Nate Cooper - Investing in OLIPOP at Pre-seed

On this episode, we’re joined by Nate Cooper, Founder & Managing Partner at Barrel Ventures, and OLIPOP pre-seed investor. 

He tells the story behind investing in OLIPOP at pre-seed, what changed between the early brand and the rocket ship it became, and the hemp beverage bet he believes is far bigger than most people expect. 

Nate unpacks why venture is not a fit for most brands, what founders with no operating background consistently miss, and how to raise around milestones instead of “months of runway.” 

We also get Nate’s high-level investment checklist and some advice for breaking into consumer VC.

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Episode Highlights:

🧭 Venture as a tool: when to raise equity vs. when to use debt
🧵 Upstream excitement: ingredients, packaging, and infra that remove friction
🥤 OLIPOP at pre-seed: conviction, category, and the early brand arc
🌿 Why hemp beverages may be a much bigger wave than expected
🧾 Nate’s investment checklist: shelf benchmarking, unit economics, repeat, team
💸 Fundraising that works: milestone-led plans, realistic pricing, exit math
🎯 Careers: how to position yourself for a role in consumer VC

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Table of Contents:

00:51:28 - Intro to Nate and his path into CPG
02:06:05 - Investing in Olipop at pre-seed
05:22:29 - What investors with no operating experience miss
08:17:27 - A tale of two cities when it comes to fundraising (or not)
10:22:27 - Upstream excitement
12:40:27 - Easing friction is the key
14:34:01 - Investing in a product you don’t personally enjoy
15:26:11 - The biggest opportunity in CPG right now
21:04:18 - The bet Nate made in the hemp beverage category
23:54:09 - Nate’s investment checklist
26:36:17 - The early Olipop brand (not great)
27:23:16 - What founders have to get right to have a successful fundraise
29:51:03 - How to land a role in consumer VC

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Links:

Barrel Ventures – https://www.barrelvc.com
Follow Nate on LinkedIn – https://www.linkedin.com/in/nathan-cooper-2ba9aa19/
Follow Adam on LinkedIn - https://www.linkedin.com/in/adam-martin-steinberg/ 

For help with CPG production design - packaging and label design, product renders, POS assets, retail media assets, quick-turn sales and marketing assets and all the other work that bogs down creative teams - check out KitPrint.

Transcript

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the single largest consumer category that three years from now we look back on and say holy shit like where did that come from welcome to shelf help today we're speaking with I think one of the most highly sought after early stage CPG investors in the space today Nate Cooper founder and partner at Barrel Ventures based out of Chicago Nate invests in everything pre farm to post fork meaning everything from ingredients and packaging all the way down to your traditional consumer facing brands are the barrel maybe just first off the listeners that that aren't familiar with you know you and Bear Adventures maybe kind of your focus core thesis of the firm and maybe just going a little ways back what LED you to focus your career on CPG in the first place yeah so I grew up in the food industry I am the generation 4 of entrepreneurs in and around food my great grandfather grandfather and father you know all had very successful businesses in around food and I always told myself I wouldn't work in this industry and I've never left it and so you know I was an entrepreneur for the first dozen years of my career and then with my company Wise Apple we got screwed over by a large strategic um which is a story for another day but in hindsight the best thing that ever happened to me and kind of became an accidental venture capitalist you know the first check I wrote was might end up being the best check of my career um which we can get into yeah we'll get into that shortly and I think one of the reasons you know you said sought after must be sought after by those people who don't know me because a lot of this is luck but I think one of the reasons you know we've had success here is because I don't have traditional training of you know venture capital I'm an operator at heart and I like to get my hands dirty and I don't know any better than to try and add just a massive amount of value through us and our our network and we've been really fortunate to invest in a lot of people who are much smarter than us love that you mentioned the the first investment might be your most successful of the career got to ask that one out of the gate as I'm sure especially people that are familiar with you that's something that's at the top of mind for anyone that's listening so yeah you you invested in olipop at I believe pre seed looking back now what did you see what gave you that strong of a conviction to write that check that early yeah so I had David Lester over to my house for dinner seven or eight years ago at this point and he he walked in and my wife goes hey I made chicken and he goes I'm vegan and she goes well we're starting off the wrong foot there and he brought three cans over I'm not even sure you know they had logos on them it was the strawberry vanilla the cinnamon Cola was called then and the lemon ginger and my favorite part is he left and my wife goes that was disgusting please don't invest so I get to hold that over her head forever but I like I distinctly remember trying the Cola and like closing my eyes and feeling like this tastes like a Diet Coke right and so my thesis at the time was you know this is 2018 I think you got kombucha which you know over the past decade we've formed become a billion dollar category which millions of people would love to drink for its functional benefits me included but don't cause it tastes like crap sorry and on the other hand you've got tens if not hundreds of millions of people who wanna stop drinking soda but can't because it's addictive there's nothing that really fills that gap et cetera et cetera and this was kind of that in my head was the perfect thing that sort of fit both of those need white spaces and I sent it to 30 people you know I I never really written a real check at that point investing didn't know what I was doing I was an entrepreneur and every single one of them said no except for one friend of mine and I was like at that point I was like I don't I don't know if I'm gonna do this and thank God I did and then the rest is history what even though you had all those knows and you said that one yes what was the No. 1 factor you think you just said you know what I'm doing this anyway there was a coolness factor of it you know I think for me at least when I talk about investing the tangible products that people can actually touch their hands on and taste and see and feel it's much more fun to talk about those even if you know even if some of them might not be the biggest or most successful just because people understand it right if you talk about some software thing or some ingredient or packaging like the average Joe in middle America you know is not gonna know what that is right and then I just had this gut feeling you know when you when you look at soda and carbonated soft drink you know it's the biggest category in the world that the last real innovation was like Diet Coke right yeah and it was right for something and we bet on the right horse yeah seems like we did you made the right bet you definitely made the right bet you were definitely an operator before you launched barrel that's how you seem to generally approach the the investing side what is what would you say early stage CPG investors that that don't have any real operating experience often missed in terms of deals they pass on red flags they miss those kinds of things I think like operating a CPG company and selling a product to consumers you learn you know to figure out what people's wants and needs are you need to go in the house you know go into their homes and interview and figure out you know what the jobs to be done of your product is and if you look at you know some of the big bets that went wrong in the past decade in this category I think you know the quote unquote fake meat and the lab grown meat thing I think is one of the big ones you know that a lot of these massive you know non traditional CPG you know legacy venture firms made and they put hundreds of millions if not billions of dollars into this category and I think at the core of that you had two things one was the product might not ever be scalable at a price that is you know price parity or even near it and 2 which is even the bigger problem was consumers might not ever accept this right and so underwriting for execution is one thing right underwriting for execution and consumer acceptance is another right and so having both of those be big question marks you know in my which is why we kind of avoided that space yeah that makes a lot of sense are there any deals that um you think you you might have skipped out on if you didn't have that operating experience earlier earlier in your career that you came across and yeah any deals if none come to mind that's all good too I can't none come to mind there's there's probably ones that I pissed that I've passed on that I shouldn't have many um you know I think one of the things that's been really challenging for me you know as an operator without having the venture training as an operator you you look at things and you're like okay what could go wrong right there are with any business there is a list of infinity things that could go wrong and if you look at a venture capital deal from the perspective of what can go wrong you will find a million reasons why not to do any investment as a venture capitalist you have to flip that on on its head and say OK what if everything goes right right how big could this be which is a very still to this day is very challenging for me because I'm a risk averse person by nature right and you know I look at things and I say okay what could go wrong when like in venture you have to totally flip that on its head and say okay what if everything goes right how big yeah that totally makes a lot of sense if you were um LinkedIn Twitter feed these days at least from my point of view obviously everyone's feet is different but it feels like it's kind of a a tale of two Cities to a certain extent meaning it seems like I see you know resurgence of exits and and big raises happening whether we're talking about Siete or you know runs raising at 500 million but then also a lot of operators somewhat scraping by struggling to raise I guess whether we're on the whether we're on the same page here or not I know this is a broad question but kind of reflecting on that how would you describe the state of CPG today I think the the grunts the ciates the simple Mills the Ollie pops the poppies the RX bar they get all the headlines because they're the big exits there are hundreds of smaller exits that have happened right and I think everyone builds to be you know those 500 million dollar plus exits when in reality you should be building like the vast majority of CPG companies you should look at a 50 million dollar exit as a home run right and if you build for a 500 million dollar exit and you sell the company for 50 million dollars you look at it as failure right but like just build a great business and try to operate it efficiently from the start and you know venture capital is a very specific type of medicine right that the vast majority of CPG companies probably should not take right and once you take it like you kind of got this binary outcome in the most cases where it needs to be really big depending on how much money you raise but I think founders should sort of figure out how do we optimize for a 50 million dollar exit and make that a home or even smaller right and I think everyone has sort of seen these big exits and thinks that's what I need to be to be successful and that's the that's not true yeah that's super helpful for you seeming to be have a lot of excitement around might call it the top of the supply chain infrastructure ingredients I don't know fermentation some of those things what what are you most excited about right now at this part of the supply chain and why do you feel like innovation at this part of supply chain can really create I think I've heard you say outsized or yeah yeah so if you look at let's look at the past 20 years right there are ingredients that have come up that if you look at pre and probiotics right colostrum collagen you know 20 25 years ago nobody had any idea what those were right now those are all multi multi multi billion dollar categories and so you know we have an investment in a company called Helena which is using precision fermentation to create a lactoferrin and I sort of look at this as like imagine if one company owned the IP to pre and probiotics or you know collagen or things like that that's what this can be and so you know that's how big I think something like that could be there's also the opportunity to future proof commodities right so before the war in Europe nobody knew that a massive proportion of wheat came from Ukraine and then when you know there's global disruption like that it causes spikes in commodities look at what happened in cocoa didn't everyone looks at Coco right now and says hey this is a moment in time but if you talk to anyone who knows this Coco's not coming down any anytime soon right there's deforestation there's climate change there's child labor there's you know an influx of supply and demand that isn't going anywhere there's products that are cheaper and more profitable for the farmers to make you know than Coco and so these you know whether it's Mondelez Berry Callebaut Mars whoever it is like they are looking at five years from now and saying holy crap like we need to figure out we need to future proof our supply chain of cocoa and whether that's you know synthetic whether that's you know we have a poor fellow company called Celeste Bio which is you know using cell cultures to make cocoa derivatives like they need to figure out what their future looks like or they're not gonna have a future or the price of a chocolate bar is gonna be like 7 dollar right right you've said that the secret to building a successful business is easing friction can you share a an example or two of who has or or is doing this really well yeah so I think obviously there are always outliers that don't fit the model but if you look at a lot of the world's biggest businesses over the past 20 years they're not creating you know massively new ideas look at Uber taxis and limos existed right look at Olipop healthy soda existed and you can go on and on and on what they're doing is like making it easier for you to achieve something that you wanted right Uber made it you know calling a cab as quickly as you know clicking a button right Alibaba made a better for you soda that didn't taste like crap right and there are hundreds if not thousands of examples where like everyone thinks they need to reinvent the wheel you don't need to reinvent the wheel cta right tortilla chips existed they just made it better for you they made it permissible indulgence right R X Bar didn't reinvent a protein bars they marketed it better and made something that had better ingredients right and time and time again I think the best business ideas are not you know because if you change too much or reinvent the wheel there's you're trying to change consumer behavior and you're trying to convince consumers need something that they didn't even know existed if you make a small tweak and David Lester one of the co founders of Lollipop said this very well and it'll always stick with me you can change one or two things but you gotta keep everything else the same if you change too many things you confuse consumers you scare them away you're never gonna get them change one or two things like you gotta shout out building a really big business that makes a lot of sense that that yeah your hate for matcha really popular category trend at the moment I'm 100% right there with you I don't understand it have you invested or like would you ever invest in a brand that checks a lot of the boxes but they're in a category or just their the flavor whatever you personally don't enjoy I won't say never you know cause I I recognize I'm an equals one but if I don't like it I'd say there's a much higher likelihood that I won't invest because then I like I'm not as excited about it but I think that's that's hard as a you know most of what we do is consumer stuff and I'm inevitably the first one that tries it but I try to give what I try to a wide variety of people as well because I recognize that I am an equals 1 and I do I do hate matcha and I've tried a million different kinds and never THC beverage category is the biggest opportunity in CPG right now why is it the biggest opportunity right now from from your point of view so I'm sure you've seen some of the data alcohol think something came out last week lowest recorded consumption you know ever I think between whoop or ring and Apple Watch I think they inadvertently have like actually decimated alcohol I think GLP ones have had a bigger effect on alcohol than any other food category and I've GOP ones are actually being studied as a treatment for alcohol addiction you know addictive behaviors yeah um and I'm sure people people seen the onslaught of these non alcoholic beverages like partake and athletic and a bunch of others I think at the core of it is that people still want to feel affected right so people are more conscious of what they're putting in their body they're more conscious of how alcohol makes them feel and the bad things it does to their body thanks to whoop or ring and Apple Watch and things like that and you know with the passing of the farm Bill what you have with these THC beverages is something that gives you the the benefits of alcohol the social lubrication feeling a little buzz without any of the downside right without the hangover and I don't know if you've been in a liquor store recently or in a state that where it's legal but and I'm saying this as someone I've never smoked a joint I've never had a gummy in my life so the hurdle for me to try this was very very high but a month ago these liquor stores had a shelf of this stuff at least where I live now they have an entire aisle and they say they can't keep it on the shelf in Minnesota some stores are saying it's making up 15 to 20% of their liquor store sales you multiply that across the country and yes there is a non zero chance that this gets banned I would put that at a very very slim chance you multiply that call it 10% of alcohol sales across the country that's a but 50 billion dollar category that didn't exist a few years ago I am convinced there will be multiple multi billion dollar brands in this category we've made our bet into now it is but I will say I've never seen an uptick of a category that's grown this fast I've never seen the quantity of brands that's gotten to you know a decent size scale of $30 million plus this fast I've never seen retail acceptance come this fast I've never seen consumer acceptance come this fast and the the amount of people who are willing to talk about this and try it in public and I is unlike anything I've ever seen before even you know even in the cannabis legal states right this I think it's because beverage if you look historically you know across millennia beverage has been the vessel through which consumers get caffeine alcohol you name it vitamins medicine right yeah liquid and I think it's that there's something more socially acceptable about a smoke about drinking a beverage than there is about smoking or eating a gummy and it's more social and so I truly think that this could be the next like absolutely massive consumer category yeah yeah yeah it's wild to be a part of seeing seeing the numbers and the data it's really fun and really wild to be a part of yeah and also one of what has turned out to be one of the most challenging markets in in California so granted I'm a bit jaded to a certain extent but how do you account for regulatory and political uncertainty especially now at a time when things to be shifting pretty quickly and in all directions depending on the state that you're looking at so first off it's scary as shit right the rules are changed on a daily basis every state is different it's pretty challenging to keep up with I will say though that a lot of what we do in venture and we as venture capitalist is binary right this is either gonna work or it's not I think I got the feeling with with nowadays this brand in this category that if this does stay legal and you know there are people I would say 99% of people are more experts than I am again because wasn't historically a user of this stuff I have more confidence that this will be a 10 billion dollar category if this does stay legal then anything else I've ever seen like I it's just I don't know if you've been into a liquor store in Minnesota like since you moved there but just talk to the store owners and they've never seen anything like it yeah their the amount of product that these stores are now carrying in in the states where it's legal is as if whiskey was invented yesterday right and the demand for it is just through the roof yeah it's a wild it's one example but I know the the Surly Brewing guys out here in Minnesota a bit and they started pretty early on they launched their own mthc beverages and then they've also been co packing for some other brands and I think the volume of what their volume is now in terms of I think they might be producing more uh hemp beverages in their facility than they are beer at this point which I know that's one data point but that's like one example of a brewery that's been around for years and years and years and it happened this this quickly is is pretty wild and I think you know the strategics have stayed on the sidelines till now right to date I think the second that they decide we're gonna dive in I think it's gonna be Domino's falling and the multiples they are gonna pay for these brands is gonna be through the roof right totally on that front you touch on a bit you invested in nowadays why was the conviction so strong with this team and brand versus others within the context of you know how fast this category is growing first off Justin and Anthony are incredible operators they're incredible leaders they're incredibly humble which is really important to me they're you know I look at these first off we invest in people right and I sort of say hey would I go work for these people would I go spend time with them you know put myself in the trenches with them and I yes yes yes I at first passed on it you know I never tried anything I wasn't didn't know about the farm Bill I wasn't a user of this stuff then I saw the numbers and they were impressive and then I spoke to them and they were awesome and then I tried the product and it blew me away and no one likes drinking or like drinking collect whiskey and things like that this has replaced alcohol in my house 98% of the time um you know and I've got a whiskey collection that I don't know what I'm gonna do with now and yeah we're so far we couldn't be happier that's great meet all expectations that's awesome and I think also you know one thing that they've done better is they have a spirit bottle they also have a can everyone else is launching with an RTD first off I think their brand is very approachable you know by a mainstream you know non cannabis non THC user um which is one of the things of how you build a massive brand right you go after the mainstream consumer who wouldn't you know normally touch a brand that says you know cannabis this cannabis that Cheech and Chong whatever it is and the other thing with their spirit bottle it's as if you know you go to a liquor store and they're only selling beer and then all of a sudden Grey Goose is there right so their form factor differentiation is like so eye catching cause there's nothing else like it yeah yeah that's a good point I think I've ever given and people display this on their bar carts like it's a super high quality bottle of wine or collectible bottle of whiskey and you know looks great yeah that's great that's awesome yeah all those points make a lot of sense I read a few small like angel checks here and there some of the key things that are top of mind for me are the founder of the team obviously is just the overall product experience really good are the unit economics there the velocity numbers heading the right direction and are they promising and something you kind of touch on a little bit earlier but positioning a bit differently like does the brand have a clear place in the shelf is it clear what kind of section aisle will slide into they're not trying to do something that's so new that retailers don't know what to do with it I'm curious from your perspective you're obviously much more of an expert in this than I am what what does your high level checklist look like I think consumers need to be able to benchmark a product against something right because if there's nothing that they can benchmark against like it doesn't fit into a place in their brain and it'll confuse people and so that goes back to like you can change one or two things but if you change too many like I'd rather invest in an incredible team with a OK product right than a incredible product with a shitty team I much prefer people and teams that you know when they go do interviews it's we us than I me right I think humility is really important in this in this industry cause it's really easy to get knocked off your high horse really really quickly I like people who are solving a problem they've faced themselves and who have this like obsessive compulsive desire and want to fix that problem because I think you're going back to their first conversation there there's gonna be a million things that are that will happen when starting a business in this industry that will make you want to give up right there's gonna be a million things that go wrong and you have to be able to keep your eye on the future and be like okay well what if everything goes right you know when David when David Ben started Lollipop you know I remember saying to my wife and my partner my dad look if these guys ever get to $50 million it's a home run right now they're doing that a month right I remember you know thinking oh we did you know close to a million bucks in the first year it was amazing right remember we had our first million dollar month when you start to compound these things in scale it's pretty crazy uh how big they can get yeah in a in a really crowded market like bars I guess now prebiotic soda obviously you got in much earlier but bars seems to be a good category to look at what do you need to see to write a check from a differentiation standpoint let's say bars you're talking about protein bars might apply the same they just need to be better but yeah I'm curious if anything's like different I guess so I think there's you know there's brand and there's product right you have an incredible brand people will try your product once right if your product sucks they'll never try it again if you have an incredible product you'll get the repeat and so like the unicorns where I get really excited is the this company's have an incredible product and incredible brand at the same time and I think both Lollipop and nowadays check those lists pops brand when I met them um the brand and product tasted exactly the same as it does today but a month before that they had another brand that they scratched right before launching I can say this was full and if you go back on their Instagram you can find their old brand full confidence if they had launched with the old brand the brand would have failed the company would have failed and look scrapping a brand that you spend tens of thousands of dollars on you know two months before launch may sound like a terrible idea but when it works it really works totally that makes sense shifting gears a little bit for early stage founders that are actively raising about to start raising in today's market what are the most common ways in which you see founders shooting themselves in the foot the most common ways in which founders shoot themselves in the foot know your numbers don't get discouraged right there's gonna be 1,000 people who say no and all it takes is one to say yes and that's the same thing with with sales with things like you know I remember I think target said no to Lollipop for two and a half years three years before they said yes and now target the numbers either are wild right be able I think storytelling is one of the most important skills that these founders can have right so everything you do whether it's fundraising whether it's selling whether it's hiring like you're all you're telling a story everything that you do is telling a story so be know your story inside and out yeah I think I've also already talked about or say something along the lines of how operators should reframe the question from how much should I raise or or how much money do I want to something more along the lines of what's the next milestone or two I need to hit and how much do I need to to get there can you expand on this a little bit for some of those operators that are listening and maybe this could be helpful for yeah look I think fundraising in general is like uses this vanity metric you know where everyone's like I raised five million bucks I raised 10 million bucks I care less about how much you raise I care more about like what have you accomplished right I'm much more impressed by someone who's raised no money and built a really big business than by someone who's raised a lot of money and built an okay business right I think raising money and venture capital is sexy because it's you know the in vogue thing to do if I was a founder I'd much rather bootstrap than raise venture capital and much rather fly into the radar than raise like I said it's a very specific medicine but what would you rather have like look like Arnold Schwarzenegger completely natural or look like Arnold Schwarzenegger with steroids right like you'd rather do it naturally right because then you can tell everyone like this is all mine I own it versus having to give 20 30 40 50% to someone else right totally so if you do choose the route of venture capital a always raise more than you need like I'm gonna go on both sides here but b figure out what you wanna accomplish and what you need to get there rather than saying I'm just gonna raise 2 million cause that's that's the thing right yeah that's totally clear last question for you Nate um an unconventional background is dead set moving into an early stage investor role in CPG or working closely within a early stage in you know CPG investor firm maybe they don't start as an investor meaning joining a firm like barrel who's really just yeah willing to do whatever it takes what should or could they do to give themselves a real shot so I will say I launched barrel because I couldn't get a job anywhere else like I talked to probably 50 friends of mine who run venture capital firms and they wouldn't hire me I think people look getting a job in venture is really really hard these days just cause it's a popular thing to do I think the people who end up getting jobs are the people who like go above and beyond they're not the people who apply for a job normally they're the people who like blow someone away with like here's my thesis here are the companies I've invested in here like here's the deck I like they go above and beyond and they basically hire themselves you're not the first one I've heard say that this has been awesome yeah what's the best place for people to follow along with with you and everything going on at barrel Twitter LinkedIn email I'm an open book happy to chat with anyone perfect awesome mate appreciate the time that's the plan so excited to get into it yeah Nate just give us a quick lay of the land in terms of I'm gonna take a flyer on this one anyway if you just go look at the average CPG focused outsized outcomes a few weeks ago you tweeted about your I've heard you say that the hemp I think this is going to be bigger than anyone imagined I built a a brand in the regulated THC space and it is the single best housewarming gift does the product taste amazing if someone with let's just say and we got a hard stop appreciate the time