Everybody in the L.A. tech industry seems to know the Reum brothers.
The siblings, Carter and Courtney, have invested more than $50 million as part of an informal syndicate, which has participated in funding rounds alongside prominent angel investors Brian Lee, Paige Craig, and Troy Carter. They are also known for sweetening deals by bringing in celebrity investors such as Demi Moore and Tobey Maguire.
Now, after selling an undisclosed majority stake in their Beverly Hills vodka company Veev Spirits to Luxco Inc. of St. Louis in March, the brothers want to expand their investment portfolio even further.
The Reums are formalizing their investment activity, which had previously been relegated to a side business, by launching a startup studio and syndicate named M13. A syndicate is a structure that allows other accredited investors to participate in deals discovered by someone else. The Beverly Hills firm is aiming to syndicate $100 million in investments into dozens of startups, especially consumer products companies, over the next five years.
“We want to build a holding company that can incubate, create, and launch companies,” Carter Reum said. “It’ll be a combination of incubating and creating our own ideas and purchasing brands that we don’t think are reaching their potential.”
M13 will aim to help budding consumer products companies learn the tricks of the trade, such as landing distribution deals, branding products, and managing inventory. Some startups will be given office space at M13’s 3,000-square-foot Beverly Hills headquarters, while others will collect mentorship and resources from afar. In exchange, the firm will take a minority stake in participating startups.
M13 plans to make 20 to 40 investments a year of between $100,000 and $250,000. Its goal is to incubate five to 10 of those portfolio companies, said Carter. The amount of investment from M13 and its syndicate would vary based on a startup’s size and stage. M13 will also take a 20 percent cut of each syndicate member’s profit after an exit, according to the firm.
The Reums are hoping their experience in building up Veev and angel investing, as well as their celebrity connections built through years of social, promotional, and networking events, will help bring about a whole new generation of L.A. consumer products and e-commerce companies.
That could be useful in Los Angeles as there are not many local incubators and investors with expertise in developing and selling physical products, said Kara Nortman, partner at Santa Monica’s Upfront Ventures.