INTERVIEWS

What investors want from brands

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From tone of voice to building communities, three investors tell us what they’re looking for from consumer brands.

When we asked investors to name the attributes brands must demonstrate to pique their interest, we weren’t expecting such lyricism: “the forgotten art of brand building and storytelling”, came the reply.

These were the exact words of Octopus Ventures’ Matt Chandler. In part, he explained, this was fueled by the volatility of customer acquisition costs (CAC) during the last 18 months (that’s the language we were expecting…). In and out of lockdowns, consumers have spent their money in different ways, making it difficult for brands to predict behaviour. “Some over-invested in customers that never came,” Matt says. “Other brands, like those in the on-demand grocery delivery sectors, came out of nowhere and flooded the market. Now, they’re seeing some pretty hard times. It made us focus on businesses that are not reliant on performance marketing and, instead, on those with an art for brand-building.”

He points to Olio, the app that connects neighbours and local businesses so surplus food can be shared, not thrown away – and in which Octopus Ventures invested in 2018. “Olio has a bold and ambitious mission to fundamentally change consumption with an opportunity to build an audacious brand and create a new category,” Matt explains. “It hangs its mission on a really emotive hook.”

At Piper, which invests in brands with sales of between £5m and £50m, the team talks about building “brand legends”. “The best brands have a clear purpose and are thought leaders in their space,” says Yasha Estraikh. “They have a strong brand identity and are very good at telling their story – tone of voice is one of the hardest things to get right.”

So which sectors are proving attractive to him? Yasha lists health, wellbeing and personalisation, and highlights the “nascent space” within wellness as an opportunity for brands to stamp their authority with proper science. “We live and breathe consumer brands and trends, and whilst there is currently less investor appetite in hospitality, it will come back around – we’re still big believers in bars and restaurants,” he adds.

For him, successful brands within hospitality are those that have the potential to be highly scalable, but have abandoned the traditional cookie-cutter roll-out approach of identikit venues in favour of a differentiated offer. “The simplicity of a business like Flat Iron, for example, makes it a very disruptive brand,” Yasha says, by way of an example. “They only have one thing on the menu: a great steak at a great price.”

Beyond sectors, investors are interested in brands that share and reflect customer values, notably those that prioritise sustainable business models. Virgin StartUp, which offers personal loans to founders looking to start or grow their businesses, are funding companies like OddBox, Andersen EV, BYBI and Freestar. “We’re focusing more on purpose-driven businesses and those which are looking to have a positive impact on the environment and communities they serve,” says Joe Kenyon. “Not only is it important to help combat the climate emergency, but consumers are voting with their wallets, and want more environmentally conscious brands to choose from – and are willing to pay for them. For us, the brand is core to the proposition. It’s not just a logo and a name, it’s a way of doing things, a purpose and a set of values, which run through your whole business.”

It is on the theme of community that all three investors come together. As part of Octopus Ventures Work Experience programme earlier this month, Matt got into a discussion with 16-18 years old about belonging, or their struggle to belong, in a global culture of hyper-individualisation. For him, brands that can foster a sense of belonging, that can create communities, will be thought-leaders, whatever their sector. 

Community is a pillar by which Piper judges a brand. “It’s increasingly important to build a brand through community, where customers see the brand as part of their lifestyle,” says Yasha. “[Clothing brand] Snag, for example, has a unique tone of voice and a vibrant community, with daily user-generated content. They work with their community to design products, to create photo shoots.”

Earlier this year, when we created Defining Your Difference, we had a clear objective. We wanted to design a digital pocket guide to help brands unlock their most powerful asset: their story. Whether you’re pitching for investment, convincing landlords, recruiting staff or even briefing a design agency, clarity on what makes you different is the starting point. And that normally begins with a good story. So, what’s yours?

Without create brands that make a difference. If you’d like to discuss how your brand can connect with today’s consumers, get in touch on 02070999080 or [email protected]

This article first appeared in The Brief, a monthly email with conversations and provocation for leaders and founders of brands. Sign up here to receive it directly to your inbox – and join the debate.

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