Yet another investment vehicle geared towards the trendy food and beverage sector has launched in Los Angeles. Brentwood-based Alethia Venture Partners announced on Oct. 12 its $50 million debut fund, which targets beverage brands past their pre-seed stages.
According to the firm’s managing partner, Mike Warren, the company is still fundraising to close the Alethia Opportunity Fund I, the first of five Warren’s team hopes to unveil on a yearly basis.
The firm could be looking to cash in on a city flush with investment interest in the food and beverage space, evidenced by healthy funding for the venture capital firms and consumer brands in the space. For example, West Hollywood-based Joyful Ventures LP and Pasadena-based Supply Change Capital Management LLC recently raised a combined $63 million across their debut funds focused on food tech. Top consumer packaged goods developed in the city, many selling “better-for-you” alternatives in some of the top grocery chains across the country, have racked up hundreds of millions in funding. Take the Santa Monica company Supply Demand Inc., doing business as Liquid Death, which raised a total of $145 million last year for its savvy tallboy water repackaging, or the Culver City alternative meat producer Daring Foods Inc., which has racked up $113.8 million in total funding.
Alethia sets an ambitious timeline for the venture capital industry. The beginning stages of a fund, including its filing, fundraising and portfolio-building processes, can often take upwards of five years.
But Warren and his team of five partners are racing against the regulatory clock, grandfathering both Fund I and Fund II by filing the paperwork for the latter in hopes more capital can debut this same time next year.
The Securities and Exchange Commission, spurred in part by the regional banking fallout, adopted new rules for venture capital private funds, which are set to go into effect on Nov. 13. Under the Investment Advisors Act of 1940, the new rules will require additional disclosure and consent obligations to investors.
“There are also several changes to the FINRA and SEC rules for funds that are going to happen in the next 18 months,” Warren said. “We want to grandfather as many funds as we can in that time period by having closed the funds within that time period.”
Fund I is Alethia’s public debut, and the firm has offices in San Francisco, Tucson, Arizona and Brickell, Florida. Its general partners are scattered across the country; Warren said the six-person team prefers to travel to investors and spend time in their portfolio companies’ offices. Most of the team balance other full-time endeavors and serve primarily as advisors.
So far, the firm has announced six investments, four in alcoholic beverage brands, one in a video commerce platform with a “premium spirits” shopping channel and one in a fintech payment platform.
Alethia plans to make 15 to 20 investments, leading or co-leading series seed, A and B rounds with capital commitments upwards of $5 million per company.
