Editor's note: Our Post Seed VC event is coming up on Dec. 1 in San Francisco. We'll have Chamath Palihapitiya (Founder of Social Capital), Aydin Senkut (Felicis), Jeff Lawson (Founder & CEO, Twilio) and more. Check out the full lineup and register for tickets before they jump! Post Seed is brought to you by Vator, Bullpen Capital, and Haystack.
There has been a big debate over the last few years over whether the Series A crunch is real or not. What everyone can agree on, however, is that there are definitely more seed and early-stage funds now than ever before, and more people willing to give money to young companies looking to make it big.
In this edition of "Meet the VC," we interview John Durant, Founder and General Partner at Wild Ventures.
John Durant is the NYT bestselling author of The Paleo Manifesto and Spartan Fit! by Joe De Sena, founder of Spartan Race. He studied evolutionary psychology at Harvard under Steven Pinker before moving to New York City and becoming a “professional caveman”: mimicking a hunter-gatherer diet, running barefoot through Central Park, experimenting with intermittent fasting, and doing polar bear swims in the Atlantic. John has been featured in the New York Times and The New Yorker, interviewed on The Colbert Report and NPR Morning Edition, and has been rated one of The 100 Most Influential People in Health & Fitness. Prior to becoming a professional caveman, he spent three and a half years at an ad tech startup after a stint in management consulting.
VatorNews: Tell us a bit about your background. What led you to the venture capital world?
John Durant: I definitely did not have any grand plans of becoming a venture capitalist but it started to happen organically, so here I am.
I was Harvard undergrad, 2005. My major was history but I ended up studying prehistory and evolutionary psychology and got very fascinated in evolution and human nature. That eventually led to an interest in the paleo diet, evolutionary health, and ancestral health. I started experimenting with that in 2006, soon after graduating. Personally, it was a hobby, and I was trying to improve my health. After getting involved in media, I ended up writing The Paleo Manifesto, which came out in 2013.
As I was building a platform in the healthy living space, I started to get approached by more startups and companies trying to get promotion, a blog mention, or an introduction. So I started to help some of these companies without any expectation of where that would lead. I started to advise a number of them formally and help them raise money from influencers to get promotion.
Three and a half years later, I’ve been able to raise a small fund and am looking to do 12-15 deals in consumer health products and technology over the next couple years.
VN: What is your investment philosophy or methodology?
JD: Wild Ventures has a fundamental belief that reactive healthcare doesn’t work very well—if at all—for chronic health problems. Obesity, type II diabetes, autoimmune conditions, depression, etc.—our reactive healthcare system, biotech, and medical devices are not very effective at treating these conditions. They’re better prevented with lifestyle changes.
First of all, we focus on lifestyle, healthy living, and individuals and communities making changes in their lives and making different decisions. Not the B2B healthcare system. Not the FDA and FDA-regulated industries. Not medical devices. Not diet fads and scams. Our phrase is we don’t invest in scalpels, pills, bills, and shills.
I really love cults. I love paleo, CrossFit, where you have really fanatical members. I think that’s great. These are different communities where people have been able to alter their lifestyle for a variety of reasons because they’ve been able to tap into community, because their actions have deeper meaning for their lives and how they view their identity. If people are getting tattoos of some community they’re a part of, it's a signal that it’s really meaningful to them.
We also love passive intervention, which is a phrase that I’ve borrowed from my friend Steven Dean of Quantified Self and Prehype: things that would work on anyone no matter how lazy, unmotivated, or uninterested in health they might be. We like those two polar extremes of cult member versus something that would be effective for the laziest person out there.
VN: What do you like to invest in? What are your categories of interest?
JD: Consumer health and healthy living. We think we’re going to do a third of our deals in food and beverage and two-thirds in consumer health products and tech.
VN: What do you look for in companies that you put money in? What kind of traction do you look for?
JD: Part of our angle is getting a variety of health and fitness influencers to invest in companies and promote on their platforms. We look at people, brands, missions, and products that we can not only promote but really get behind. These influencers are based around them as a person. It’s not another retailer or anonymous website, it’s their identity. So if we’re going to get behind something, we want to believe in it on a deeper level—believe in the founders, believe in the brand, and have it be something we’re not just writing a check for today but seven years from now still be promoting.
We look for cult followings. In the food and beverage space, I love high fat products. Our entire food system ran off a cliff with this low-fat diet B.S. that was not grounded in science and corrupted by the sugar industry. We look for this theme of things that used to be common or authentic for any particular type of food and got bastardized by the industrial food system, which includes low-fat diets. Now there’s a whole wave of products returning to form.
We like things that can be sold online so our people can have maximum effect in promoting them. Products with great margins that lend themselves well to digital affiliate marketing.
We look for things that don’t require people to change a ton of behavior. There is a lot health advice out there that requires massive behavior change. If you can get someone to join a cult and change their behavior, great. Wonderful. But it’s very hard for people to change their behavior. The more it depends on usage of a product or service requiring fundamental behavior change, it can be tricky.
VN: What kind of traction do you look for in your startups? Are you looking for a number of customers or order volume?
JD: We’ve done both. We’ve gotten involved with a couple companies pre-launch.
Our influencer group has very good data on the market and product/market fit because these are entrepreneurs with email lists, podcasts, and platforms. So we’re really in touch with what people are making themselves and what consumers want and demand: you know, why isn’t there a mayonnaise that isn’t made with canola oil or soybean oil and has eggs from pastured chickens? That was a couple years ago and one of our guys went out and made the product.
We have a very good sense of product/market fit, so there are instances like with Thrive Market where, yes, people are demanding this. So if we have confidence in the founders to execute, we’ll get involved before there’s any traction. We’re leading the seed round of a bone broth company, and we got involved pre-launch because we like the founders and we loved the category. So we were absolutely 100% confident that if they produced a great product, it would sell incredibly well. And that’s turned out to be true.
There are other cases where something is taking off and we’ll take a look at that too.
Here’s one of the challenges. Look at the gym market. Most gyms sell these memberships and people don’t use them. They sell these memberships in January, and if even a third or a quarter of their members all showed up in the same week, it would cause a lot of problems for these gyms because their capacity is based on low usage rates. It might be a perfectly fine business model, but it’s a business model based on failure and lack of usage of the product. We hate that. It’s profitable but it’s based on people not going to the gym.
So I’ve looked at testing companies and dug into blood work and things like that. Are people actually using this product? They might order it but do they use it? If the company is getting a lot of sales but the consumer isn’t using it, that’s a problem and we’re not interested in that..
VN: What would you say is the top investment you have been a part of?
JD: The top investment that we’ve been a part of so far is Thrive Market. Our group has been involved since pre-launch and the team has just executed beautifully. They raised a $111 million Series B earlier this year and are on a $100 million annual run rate.
They have been a great fit for a variety of reasons. In terms of timing, we’re at a point where values around healthy living have started to go mainstream but it’s still really expensive to do so. So there’s a window of opportunity for a company like Thrive Market—a discount club like Costco but oriented toward Whole Foods-type products and brands—to establish itself and be very successful.
I work with different people with different eating philosophies—some are paleo, some are vegan, some are real/whole food, some are anti-inflammatory. There are all these different flavors of diets, and because Thrive is a retailer everyone could get behind it. You just buy the food that works for you and your approach. That allowed us to assemble a large group of influencers to back the company. We believe in the social mission for each paid membership, to give away a membership to a low-income family, teacher, or veteran.
VN: How long is your due diligence period when choosing to invest in a startup?
JD: We’re a little bit slower than other firms because, with this influencer approach, people need to try the product and have a sense for whether they’d be willing to promote it on their platforms. For the influencer model to work, these folks gotta love it. And they have to believe in it for reasons beyond financial calculus. I can’t force people to do that.
But when we back something we can bring a lot of firepower to the table. We’re not the types that can meet a company, look at some numbers, and three days later write a check. We’re more strategic.
VN: What is the size of your current fund? And where is the firm currently in the investing cycle?
JD: We haven’t announced that yet. Because we’re doing it through AngelList, the size of the fund does not reflect the amount of capital we can deliver. It’s a small fund, and we’re looking to do 12-15 deals over the next two years. We’re going to be deploying—in total—probably $5 to $7.5 million over the next couple years.
VN: How much do you put into each startup?
JD: On average, it’s going to be about $0.5 million.
VN: Is there a typical percent that you want of a round? For instance, do you need to get 20 percent or 30 percent of a round?
JD: We’re usually going to follow, not lead. This is my first fund and we’re taking the influencer approach, which is more time-consuming. Leading a round is a responsibility and right now we have some bandwidth constraints.
Our role is complementary to more traditional, larger VCs. We’re looking to come in and right a $400K check so we fit into a lot of rounds and bring a lot of strategic value. Frankly, we don’t see ourselves as competitive with too many folks.
VN: What percentage of your fund is set aside for follow-on capital?
JD: We have some capital set aside, but it’s a bit “TBD” right now. We’re being upfront with all the companies we invest in about our situation down the road so there are no surprises.
VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?
JD: Seed and Series A would be our sweet spots.
VN: In a typical year how many startups do you invest in?
VN: What do you like best about being a VC?
JD: I love being a part of the process of creating the world that I would want to live in. If you want to change the system, you have to build the future. I love being a part of creating a constructive alternative, and I think that’s ultimately what’s most satisfying.