank you so much. So I wanna turn to you a little bit. You are, as I mentioned before, you're also a business owner and you're going through some of the same things that the founders you work with go through. How do you manage stress? What do you do to take care of yourself?
Melissa (37:17.038)
So one is I'm highly obsessive, I think is probably the first thing to say. And I am a data tracker, like crazy. So I wear like a glucose monitor. I wear a ring, I wear an apple ring, an apple pod. I track all the food and macros I eat. Like I'm totally crazy. I am a clean keto eater. Like
Djenaba Johnson-Jones (37:31.032)
Yes, oh wow.
Djenaba Johnson-Jones (37:38.796)
Yep. Love it.
Melissa (37:46.206)
never cheating. I have found that my own personal body runs much better on clean fat and protein than it does on carbohydrate. That was a huge change for me, by the way. I made that change about two and a half years ago, and I performed better, both mentally and physically. And I'll just take one step back and say, two and a half years ago, I freaked out. And I basically said, oh my gosh, you're now responsible for all this capital.
Djenaba Johnson-Jones (37:52.921)
Yep.
Melissa (38:16.262)
And that's not the world you originally came from. And I remember waking up one day in the middle of the night in like this cold sweat and was like, oh my gosh, you have to return all this money to people with a multiple. Like you gotta be on your game, girl. And that next day I was like, what can I do to be the very best version I can possibly be? I changed my diet. I was already a relatively clean eater, but I mean, man, I went.
Djenaba Johnson-Jones (38:28.749)
I'm out.
Yes.
Melissa (38:45.302)
way far off the scale now. I work out a lot. I spend a lot of time, not necessarily high intensity workouts, I do those every day also, but like I move a lot. I'm walking a lot. I find that like, I think better when I'm pacing. Maybe I'm ADD, I'm not sure. But like, it's totally fine. I know what works for me. And I know that like, if I'm sitting in a chair all the time, stress is constantly building up for me.
Djenaba Johnson-Jones (38:57.219)
Yeah.
Djenaba Johnson-Jones (39:04.153)
You win.
Melissa (39:12.93)
But at least if I'm moving, I'm getting physical stress out of the way while I'm able to deal with mental and emotional stress. And I think clean eating helps on that regard because you're not having these glucose swings. So I wish I could tell you, like I was a meditator and a yoga person because I feel like that fits in our universe so well. I'm terrible at meditation because I can't stop my brain. And like yoga, I try and get bored in about the first two and a half minutes and just stop.
Djenaba Johnson-Jones (39:30.433)
I'm gonna go.
Melissa (39:42.526)
Um, so like I, that's not me. Um, I'm much more of like a in your face, like I have to do it person. Um, but really those are the things I do. Oh, and I go to bed every night between eight 30 and nine o'clock. Like no apologies.
Djenaba Johnson-Jones (39:55.533)
I'm the same. Well, lately it's been like 9.30, but like I go to sleep before everyone in the house and they just know, I'm like, it's time. Even my own parents are like, it's time to go to bed, right? I didn't want to call you too late. Cause I was like, I just want to, I like, I know what my body needs and now I'm not ashamed to just go ahead and give it what it needs. So yeah, that's good.
Melissa (40:07.659)
Yeah.
Melissa (40:15.958)
That's it. You have to be in. And that's what I realized. Like you have to be unapologetic about these things. And my phone goes off at 8.45 at night. Like I have to actively go in and look to see if someone's responded to something. Cause otherwise I'm not seeing it. There's no alerts or anything else. I won't start calls generally before 10 a.m. in the morning. Why?
I care about eating a wholesome breakfast. I care about sitting at the table with my wife and spending time with her. And I care about getting a workout in. And after that, I'm happy to have phone calls and crush the day, but like, if those things don't happen for me, I'm not gonna be great for the rest of the day.
Djenaba Johnson-Jones (40:57.124)
I'm worked out. I do, I do, I try to do guided meditation. I'm getting used to it and I actually kind of like it. And then journaling afterwards. So I spend an hour to an hour and a half just by myself. So I'm also up at 4.30 or five in the morning and then I start my day and it's the best. It's the best. Love it.
Melissa (41:10.786)
Totally.
Melissa (41:14.974)
Maybe the guided meditations what I need to do maybe.
Djenaba Johnson-Jones (41:17.164)
I think you do. I can't sit there by myself, because you're right. My brain will be everywhere. But if somebody is like, OK, I did one about gratitude, which was really great. It was a month of everyday gratitude, and it was the best thing I ever did. Yeah, so the trial is done. OK. Great, so we have what we call a money bell at Hudson Kitchen that we ring when we're celebrating something. So I'm wondering, what are you celebrating? It could be personal, professional, or.
Melissa (41:30.803)
Okay, I'm gonna try
Melissa (41:43.254)
Well, it's really funny because you provided me nicely with some of the context of this before I got on. And this is the only frickin' thing that has stumped me. And I've been racking my brain for the last 36 hours to answer this question. And what I realized is, you know...
Djenaba Johnson-Jones (41:57.89)
I'm sorry.
Melissa (42:05.138)
I mean, well, so I'll just tell you in my own personal journey, I'm like a sprinter, not a marathon runner. Like that's who I am as a person in general. I couldn't like run more than three miles or 3.1 miles, which was like my big feet. I decided I was going to run a half marathon one day, like just one day I decided. And I did the next week I ran a half marathon.
Djenaba Johnson-Jones (42:11.056)
Okay. Yep.
Djenaba Johnson-Jones (42:22.692)
Mm-hmm.
Djenaba Johnson-Jones (42:26.516)
Oh wow, the next week?
Melissa (42:27.902)
all like, oh yeah, I was just like, you're doing it. I ran like seven miles one day, 10 miles the next, and then crushed the 13. And I just wanted to see if I could do it. I've since run like five of them in the last couple of months. But, and so like, I'm proud of that, but I know I have that in me. And so the reason why I think this question has sat with me so much is really...
Djenaba Johnson-Jones (42:35.865)
Wow, okay.
Melissa (42:54.186)
When I take a step back and I think about how things have evolved for me in the last handful of years, it has been a beautiful blend of luck, of hard work, and of passion.
Djenaba Johnson-Jones (43:04.894)
Mm-hmm.
Melissa (43:09.862)
None of those things could occur if I didn't have people who wanted to show up every single day and believe in the same mission that I'm pushing forward in this space. And so my successes are not mine. My successes are theirs. And
We have people on our team who have grown so much in the last handful of years, who've been promoted, who've taken on roles of partnership, who run the firm, like, those are the things I'm most proud of, because at the end of the day, one person can't do anything on their own. I always thought one person could, and my ego, trust me, wants to be the one person who's like, got it all crushed.
But like I realized, you know, a handful of years ago that wasn't going to get me there. And so that amount of giving up control and being happy for people who are on that journey and providing that support to them is really probably the thing that's most exciting for me.
Djenaba Johnson-Jones (44:14.836)
Thank you for sharing. That's amazing. So Melissa, let everyone know where they can find out about you and Siddhi Capital.
Melissa (44:21.622)
for sure. Well, Siddhi Capital is easy to find on its website, s-i-d-d-h-i, capital.co, by the way. Someone had citycapital.com, strangely, which now we do own, but I feel like we can't just redirect people to a new site, so it's.co. And I'm Melissa at citycapital.co.
Djenaba Johnson-Jones (44:43.684)
Cool. Thank you.
Melissa (44:45.654)
For sure. Thank you so much, by the way. And like next time we should do this again in reverse, cause I want to hear your story. Why you decided to do this for entrepreneurs and all the support you get. Cause I feel like that's really relevant.
Djenaba Johnson-Jones (44:51.138)
Okay.
Djenaba Johnson-Jones (44:54.745)
Definitely.