What Makes a Brand a Good Fit for Factory?
Factory helps small food, beverage and pet health companies grow up. In addition to equity investments, we offer all the resources small brands need to compete with the big guys, from marketing to supply chain to new product development. Our strategic guidance helps entrepreneurs to expand their businesses more quickly than they would be able to do with just a pure cash investment.
“It’s a lot more than money,” says Keith Caldwell, Factory’s operating partner. “We’re available for entrepreneurs who are looking for help and want to partner with someone who will get involved in their business.”
If you’ve got a great product on store shelves that’s generating $2-$20 million in sales annually and are looking to accelerate growth, Factory could be a good partner for your business. (If you’ve got an awesome idea for a product but haven’t actually started making it, you’re not ready to work with Factory.)
Your brand could be a good fit for Factory if…
You have a great founder or team of founders.
We want to work with passionate, hands-on entrepreneurs who are excited to collaborate with Factory. “The fit of the entrepreneur is the number one criteria for us,” says Caldwell. “Pipcorn [an heirloom snack company and Factory investment] has an incredible team of founders. They’re all great people who know their strengths and where they need help, and they’re willing to do anything to make their company a success.”
Your product is differentiated.
Factory looks for products that have a unique solution to consumers’ needs. For example, Factory chose to partner with sports nutrition brand Honey Stinger because it was able to fill a hole in the market by offering athletes a better-for-you, more effective alternative to sugary energy snacks.
Your product fits in with a trend, not a fad.
We want to invest in products that have the potential to become household names. Our goal is to help grow your company so that shoppers are reaching for your products for years to come, not just until the next big fad comes around. “We’ve stayed away from CBD-infused products and strictly keto brands, for example, because demand for those types of products hasn’t been proven to be a lasting trend so far,” Caldwell says.
Your brand is scalable.
Is there an opportunity to expand your brand beyond the original core product? Pipcorn is a great example of this—it started out selling heirloom mini popcorn and recently launched cheese balls and dippable corn chips, both made with its signature heirloom corn. Now they have placements all throughout the salty snack aisle, positioning them to gain a larger market share. (If your product line can spread beyond one aisle of the grocery store, even better!)
Mikey’s, another factory investment, started with grain-free English muffins and grew to include other frozen grain-free products made from simple, pronounceable ingredients like tortillas, pizza crust and, most recently, pizza and breakfast pockets. The brand is angling to dominate the market for people who need or choose to eat clean label food that’s free from top allergens.
Your product is hard to copy.
We love products that are difficult for competitors to replicate. Caldwell says Factory’s decision to partner with Stuffed Puffs, a filled marshmallow with a milk chocolate center, was easy because there’s nothing else out there like it and the manufacturing process is proprietary. But even if you don’t have intellectual property associated with your brand, qualities like an authentic origin story or unique key ingredient can keep you a step ahead of the competition.
You have a sustainable profit margin.
This one’s pretty simple—we want to know that your brand can make money. Acceptable product margins vary by category.
Your brand is an attractive acquisition.
Before Factory invests in a company, we want to make sure there are potential buyers for it when the time comes to sell. “We’re not the right group if you want to hold onto your company and turn it into a multi-generation family business,” Caldwell says. We expect brands to stay with Factory for about five years before making a strategic exit (though we can hold onto brands for as long as we need to).