The investor’s view on brand building, with Active Partners


Category leaders, purpose-driven, fostering emotional connections. Dan Linegar, Principal at investment firm Active Partners, talks to us about what makes a brand worth investing in…

WO If we were to get into consumers’ heads right now, what are they thinking? What‘s making them excited, angry, motivated?

DL  The big thing in consumers’ heads at the moment is uncertainty, driven by the macro environment we’re in, which is affecting how and where consumers are spending their money. But what’s coming out of that is a focus on value – whatever price point they’re transacting at. The brands that can really understand the consumer, and then serve them in a way that offers value and authenticity, whilst still inspiring and delighting them – those are the brands that will stand up for the consumer at the moment. 

WO So who’s winning? New or established brands?

DL  A bit of both. The number of brands that have been able to really break through in the last couple of years is probably fewer than it was in the two years before that. And that’s partly driven by it being harder to access capital in early stage investments. But new brands are emerging and talking to customers in new ways. The best, existing brands are evolving to meet the changing needs of their customers and continue to drive growth. There’s a lot of evolution happening in all parts of the market.

WO And which sectors are piquing your interest? 

DL  We have a long history of investing in the experiences economy, and we certainly want to keep doing that. Particularly coming out of the pandemic when people couldn’t do a lot of these things, it has been a really hot sector with trading off the charts in a number of businesses. Another sector is healthier living and wellness, where we’re looking to back products, services and technologies that make us or our loved ones able to live lives that are happier and healthier. I’m personally really interested in the intersection of these two sectors – and that often comes to the fore in the world of hobbies and activities that can bring consumers real joy, while being good for them, their friendships and families.

“The best brands have a clear purpose beyond simply making money.”

— Dan Linegar, Principal, Active Partners

WO So how do you know when you’re looking at a good brand and not-so-good brand?

DL  The best brands have a clear purpose beyond simply making money. And that purpose guides everything in their business. They also stand out with what we like to call an “edge”, a really distinct point of view, which they’re able to communicate in various ways that are recognisable and creatively consistent, be it through visual identity or tone of voice. But stepping back from it, the best brands really make you feel something, an emotional connection far beyond just the value of the product or service. 

WO At a time when the word “purpose” is being co-opted by so many brands, what effect is that having on consumers?

DL  When you think about purpose broadly, it doesn’t mean everyone has to save the world. It can also be about your customer base and how you want to make them feel or think about your category in a way they’ve never thought about it before. But consumers definitely expect brands to have a purpose because they’re looking to connect with businesses that have values they can feel aligned with. The reality is, as more and more brands have tried to jump on the bandwagon and make purpose claims, particularly around society and the environment, consumers have felt a sense of claim fatigue. But they’re becoming more discerning about greenwashing and what is real and what isn’t. So I think it’s absolutely an issue that brands need to tackle head on. When they think about defining their purpose, brands need to be open and honest.

WO So having a clearly-defined purpose is massively important?

DL  Absolutely. Often it’s an exercise we do in the first six months of making an investment to ask the business to revisit their brand and how they articulate their purpose, which then serves as a guiding principle for everything in the business and how the team can make choices and direct investment.

WO Would you invest in a business that didn’t have a brand?

DL  We do get really excited about brands that are well-formed, but we are absolutely open to investing in companies with a “brand” that is in an earlier stage of the journey. A clear articulation of the brand is really important, even if they are quite well advanced – it’s a place we like to invest in order to make sure everyone within the organisation is on the same page.

WO What is it specifically about having a brand that adds value to a business?

DL Partly, it’s related to how the brand affects the financial performance of the company, now and in the future. The best brands are able to acquire customers through organic channels at very high rates and retain those customers with high levels of repeat purchase or visits. Great brands give the business defensibility against newcomers to the industry and, very importantly, they give you the authority to try new things. Recently, The White Company – a homewares and bedding brand – launched a knitwear range, which has been very successful. It’d be very difficult to jump across categories without a well established brand that people feel deeply connected to. Then there’s the more intangible aspect… investors and acquirers want to be associated with the best brands. Large corporate players realise it’s difficult to create a brand themselves, that it’s often the brand founder that drives the magic. So they need to look externally to bring brands into their ecosystem. 

WO The name Active Partners suggests there’s more to you than just handing over the money…

DL  We invest from two different funds at Active: a growth fund, which is the team I work in, and our early-stage fund. For the growth fund, we typically do two to four new investments a year, anywhere between £3m to £10m, and we will normally take a board seat, playing an active role in supporting the founder and company on the growth journey. We don’t interfere with the day to day running of the business, but we’re always just a phone call away. Where we get most involved in is helping to clearly define the strategy of the company, and allowing the company to leverage our network as one of the longest-standing consumer investors in the UK. So we get pretty hands-on in the big issues that drive equity value creation.