L Catterton’s Whitney Casey Envisions a New Wave of Investors Fueled by Empathy and Long-term Thinking
From founder and CEO to partner at L Catteron, Whitney Casey talks about her perspective and ushering in investing 2.0.
As a prior Emmy-winning newscast journalist, founder and chief executive officer, Whitney Casey aimed to bring a fresh perspective to her role as a partner at L Catteron. From the way investors work with founders to untapped industries that have enormous potential despite being largely ignored in the past (like women’s health), Casey is leading the future of CPG investments with an investor 2.0 mentality.
One of a few women venture partners at L Catteron, Casey said she is creating a new category of investors. Her investments highlight her diverse background informed by her previous roles as the founder and CEO of Finery and cofounder of Tally Health and include work with Stripes, WTHN and Alice Mushrooms, along with other women’s health businesses.
Here, Casey talks to WWD about the future of investing and areas where she sees growth.
WWD: From your perspective, what is the current state of CPG investing?
Whitney Casey: We’re in the thick of it for CPG and it’s a fascinating crossroads because on one hand, we’ve seen unprecedented growth fueled by consumer demand. It’s demand for things like [those] buzzwords: sustainability, wellness-oriented products, and brands are pivoting toward functional ingredients which is this huge trend of transparency and lifestyle alignment. We’ve also heard a lot about, clean beauty, which is table stakes now.
But the market is super saturated, so consumer demand for all of those things is high, the market is supersaturated and legacy brands are just struggling to remain agile. And with scaling younger brands, the pattern is so much tougher than it used to be. Now it is so different. The channels are so fragmented. There are so many different channels and they’re fragmented and hard to reach the customer.
And there is skyrocketing customer acquisition cost. We’re not talking about it going up 10 percent year-over-year, it’s maybe 100 percent year-over-year. Those things are hitting CPG, even though demand is up. If you’re a new brand, or you’re trying to break through the noise, it is very hard.
WWD: With that in mind, what do these young brands need to have for investors to take notice?
W.C.: If you think about the way that valuations were sky high during the pandemic — meaning what investors would pay to invest in a company during the pandemic — that’s all normalizing and we’re in an environment where profitability, not just grow at all costs, is the priority.
This shift in the fundamentals of these businesses is forcing brands to be sharper about product market fit and operational discipline is key. That weeds out trend chasers and highlights those businesses with staying power when you have real working unit economics. Now, you need to start businesses that have such great fundamentals and great unit economics, otherwise they’re not investable.
WWD: What are some of the blind spots you’re seeing not getting investments?
W.C.: I think there are some glaring blind spots, because even most innovative brands haven’t seen them, or investors could be missing them. I think it’s female-focused categories. You don’t have to be a female it’s not about being a female investor to recognize those, but 80 percent of consumer dollars is spent by women. So, let’s start focusing on what women need.
Women’s focus categories like fertility, menopause, sexual wellness and women’s health, in general, are often underfunded and poorly understood. Right now it’s super fragmented because there’s so many little businesses that have started up in this space. We’re going to need to see these businesses mature and become bigger businesses, so that there can be growth rounds and then exits and private equity rounds after that.
It’s so shocking that menopause happens to everyone and yet has not been addressed. Fertility in 17 states is required to have fertility benefits. These are all super interesting things. There’s an overemphasis on sustainability, DTC and wellness, but there are meaningful niches inside of those. I think that is just where there’s a massive upside for those willing to invest in these underserved markets early.
WWD: How are you working to represent and bring in this new wave of investors and what does that new guard of investors look like to you?
W.C.: What I’m trying to find on my team and the people that I look to, and what my firm has started to believe in, is that ability to balance both vision and execution or operational excellence. And that’s essentially what you’re balancing when you start looking at companies. You’re looking at the team and then the unit economics. Does this business have a solid business? Is it meeting an addressable market?
My experience allows me to help founders spot market opportunities early and then recalibrate when necessary. And what’s important about that is in a tough market — like we’re in now — you have to be able to be malleable, and it becomes even more important.
We’re not in this era where capital is free-flowing. It was bonkers in 2021 and valuation was not that important. Now, investors need to look through a different lens, and that’s finding new ways to scale companies, combining companies to create more value, and being flexible and resourceful. You are always told as a founder, you need to be resourceful, but I also think as an investor, you need to be resourceful because access to funding is so tight.
[It’s about being] smarter about how we’re going to go about this growth project and we have to be pretty clever about it.
Having fundraised myself, I think I uniquely understand the challenges of getting investors to buy into your vision. Storytelling is everything in fundraising. That’s what founders and investors do well. If you have to get your company to raise money, you have to be good at helping them craft that story for a room full of people who don’t use their product.
WWD: What do you think is needed to create an investing 2.0?
W.C.: We could just maybe embrace a little bit more empathy and long-term thinking into investing. And investors need to adopt a builder’s mindset, understanding that pivots and recalibrations are just part of the process, not signs of failure. We have to be able to educate our audiences and look for opportunities that are not, that aren’t sort of binary, that aren’t like so obvious.
For instance, I looked we really liked the longevity category, and there weren’t a whole lot of businesses that we liked in the category so instead, I said, well, here’s this amazing scientist from Harvard, David Sinclair, and he’s solving the problem. Let’s find a commercially viable solution, and let’s build a business around him. We created a new business and incubated it at L Catteron and we grew that business.
Typically, we see a company, it’s doing well, we put money in, it does better, right? But in a market that’s super challenged, you have to look at different opportunities differently. I think that’s investor 2.0.