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With economic and consumer trends constantly in flux, Imaginary Ventures co-founder and managing partner Nick Brown wants to ensure his VC firm stays ahead of the curve.
Brown created the venture capital firm alongside Net-a-Porter founder Natalie Massenet in 2018. It is now one of the largest VC funds sitting at the intersection of technology and retail. The company’s portfolio includes well-known brands, platforms and founders, including Glossier, Skims, Everlane and Farfetch. The firm has grown funds under its management to $1 billion. In April, it announced its third fund, of $500 million, across late- and early-stage businesses.
According to Brown, part of Imaginary’s success has been its ability to find the diamond startup with the potential for global reach. “Our approach to investing in brands was always brand lead and product lead,” Brown shared on the latest episode of the Glossy Podcast. Brown added that the company prioritizes brands at the forefront of innovation in technology and those that can adjust to an ever-changing ecosystem.
While Imaginary has found success in investing in later-stage businesses, it also values early-stage brands and founders shaping the future of the consumer experience.
“If you’re an early-stage founder, it’s less about the detail of [a 5-year plan] and more about the vision of how you’re going to hit scale, because that’s the hardest thing for everybody. I would say that, for every 20, 30, 40 companies we see, [only] one of them has the ability to hit that [$100 million] kind of scale. So you want to be really thoughtful and really confident in your articulation of how you achieve that,” said Brown.
Below are additional highlights from the conversation, which have been lightly edited for clarity.
The Imaginary Ventures touch
“I want to be as supportive as I can, Natalie wants to be as supportive as she can, [and] the rest of the team are exactly the same way. Ultimately, we’re not owning these businesses. We’re not day-to-day operators in them. Our model doesn’t allow for that. We invest in 8-10 companies a year, so you can’t be day-to-day operators of all of those businesses in the same way that a CEO is going to be. You have to be honest about that because, when a CEO is looking for an investor that’s going to run their business, they should be looking for a very different profile of investor than the venture capital ecosystem. Ultimately, what you want is very specific, very targeted support that’s going to vary drastically across each of the companies that you invest in.”
“[I] look for founders with something to prove — most great founders have that in common. You look for founders that are not scared of hiring people that are better than they are at a particular function. You look for founders that ideally take feedback well and listen — that’s important. That doesn’t mean they have to follow through with the advice you’re giving them, but it means they need to be thoughtful and listen to it and encourage that feedback loop. You look for founders that are nimble and who are willing to pivot during certain difficult times…. That’s the difference between a founder folding and a founder surviving. Those are the types of founders that are not only going to survive, but they’re going to thrive in moments like that.”
Taking a long view
“I want everybody to lead with patience. That may sound corny, but it’s really important in moments like this, when the market is changing at a pace that’s so rapid and when the consumer is in such a state of limbo. We don’t know what consumer spending is going to look like for the next 12 months, so we have to be patient. You have to be patient in your pacing of finding new companies, and you have to be patient [and understand] that it will take your existing companies a little bit longer [to scale]. It needs to be a driving KPI for everybody. That’s what I am most focused on internally.”