CAVU Founders: “Shifting Food Paradigm” to Guide Investment

CAVU970Comprised of a well-known entrepreneur, a legendary brand-builder, and a self-described “hunter” of cutting edge brands, CAVU’s triangle offense is getting ready to hit the floor.

Attracted by the savvy reputations of its founders, Clayton Christopher, Rohan Oza and Brett Thomas, the new fund — with a name derived from the acronym for Ceiling And Visibility Unlimited, a pilots’ term for favorable flight conditions — raised more than $150 million pre-launch to invest in and incubate food and beverage companies.

Much of the interest in the fund is owed to its principals’ already strong records. Christopher co-founded (and eventually sold) both Sweet Leaf Tea and Deep Eddy Vodka, and has invested in companies like Rhythm Superfoods and Primizie crackers, among others. Oza, who famously brought celebrities like rapper 50 Cent on board at vitaminwater as an investor and brand ambassador, has been involved as an investor and advisor with companies ranging from established brands like PopChips, Bai and Vita Coco to the relatively tiny WTRMLN WTR. Thomas, the newest of the three to the CPG sector, worked at a hedge fund but was obsessed with food and beverage, and became an investor in brands like Suja and Deep Eddy, which enabled him to forge a relationship with Christopher.

Thomas and Oza had discussed starting a fund together for about two years but say they wanted to bring in someone known as an operator and entrepreneur as well as the marketing-savvy Oza to fit the mix. For his part, Thomas — whom Oza calls “the Hunter” for his dogged approach to finding deals — is something of an expert in outdoor advertising, having helped shepherd a billboard campaign for Suja early on as an investor.

BevNET spoke with Oza and Thomas recently about the new fund, which will be based in Manhattan but has its founders scattered in Austin, New York and Los Angeles.

Thomas has been credited with performing much of the legwork in drawing the two well-known entrepreneurs together into the fund.

“When I started looking at consumer brands, what I realized really very quickly was that there were a few difference-makers in the CPG world,” noted the Cleveland native. “Young entrepreneurs seeking people in the industry would seek out people who they knew were successful, like Rohan, like Clayton. And Rohan sees trends very early, he has that whole ‘If you build it they will come,’ sort of thing. I reached out to him, and wanted to get close to him, and be in the same deals. And the same business acumen, I saw, is with Clayton Christopher.”

On the line, Oza and Thomas demonstrate a confident jocularity that comes from their past success and belief in the future.

“It’s about working with smart fund people, and smart founders and brands,” Oza said. “I wanted partners that were really smart, and I wanted people who I could go have a beer with and maybe play some tennis.”

The fund will focus largely on food and beverage investments — although it has also invested in the dog food company Nulo. Other early placements from CAVU have included an investment in Bai, where Oza is already a shareholder, and in breakout online natural products retailer Thrive Market. Christopher has also touted Mighty Swell, a ready-to-drink cocktail brand that will incubate in the fund.

“The entire food paradigm in this country is shifting at a much more accelerated rate,” Oza said, due to the growth of Whole Foods and the spread of information on the internet, which has led to consumers’ having an increased tolerance for fats — once a dietary taboo — and protein over carbohydrates and sugars.

“No sugar,” Oza said. “It’s public enemy number one.”

The fund closed quickly, the founders said, and was oversubscribed, moving from an initial target of $100 million to the final total of $156 million.

Despite all the “dry powder” that is in the fund, Thomas said investment size will vary.

“Most funds don’t have the range to invest $20 million into a high growth established brand as well as $1 million with founders stock,” he said. “We’re stage agnostic. We’ll co-found brands… that’s a really cool component of our fund. That could be founders’ equity up to a very small check. But our real check size, we don’t put a lot of ceiling on it. With co-investment, we could take down a $100 million deal, if there’s a best-in-class deal.”

That’s because the principals firmly believe that, with the track record they bring as entrepreneurs and investors, they offer the best possible advantage for the brands they work with in terms of providing the vaunted “value added” investment team.

“There’s two things happening in food and beverage space,” Oza said. “One, the rate of disruption in every category, from cookies to chips to ice cream is accelerating. At the same time there are more and more [venture capital] or private equity players in the mix.”

With the amount of attention — and cash — chasing food and beverage companies, entrepreneurs, Oza said, “are the prettiest girls at the dance. You can get money really easily, but… do these guys provide value beyond the money to give us a path to growing bigger and more than annoying me at board meetings. Entrepreneurs are becoming more savvy about who they want with their company because they want someone who can build themselves something really special.”