The Consumer VC: Venture Capital I B2C Startups I Commerce | Early-Stage Investing I Brands
How He Buys Multi-Million Dollar Brands with Fan Bi, Founder/CEO of The Hedgehog Company
Jan 29, 2024
Fan Bi, Founder & CEO of Hedgehog, talks about valuing direct-to-consumer brands, challenges in the messy middle stage, expanding a DTC business to additional sales channels, and the Founder's predicament in the consumer acquisitions market.
46:14
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Quick takeaways
- Valuing businesses based on revenue multiples is no longer sustainable, and metrics like true gross margin and operational complexity should be prioritized.
- DTC brands should prioritize sticky revenue through subscription models or repeat orders, as categories with high LTV and repeat rates offer great scaling opportunities.
Deep dives
Valuing Businesses Differently
Businesses should be valued differently as the party of high valuations based on revenue multiples has come to an end. The focus should shift from revenue to metrics like true gross margin and operational complexity. The era of assuming irrational valuations on exit is over, and profitability should be prioritized for long-term sustainability.
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