Willow Growth Partners’ Deborah Benton and Amanda Schutzbank,
From our Women's PE Briefs - week commencing June 28, 2021
Willow Growth Partners, which was founded by managing partner Deborah Benton and general partner Amanda Schutzbank, closes its inaugural fund – a fund that Deb tells Women’s PE Briefs the firm will use to support consumer-focused founders at the seed stage and “put them on the right path to create a healthy sustainable business.” The Los Angeles firm raised $28 million to invest in emerging consumer brands and their supporting technologies – an effort that began in February 2020. “Even with the pandemic and accompanying turmoil, Deb and I were determined to proceed, convinced that our investment thesis was more relevant than ever,” Amanda also told Women’s PE Briefs. Willow, she said, raised almost the entire fund over Zoom – with more than 50 percent of its limited partners being women. “For two women GPs, raising a first-time fund, we’re thrilled that we were able to exceed our target in just over a year,” Amanda said.
Deb and Amanda formed Willow Growth after looking at what Deb says was “hundreds of deals together” while she was an angel investor and Amanda was at Amplify. The two ended up co-investing in four deals and came “to understand how each other assessed and underwrote deals,” Deb said. Willow Growth’s focus emerged from what Deb had seen and experienced while working in the digital consumer space as president and chief operating officer of NastyGal and ShoeDazzle and executive vice president of operations for Teleflora. “From my operating experience, I believed that consumer brands were very different from traditional tech and software companies and required a different playbook in terms of capital structure, scaling and key metrics.” The firm, she said, is striving to take “the best of the VC model and the PE model focusing on investing the right size capital with realistic valuations and working with companies to scale in a healthy way, ensuring that they developed the important key metrics that make them attractive for later-stage growth investment or acquisition.” She said that she and Amanda “saw many consumer brands failing because traditional VCs were often approaching them like tech companies, including a too-strong focus on solely fast topline growth and a $1 billion plus exit.” The reality, they saw, was that the majority of the acquisitions were actually happing in the $200 million to $500 million range. “Needless to say,” says Deb, “when you value and capitalize a company that pushes them to achieve a $1 billion plus exit – yet most acquisitions are happening earlier – it’s easy to see how companies can be put on a path to unhealthy revenue growth and a weak margin structure.” As a result, Willow Growth looks to invest at the first institutional stage “at rational valuations and with appropriate capital infusions,” she said. The firm, she added, “doesn’t value assess or scale consumer brands the way the traditional VC model does or take control-like influence over them like PE firms often do.”
Willow is not a diversity or female-focused fund, but 75 percent of its current portfolio have female or minority founders. Its investments include dae, a clean hair brand whose CEO and founder is Amber Fillerup Clark; Ox, a fulfillment platform for supply chains whose founder and CEO is Charu Thomas; and Coterie, which produces baby personal care products. The firm, said Amanda, is looking to make 20 investments with the fund. Willow’s core areas are health and wellness, beauty, personal care, food and beverage, apparel and accessories, and home and pet. “We aim to invest in brands that not only offer superior and differentiated product design and functionality – but that also are led more broadly by strong values,” said Deb.