Siddhi Capital Raises $135M for Fund II

Siddhi Capital has successfully raised $135 million for its second fund, maintaining a 2:1 investment focus on consumer packaged goods (CPG) brands and food-technology companies.

Why it matters: The current high-interest rate environment has made it challenging for venture capital firms to secure capital, but Siddhi Capital remains optimistic about the future, navigating these challenges by supporting innovative brands and pioneering food-tech companies.

The details:

• Siddhi Capital, formed as a joint venture between Melissa Facchina’s operations firm Siddhi Ops and the family office of Brian Finn, focuses on growth-stage CPG brands that offer restaurant-quality foods and beverages to a broad consumer base.
• The firm also targets food-tech companies developing novel ingredients and solutions to food-manufacturing challenges.
• Siddhi Capital takes a proactive approach by securing board positions in its invested brands to guide them through scaling their businesses.

The challenges: The post-COVID environment has not been easy for CPG startups, which often struggle with product differentiation and a saturated market. Recent data suggests that the number of new CPG product launches is at its lowest since 2007, with only 35% being genuinely new products in the first five months of 2024.

What they’re saying:

• “Our portfolio is composed of approximately two-thirds CPG food and beverage brands and one-third food-tech companies. We are focused on solving mainstream mass-market consumer desires with what I like to call non-intimidating product profiles,” said Melissa Facchina, co-founder and general partner at Siddhi Capital.
• “The truth is, the emergence of numerous CPG brands over the last decade has led to natural attrition. Consumers have limited dollars and shelf space is finite. This market correction post-COVID is, in a way, beneficial for the industry,” concluded Facchina.

What’s next: Siddhi Capital plans to invest in fewer, larger CPG deals aimed at high-margin and cash-flow-positive businesses, expanding its footprint into health & wellness, beauty, personal care, pet, and alcohol sectors. The firm aims to be operationally complementary to its portfolio, offering in-house expertise to help brands reduce costs and improve margins.

Full story

Siddhi Capital has closed its second fund at $135 million, doubling the size of its previous fund. The growth equity firm, known for its operational expertise in the food and beverage industry, plans to invest in fewer but larger deals focused on high-margin, cash-flow-positive businesses. Melissa Facchina, co-founder of Siddhi Capital, explained that the current market conditions, characterized by high inflation and interest rates, have influenced their investment strategy.

“The metrics for an exit have changed materially, and a vast majority of them are around margin, cash flow positivity, or at least neutrality,” she said. Despite the challenging venture capital landscape, Siddhi Capital has retained nearly all of its limited partners from the first fund in its second raise. This success is attributed to the firm’s strong track record and access to significant industry deals.

Fund II will allocate two-thirds of its portfolio to traditional food and beverage categories, while the remaining third will focus on food technology. The firm also plans to expand into health & wellness, beauty, personal care, pet, and alcohol sectors.

Siddhi’s strategy and expansion initiatives

Facchina emphasized Siddhi’s strategy of leading growth rounds without being heavily diluted. “We look to come in at a stage where maybe only one additional growth equity investor is added, if any,” she explained. Since its inception in 2020, Siddhi has invested in approximately 90 consumer and foodtech deals.

The firm has recently adopted a more traditional private equity model, increasing check sizes while reducing the number of investments. Notable portfolio companies include Super Coffee, Cirkul, Magic Spoon, Immi ramen, Mid-Day Squares, and Momofuku. These brands have mass market viability and address specific consumer pain points.

Gabi Lewis, co-founder of Magic Spoon, praised Siddhi’s focused involvement, stating, “With a rare combination of deep industry expertise, ‘one-team’ mentality, and long-term strategic perspective, Siddhi is among the most impactful, value-add, and enjoyable to work with.”

Looking ahead, Siddhi Capital aims to be operationally complementary to its portfolio, offering in-house expertise in sales strategy, warehousing, logistics, distribution, and manufacturing to help brands reduce costs and improve margins. Facchina’s goal is to build Siddhi into a generational firm that positively impacts the consumer space by leveraging their unique qualifications and in-house team. “My goal is to build Siddhi into a generational firm that allows us to impact the consumer space in ways that we are uniquely qualified to do by leveraging our in-house team and, as a result, make a positive impact on the industry and consumers’ lives,” she concluded.