On this week’s episode of M&A Masters, we speak with Jennifer Mandelbaum, Senior Investment Director at Halogen Ventures.
Halogen Ventures is a California-based Venture Capital fund focused on investing in early stage consumer technology startups with a female on the founding team.
Female led businesses represent a massive opportunity. They deliver higher ROI and deliver higher payouts on exits, but they are still having issues raising money. Halogen Ventures, led by Jesse Draper, is ready to change that by investing in companies creating technologies that are changing lives in the consumer space.
- The key things that separate Halogen from all the other businesses out there, plus their hands-on strategy that supports the whole of every business they work with
- The 3 word marketing strategy Halogen uses to help women portray the unique gifts they bring to the table
- How they are jumping into women founded companies that support the changing way families live, work, and shop today
- The trends she sees coming for the rest of 2022 and beyond
- And more
MENTIONED IN THIS EPISODE:
Patrick Stroth: Hello there. I’m Patrick Stroth, trusted authority in executive and transactional liability, and President of Rubicon M&A Insurance Services. Now a proud member of the Liberty Company Insurance Broker Network. Welcome to M&A Masters where I speak with the leading experts in mergers and acquisitions. And we’re all about one thing here. That’s a clean exit for owners, founders and their investors. Today, I’m joined by Jennifer Mandelbaum, Senior Investment Director of Halogen Ventures.
Halogen Ventures is a Los Angeles based venture capital firm, focused on investing in early stage consumer technology companies, exclusively those with a female founder or female leadership. Today, I’m excited because usually on M&A Masters, we’re not talking to venture capital, we’re usually talking to private equity investment bankers and so forth. But we’re going to bust a couple myths. And Jennifer, I just can’t tell you how much I appreciate you being here. Welcome to the show.
Jennifer Mandelbaum: Oh, thanks for having me, Patrick. It’s great to be on. I’m happy to talk to you. And I’m really excited.
Patrick: Yeah. We’ll talk about the VC stuff and all these new things coming up. But let’s, you know, let’s get down to you know, you, okay. What led you to this point in your career?
Jennifer: Yeah. So I’ve always dreamt of being in venture capital and helping small businesses. My dad was my inspiration. He’s an entrepreneur himself. His story truly represents the American dream. He moved to America from Hong Kong at 16 years old for a better opportunity. And he moved to America with very little money and English vocabulary. He worked hard to support his family and pay through college and pharmacy school. And then he saved up his money to open the first pharmacy in West Texas, that provided delivery service to customers, substantially improving access to health care for the people in that area. It’s really admirable to see how dedicated he was to his business and how genuinely passionate he was in serving his customers.
And he really shaped my passion in helping others grow their businesses. And so now more about me and how I started, I started small. And we could talk about this like going back when I was really young. Summer after freshman year of college, I was looking for a summer job. And I got denied several waitress positions at a number of restaurants. And I was like, you know what, I’m going to start my own eBay business. And I’m going to, I’m going to sell a brand name workout gear for less. And at the time, the pre Lululemon height, this was way back, one of the hottest yoga pant brands was Solo. It’s an LA based yoga like, workout brand. I don’t even know if exists anymore, but I was so in love with that brand.
Anyway, I, I selling these pants, I really learned how to operate my own business, and keep customers happy. And coming back for more. I got glowing reviews on my great customer service, fast shipping, like kudos to my mom for doing that. I got to really understand buying patterns of my customers and to see what they really liked. And then I would message them on the latest arrivals like bit based on their preferences. So it was great. I made a few $1,000 in a couple months. And that was better than being a waitress back at that, that that time. And then post college, I worked at two fast growing family offices that allowed me to support entrepreneurs like my father, and develop critical judgment to evaluate venture backed funds.
I loved doing this so much I joined the largest organization for emerging leaders on the east coast in the venture space called the New England Venture Network, or NEVN. And in which I ultimately became the first female president in the organization’s 20 year history, and that’s something that I’m super proud of. And at the time, there weren’t many VCs, female VCs out there. Really, especially at the time. Still, there’s not enough. But I joined and created a female subgroup called WIN, which means Women in NEVN and I held several female only events, inviting top female VCs and entrepreneurs to dinners to speak and share their experiences. And for women in the industry just to connect and build relationships with one another. And then this is a really long story, but you know.
Patrick: No, this is fun!
Jennifer: And then I decided to go to business school to explore more opportunities that allowed me to build strong operational experience, which landed me at a big luxury CPG company, and I learned really what it takes to successfully launch a product, deeply know the market that we play in, closely track trends, as well as track established and emerging competitors. Now, fast forward to Halogen. I really, really love it here. This role allows me to marry many of my passions, investing in, and growing innovative startups and supporting female founders. It’s so empowering and amazing to work here. I love my super team at Halogen. And I love seeing and supporting our founders. I see how much drive and passion our founders have. And it’s so admirable and I’m just feeling really pumped just like talking about it.
Patrick: Well, you got three things in there that you mentioned, and two of the three are not consistent with people’s perception of venture capital, because you said invest, support and grow. Okay. And when they think VC they think invest, they don’t think the other two which is contrary to what people think. And I can’t wait to get into that. But before we get into that, let’s let’s get into Halogen Ventures because unlike a law firm or insurance firm, okay, they didn’t didn’t name themselves after the founders. Okay, so how did they, how did it come up with the name and let’s talk about Halogen.
Jennifer: Yeah, that’s a really good question, Patrick. So our amazing founder and general partner Jesse Draper founded Halogen and named it. In Greek halo means salt and gen means producing hence, halogen means salt producing. Jesse Draper believes that women entrepreneurs are the salt of the earth. That’s how she came up with a name. So now, I just love to talk about Jesse. She’s the founder, and she’s a fourth generation VC. And she’s the only female VC in her family. So like, venture investing is definitely in her genes. And she’s become the number one name investing in women.
She is, is one, if not the earliest investor dedicated to women founders in LA. If you name a female founder chances that she’s already talked to Halogen. For example, yesterday I went to a female founders networking event, and everyone I met was like, oh my God, I’ve met with your firm. I met with someone at your firm. So Jesse founded Halogen to invest in female founders. Years ago, she noticed there were several well run amazing startups founded by women. But they didn’t get enough funding. And so she was an early believer in women founders, and she’s made such a great impact in their growth and success.
And, and to date, I love to brag about this, we’ve got a number of notable exits under our belt. Our companies have been acquired by Fortune 500 companies to name some. We’ve got This is L an organic feminine care products company that was bought by P&G, which actually was reported as one of the most the biggest acquisitions in recent years within femtech. ELOQUII which is a plus sized fashion company, acquired by Walmart and Squad, which is a virtual hangout space bought by Twitter. And while we’re on the subject of funding females, Patrick, I love for you to hear some shocking statistics on female VCs and founders, you ready for this?
Patrick: This is this podcast gold. Are you kidding? Go!
Jennifer: Um, okay. Well, it’s it’s, it’s, I’m I don’t know why I’m laughing because there are only 15% of women GPs in VC, that’s, it’s still clearly a boy’s club. And over the years, I can see a big difference in the male to female ratio at VC networking events. I do see more female VCs at events and on VC firm websites, but there’s still not enough women in the space. Like I love to see that number go from 15% to 50%. And as for funding and startups, only 13% of venture capital dollars go to startups with at least one female on the founding team. And what’s the real shocker here, Patrick? Is that the percentage goes way, way, way, way, way down. When we’re just talking about only females in the founding team. Female only founded company’s got a dismal 2% In VC funding and 2021. This is ludicrous, right?
Patrick: Some people say ludicrous. There were other people may think you know unfair, whatever. I look at that. That’s open territory.
Jennifer: Oh my goodness. But, what what really pains me is that female lead teams generate 35% higher ROI than all male teams. And they have successful exits. In 2021 Female founded companies made up $60 billion in exits which is 145% more than the 2020 levels. And they also have proved to have quicker exits, as they’re exiting, averaging seven years, roughly seven years versus the overall market, which takes on average about eight years to exit. So women are one year ahead of the market in exits. And so I guess the big question is like, why are we still having trouble raising money?
Patrick: Well I think there are a number of issues there. But I think that first of all, that opens up opportunity. The other thing is that, and I like saying this, because there’s all this perception about well, for diversity, for diversity sake, no, we diversity adds value and things like that. The interesting thing is, what if you’re in sports or watching movement. The camera doesn’t lie. Okay. And with with, you know, business, the numbers don’t necessarily lie. And when you see ROIs at, you know, elevated rates and the success rate is high, why wouldn’t there be more direction in that way. And also the size of the investments aren’t as large. Okay. And so there’s just a lot of things going along with that.
And we can unpack that. But I think the essential thing here is that there’s recognition that it’s not too late. I mean, there are some people think, well, women owned business. I heard about that two, three years ago, that ship has sailed, everybody’s in there. No, there’s tons of opportunity. There’s lots of places in there, which is really good. But let’s go as we’re going to talk a little bit more about the whys and addressing and so forth. But let’s talk about this. Okay, Halogen Ventures. Other than your focus on women led, I’m gonna say women founded but also women led businesses, okay. And these are in the consumer electronics or consumer technology. Okay, what is it that Halogen Ventures provides and delivers separate from all the other firms out there?
Jennifer: We consider ourselves a 24 hour hotline for our founders. We help them in every aspect of the business from PR, marketing, influencer strategy, partnerships, hiring, fundraising, and exit and M&A strategies, connections to top level executives. Jesse is very, very well connected in the industry. Yeah, top level executives and successful founders, we really boost our companies with, you know, the PR, social marketing research, competitive insight, you name it.
Patrick: Well, you’re in the consumer space. You have to, you have to look at that. I mean, we’re in the b2b business ourselves. But, you know, that’s one of the things out there is you have to have a real robust cutting edge, consumer facing social media and influencer network strategy. So I think I think that’s fantastic. And the other thing is, like I said, unlike the old days, where the VC would just throw money at a number of investments, and they’re hoping that one or two, you know, cover the costs of all the others. You know, what do you say to the other eight? Just, well, we gave up some equity and we got to a small check, but you know, I want it to grow to get to the next level. How are you going to get me to the next level? You guys are doing that.
Jennifer: I know and we’re so happy we’re we’re really picking and building winners here.
Patrick: Well, there’s a there’s a three word I guess marketing strategy you guys use. And talk about the your strategy, you know, the three words strategy that you have.
Jennifer: I love to remind them to brag, brag, brag about themselves, right. When they’re fundraising and talking to interested acquirers. I think a lot of women, what I hear a lot of these women leaders say is that they have this imposter syndrome, right? Like, that’s just the kind of thing that’s just women have. And I’m, we’re we really need to kind of beat that part down. That’s definitely not a strength for us. But we need to overcome that. And I always tell them, I’m like, I help these companies when they’re looking for acquires or they’re talking to acquirers to, you know, I map out, I map things out for them.
And I tell them, like, this is really your strong points. I want you to sell yourselves and these M&A pitches, right? So I’m constantly coaching them to show that themselves off. I’m like remember that you and your colleague, like, went to like Harvard Business School, like top MBA programs? Can you put that in there? Right, like, remember like that you don’t have, like all your customers in the past, I don’t know six years have stayed on and you’ve built even more partnerships. Like you don’t have that on there. Like add that in there. Or like, all the big great values that they bring to the table, I love for them to kind of really speak in detail about and really brag about. And I cannot stress enough like the importance of of that.
Patrick: Yeah, I think discretion is the better part of valor is in polite society. We don’t want to be you know, tooting our own horn. However, in a lot of times, you’ve got investors or potential customers, and they really want to feel comfortable with you, they really want to trust you. And all they’re doing is they’re saying, look, give me a reason why I should work with you. And then if you’re just rattling these things off, you know that you’re putting your best foot forward, you’re not, you know, over talking somebody, but it’s just, it’s essential. I think that’s just one of those things. It’s just a common sense thing that people just don’t think about. And I think that’s great that you bring that down on board. As a marketing person, I love that thing. Let’s talk about your ideal target. What are you looking to invest in? Where, you know, what does Halogen Ventures like?
Jennifer: Yeah, so, like you said, Patrick, we really focused on these innovative, groundbreaking consumer technologies in multi trillion dollar markets. We put a lot of special attention to future families, which includes childcare, education, edtech, child and youth services. In fact, family technology or what’s called famtech, which is built to provide parents and their children a path to success and well being at home, in school and work. And we also focus on fintech and femtech. Femtech is feminine health and wellness technology. So I love to talk more, more about future families. Since this is a big, big market that hasn’t been talked about enough.
And a space we’ve been spending a lot of time on. Future families is a $7.5 trillion market opportunity. So Halogen has recently fielded a child care survey to over 600 families across the US. And there is no denying that there is a big demand for more affordable, high quality resources. Whether that be your traditional idea of childcare or resources and tech that support flexible, a flexible workplace environment for parents. It could be more innovative ways of education, resources and technologies to help families organize and feel supported. And here’s a stat. I love giving out stats.
Patrick: Oh yeah. You’re money right now.
Jennifer: 60% of American families have two working parents, many of whom are trying to consistently make ends meet and juggling between work and family 24/7. In Halogen’s future of family study, we found that a surprising or I guess not such surprising 96% of parents have child care stressors. The number one being cost of child care and education. And we also found that 97% of careers have been impacted due to childcare responsibilities, and 65% of parents don’t have work flexibility to take care of their family duties, which this indicates an enormous need for support and help for parents. And then being in speaking as a mom, myself, a working mom myself, I would appreciate more resources to help me thrive at home and work. I need help, right. I, before I had my son, I really underestimated parenting.
And I thought it was a piece of cake until until he came in to my life. And he’s such a joy. It’s just being a parent, it was it was not it’s more than I thought. But it’s so rewarding. But today, Halogen has already invested in number of companies in the space. To name some WeCare, which is the largest in home, affordable network for children. Hop, Skip Drive, a safe, reliable transportation solution. We’ve got Binti, a software company streamlining foster and adoption process, and one that a lot of people know, Babylists, which is America’s number one universal baby registry and parenting platform. So I’m really, really, really into these companies. It’s great and we got more but just wanted to name some. I didn’t want to name them all because we had a lot of portfolio companies.
Patrick: It’s great seeing it. And the most common stat I’m quoting, I’m presented with is, you know, women are making in the household, they’re making the majority of the of the purchase decisions. So I mean, if you’re in sales, you want to be you know, appealing to the decision maker, here you go. And as as more things are happening now, you know, in and around the home and with families. You know, what a great market and that’s the one thing that we love about entrepreneurs is they create tremendous value where nothing before existed. And then, you know, after they’ve been, you know, done the right job, I don’t know how we would have lived without whatever whatever they brought along. So I mean, it’s ideal. Is there an investment size, you know, financial profile that you’re looking at?
Jennifer: We look at all stages of companies, but primarily seed stage companies. Our average check size is 250,000 to 500,000.
Patrick: Okay. All right, fantastic. And now, I know you haven’t been involved. I mean, you mentioned you had had a couple of exits, but you’re entering at the very early stage. So there’s not a point where you’re making, you know, majority acquisitions and so forth. And I’m just curious. Within now there is a new market in the insurance field for insuring M&A transactions. And there is now the introduction of a new program. That is what we call a sell side policy where the seller of a business can sell their company and not worry about a hold back or the buyer coming back after them. And these are for deals that are between a million and $15 million in enterprise value. And so it helps, you know, avoid a lot of the risk that could be between the two parties. And I’m not sure because, again, you’re early stage, but I mean, good, bad or indifferent. Have you had any experience or share your experience with insuring deals.
Jennifer: To be honest, I really don’t have much experience here. But we work closely with our legal partners who make sure that the insurance is being negotiated at market terms, and just to make sure that everything’s gonna go smoothly. Obviously, this is one big aspect of the M&A process where there could be a back a lot of back and forth negotiation. But yeah, it’s it’s a, it’s a real, it’s a real need.
Patrick: Well, I think was great is a platform that we have here is that people don’t even know about something unless we’re, we’re having this in our conversations and so forth. Because a lot of times they think, oh, this is for the Amazon, you know, Whole Foods deal. You know, we don’t need insurance on this $2 million deal. Not necessarily true. And what’s great as as you’re going through on exits, that is a tool that you guys are probably deploying on that way. Now with you know, I when you and I talked earlier, I mentioned I’m you’ve got a son, I’ve got two teenage daughters. So I’m keenly aware of the, I would say under representation of women in mergers and acquisitions and in law in the financial sphere. My wife is an attorney, too. So we’re aware of this. And, you know, as you had mentioned earlier, I mean, you’ve been you know, breaking ground in there. Your father was a great influencer for you. And I’m just curious, give me your perspective about about what women bring perspective wise or whatever, in and how they add value. Give me, share some thoughts you have on that.
Jennifer: Yeah, I love to share. I love to have my team as an example. So just like we are lean mean team of three. And what we bring to the table, each of us bring to the table. I’m going to start with Jesse. She’s a thought leader. She has huge presence in the media. She has such a big big network. She’s a public figure that she constantly opens doors for founders. She’s actually recognized by Marie Claire as one of the most connected women in America. And she’s connected several of our portfolio companies to top executive executives in Fortune 500 companies. And on top of that, she has an eye for picking high potential startups with disruptive technology. She also has a great vision for our portfolio companies and provides really great strategic advice to our founders.
And to add Jesse has been a VC for many years and she currently sits on the board of three of our portfolio companies. Carbon 38, a leading d2c athleisure retailer, she sits on Trust and Will the first estate planning that will have everything digitalized, the whole entire process digitalized. And Preemadonna, the only at home manicure system that prints are directly on your nails. And then as for Ashley, our VP. She’s been at the firm since it was established and she’s really skilled at sourcing early stage deals and supporting our companies. She is working on building Halogen’s influencer initiative and is great on partnerships and in the business development front. She handles investor relations and manages the operations at Halogen.
She brings a lot to the table for our companies and works around the clock to support our founders. And she’s a board observer of one of our companies Bulletin, an online premium indie brand wholesale marketplace. And as for me as a senior director at Halogen, as mentioned before, I come from an operational background at a luxury CPG company and a decade’s worth of experience in investing so which has really benefited a number of our portfolio companies. Helping them draw out their M&A strategy. Help companies identify and connect with potential acquirers. Understand the competitive landscape and consumers even better and for our portfolio management, I spearhead Halogen’s follow on strategy and investment return strategies.
I monitor our existing companies and I conduct the diligence in our potential investments. And I’m a proud observer of one of our portfolio companies Live Tinted the first Southeast Asian beauty brand to launch at Ulta. And as for our founders, founder to founder. Female founder and founder for our portfolio companies, I think they bring really great value to each other. We’ve created a Slack channel for all our founders to connect and learn from each other’s experiences, what worked, what hasn’t worked. A lot of them have become buddies, and they have they have even built partnerships with each other. And they learned a great deal. And they help each other a ton. And we absolutely love that.
Patrick: There’s a community. You’re just coming right into a whole community.
Jennifer: Yes, and and just beyond that, right? We we see, Halogen sees about 5000 deals a year. And so we’re here to be the women, you know, girl power, we want to support you. If it’s not funding, like, how else can we help you? So it’s, it’s, it’s really great.
Patrick: Yeah, I would, I would stress and this is why I’m so happy to have you here. I would think that if you’re a female leader of a company, and you’re banging your head against the wall, trying to get funding, you’re trying to get attention. And it seems like you’re working twice as hard. Just to establish yourself. Halogen Ventures is a sympathetic ear, they they are in your interest. And you know what, it may be a lot easier to come and talk to Halogen Ventures with what you have because they’re more open and they’re more incentivized to come because, you know, you’re both have overlapping interests, because they want you to succeed just as much as they want to succeed. So I think you know, rather than thinking about, you know, giving up control or going to some other getting acquired by some strategic. You know, if you really want to see your dreams really play out, I think Halogen Ventures is a great way to go. Jennifer, what do you see going forward for the rest of the year? Trends, either macro or Halogen Ventures. What do you see?
Jennifer: I see. I see few things. There’s a lot. I’m going to name a few. Yeah, I see. I see an upward trend in childcare demand as more women join the workforce. You know, parents are looking for that high quality, more affordable childcare options, whether that be in home daycares, flexible hours, weekend daycares, co working space with childcare etcetera. I also see hybrid work from home model here to stay. Therefore, companies need better tools for teams to collaborate efficiently, effectively and well. Tools that ensure workplace culture is consistent, inclusive and healthy. We have an awesome HR platform, a portfolio company called All Voices that really focuses on workplace culture. And I think workplace culture really has been a big topic. And more companies are recognizing the need for these types of tools, since they’re really essential in retaining talent. Making sure employees are happy is so important. And an unhealthy toxic workplace or manager is just not okay these days. You see a lot of turnover and a lot of these big, you know, successful companies, because the culture is just not there.
Patrick: That’s the challenge that’s coming. And there are actually companies out there. One of them I’m going to point to is ParkerGale, a private equity firm in Chicago. And what they do is they’re figuring out a way to measure culture as a measurable because it’s a strategic tool for them. And so, however they harness it and what you’re doing, I think that’s great, but I’m sorry for interrupting. Go ahead.
Jennifer: Absolutely. Um, and then yeah, just to add, like, you know, in addition to this, like whole work from home thing, I don’t even know just to like from personally, I don’t, I’ve been working home since my I had my son. And I really don’t know how parents manage like work like pre pandemic, you know, going into the office and having to pick up your kid by 3pm from school and 5pm from daycare, especially working in these New York hours, it’s really not easy. So we really need flexible and understanding work culture so that parents can work guilt free. And there are a lot of innovative solutions out there. I’d love to see more companies adopt more working parent friendly solutions.
And lastly, I see an increase in consumer adoption and demand for quick commerce. Get your groceries, your products, whatever you need. Fast food super duper fast. Think like less than an hour to receive your grocery delivery. There’s a lot in New York. You know what it is? It’s just pandemic, customers, parents, I don’t know, like people have just gotten much lazier, they don’t want to leave their home. And they’re more impatient, right? So there’s just more demand here. I see a lot of these like types of services popping up in Manhattan. I think that that’s what’s really going to these like, quick, quick delivery services.
Patrick: If they can work in Manhattan, then you got you’ve got about another 1000 very large cities that could use that kind of thing. That was a reason I had just a personal. I hate injecting myself into this but throughout the whole pandemic, my family has a lot of faith in DoorDash and a couple of those things. I never liked it just because you know, it would take hours and it was faster for me to just drive, go pick it up. And then also I could check the bag before make sure the order was correct. And then get back. But if you could improve the quality there and the timing, yeah, I can be, I can be talked into just, Patrick sit have a beer. It’ll be here by the time you’re done. Boom. So if you got that you got a buyer here. So that’s that’s fantastic. Jennifer Mandelbaum, I can’t tell you how much we appreciate this. Thanks so much for joining us today.
Jennifer: Yeah, this was so much fun. I really enjoyed this conversation.
Patrick: Thanks so much.