Behind many CPG giants’ headline-making acquisitions of consumer brands are the equity firms that not only cut those fledging brands a check, but also provided strategic guidance to help them grow.
With two noteworthy strategic exits in five years, growth equity firm Aria Growth Partners—which invests $10 million–$30 million for minority stakes in companies across food and beverage, beauty, personal care, supplements, and household products—has proven to have a keen eye for brands with the potential to make it big.
The firm’s first investment was pimple patch maker Hero Cosmetics in 2021, which Church & Dwight acquired for $630 million in 2022. In 2023, Aria invested in organic popcorn brand LesserEvil, which Hershey bought earlier this year for $750 million.
Now it’s gearing up for a fresh swath of investments, as the firm earlier this summer announced it had raised $152 million for its second fund. Jackie Dunklau—who founded Aria Growth alongside Trevor Nelson, co-founder of OUAI and Shake Shack investor Alliance Consumer Growth—broke down what sets Aria apart and made its first investments successful, and the types of brands it’s looking for now.
Capital letters: As many consumer funds garner multibillions in capital commitments (Consumer investment firms TSG Consumer and L Catteron, for example, have closed funds for $6 billion and $11 billion, respectively, in the last few years), Aria was formed in 2020 to fill “a bit of a void” for consumer brand founders raising smaller funding rounds, Dunklau said.
“We want to be able to be flexible and meet the founders where they’re at, while still being able to provide this really hyper-focused consumer specialist expertise,” she said.
Aria found early success in Hero Cosmetics and LesserEvil, which both “unlock[ed] a big market opportunity,” Dunklau said. Hero found an edge by becoming an affordable market leader in a relatively new acne care product with pimple patches, she noted, while LesserEvil’s vertical integration allowed it to sell organic popcorn cooked in coconut and avocado oil at a price equal to or less than competitors. But they were also different—Hero Cosmetics launched and sold within five years, while LesserEvil grew gradually over 20 years.
While brands that are growing a new category like Hero and entering a space dominated by big CPGs like LesserEvil can both find success, Dunklau said, the former avoids a “market share fight” and offers “unlimited upside potential” as they recruit new customers into the space.
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Checking boxes: Now, with its second fund, Aria is looking for brands with revenue between $10 million to $50 million (though it could go above $50 million for the “right opportunities,” Dunklau said). Ideal brands prioritize “health, sustainability, and transparency,” which “remain resilient even in downturns,” she said.
Aria is focused on omnichannel businesses—companies with a presence on Amazon or other DTC channels, as well as at least one major brick-and-mortar partnership, Dunklau said.
“We want to see that you can both convince a consumer to buy you when they hit their landing page, and they can spend, two, three minutes reading about the product and the ingredients and everything about it, but also you can convince them when they’re walking by for two to three seconds on shelf,” she said.
The company is still looking for consumer brands that provide value in some way, she noted. When evaluating brands, Aria compares prices to competitors and considers gross margin structure to see if brands could lower prices to be more competitive or be able to raise prices if needed due to supply chain issues like tariffs, she said. A focus on value doesn’t necessarily mean they have to be the cheapest product or sell only in mass channels. Portfolio brand The Inkey List, for example, is among the brands with a more accessible price point at Sephora.
While Aria spends time “getting an understanding of how [a product is] made, how proprietary or defensible is what the company is doing,” Dunklau said both brands that use co-manufacturers and those that self-manufacture are of interest. Capacity for both is important, she noted, as the company is investing under the pretense that brands scale notably during that investment period.
Sweat equity: Once Aria invests in a brand, it typically takes a board observer seat and joins quarterly board meetings, but connects with founders beyond that with help in areas like recruiting and interviewing, retail distribution, and new product development.
“What we love is when a founder feels comfortable enough to call us or email us, on a random Tuesday and say, ‘Hey, I have this decision in front of me, would love to hop on the phone with you guys and talk about it and get your thoughts on it,’’’ she said. “Those are just really great organic, valuable relationships that we try to have with our founders.”