Leaders in Luxury | An interview with Redrice Ventures

Hot on the heels of securing a £50m for digitally-led premium brands, seed stage investors Redrice Ventures tell Walpole about the post-Covid entrepreneurial spirit, the art of story-telling plus why venture capital is getting excited by luxury’s shiny new tech future…

When the pandemic struck in Spring 2020, many working in the luxury and premium sectors rightly started to panic. With goods stranded in overseas warehouses, they were left contemplating a future where lockdowns might mean less opportunities to wear high-end fashion, travel internationally or spend money in restaurants. Indeed, a survey from Bernstein and Boston Consulting at the time warned the sector to brace itself for a $43bn (£30bn) drop in sales.

Fourteen months on, the strong sales of Rolex watches, supercars, champagne and Hermès handbags tell a different story: luxury has proved to be remarkably resilient.

Confidence in the sector was underlined last month when seed stage investors Redrice Ventures reached a £50m first close on a fund, with the government’s British Business Bank as its cornerstone investor.

Having also recently partnered with Walpole, Redrice’s experienced and passionate team believes fast-growing premium consumer startups will help spearhead this revival, particularly those with digital-first and purpose-led strategies.

Redrice is keen to make the distinction that it deals with premium – rather than solely luxury: an area it believes is ripe for investment. “People are being more choiceful”, says Robert Senior, who joined Redrice in 2018 after an illustrious advertising career – Senior was founder of Fallon and CEO of Saatchi & Saatchi. “It’s not about more, more, more but about better, better, better and the consumer will vote for the brands that count through their wallets. This choiceful approach is at the core of the new post-Covid entrepreneurial spirit, and why Redrice, Walpole and the British Business Bank all believe it’s an untapped area of quality growth.”

“The drive towards personalisation is also incredibly relevant,” says partner Andrew Sutcliffe (who is also co-founder of media group Writtle Holdings). “And we are backing young aggressive management teams who can infiltrate new markets with a very direct consumer approach before the big brands can catch up.”

With the £50m fund (which will likely end up at £60m), Redrice aims to make around 25 investments in premium consumer brands and related technology businesses. The initial investment into a business will lie between £250,000 and £2m (the fund’s equity stake target is 10-20%) with half of the fund reserved for follow-ons. It’s already helping startups such as Banquist, a Michelin-starred recipe box, which delivers superb ingredients and digital instructions from top chefs to customers’ homes. Having launched during the UK’s first national lockdown in May 2020, it recently raised £1.6m with Redrice’s backing.

The focus on the top end of the market also marks something of a sea-change: despite the luxury sector being worth £48bn to the UK economy, venture capital has traditionally been reticent to dip its toes into this market.

Covid-19 has reshaped this mindset, says Redrice founder Tom March.

“Big premium brands have been slow to embrace technology, mainly because they didn’t need it: they had big store portfolios all over the world,” he says. “Because of Covid, they’ve had to start embracing technology and reducing international physical assets, tapping into younger audiences.”

With these premium brands developing more robust digital presences, venture capitalists are beginning to spy opportunities for global expansion. “With these new online channels for distribution, you can globalise brands much more efficiently, meaning you can get to 30 major cities quickly,” adds March. “Previously, that was a much longer journey, which wasn’t always attractive to investors.”

Redrice’s current portfolio spans premium sportswear (Castore, which is kit partner to Andy Murray and the West Indies cricket team among many others), women’s performance workwear (Dai, pictured above), online fine jewellery (Finematter), healthy energy drinks (Mission) and men’s make-up (War Paint).

Redrice doesn’t just invest in any start-up, however. It has a criteria list on its website that any company wishing to receive funding must adhere to. This includes financial targets (“You have a plan to hit £30m+ in revenue over the next five years”) but also purpose-led measures (“You are good people with a plan to do good things” and “You are driven by a cause beyond the numbers”).

On one level, this can be the USP of the company itself, such as Ocean Bottle, whose reusable water bottles are made from upcycled, ocean-bound plastic. But doing “good things” should also be at the core of the business too: Redrice uses an environmental, social and governance (ESG) scorecard to track 30 ESG measures in its investments, and in itself.

The moral compass definitely has a seat at the boardroom table” says Senior.

Redrice is hoping to augment its current portfolio with innovative green and tech ventures. “There are companies using potato peel or shellfish in packaging which we haven’t had chance to invest in yet,” says partner Oksana Stowe, an experienced banker and venture capitalist. “There are some big successes out there, maybe some household names too…”

One of the biggest benefits for Redrice’s portfolio of investments is that they can tap into the expertise of its partners. As Senior, whose advertising career was marked by seminal ads such as the Cadbury’s drumming gorilla and Sony Bravia’s ‘Balls’, says, “Some of the stuff we have learned in business is absolutely transferable and we will look to pass this on to the founders we back.”

One way in which high-end brands can make themselves more interesting to investors is harnessing the art of story-telling, which dovetails with another strand of Redrice’s criteria: “You have a clear and simple story, that comes from the heart”.

“If a story comes from the heart, you can tell,” says March.

“We’re backing individuals who we believe can sell their story to create a community of fans, not just a group of customers.

If they [the start-up founders] can convey that when they’re pitching to us, it’s the most valuable thing.”

Not every business possesses this skill, however. “We’ve had situations where we believe early-stage brands could be an amazing business, but the founders are almost too close to the data to see what the proposition at play is,” explains Senior. “They almost have to pull back and see what the ‘headline’ is, what their true purpose is.”

The expertise of the partners can help here, but equally, so does the partnership with Walpole. “We’re incredibly lucky and proud to have Walpole as a partner,” says Redrice partner Jonathan Heilbron (former chairman of Walpole’s Brands of Tomorrow and former CEO of Thomas Pink). “Partnering with Walpole has been very helpful in establishing the credibility of the new fund in the premium consumer sector. Using Walpole’s network, thought leadership and the expertise of many of the individuals within the membership will help the brands we’ve invested in become stars of the future.”

“The right kind of investment, and access to the right kind of capital, is crucial for young founders’ looking to scale their businesses – and high-end consumer brands don’t ping on investors radar as loudly as they should,” says Walpole CEO, Helen Brocklebank.

“This fund is so innovative, and the expertise and insight Redrice bring as a Walpole partner is truly unique.”

As Senior points out, there’s never been a better time for Redrice – and Walpole – to achieve these ambitions. “There’s a post-Covid entrepreneurial spirit out there, aided by the accessibility of technology and a burgeoning digital economy,” he says. “You put all that into the hopper, and you create a great deal of opportunity.”

redriceventures.com

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