Branding in Venture Capital

BrandBourg is pleased to have been able to assist Fondaction in revamping its visual platform and developing its employer brand strategy. BrandBourg also provides branding expertise in connection with the due diligence process for a number of the Fund’s investment projects.

Claire Bisson, Deputy Chief Investment Officer, Direct Investments, Impact

BB: You work in an industry that often seems to have a less developed understanding of branding. Why do you consider branding so important?

CB: Fondaction is the investment fund for people who are working to effect positive change in the direction of a fairer, more inclusive, greener and more productive economy. We seek both financial and non-financial returns. This is a very distinctive positioning and we are fully aware of the brand’s impact on an organization’s growth strategy.

What is true for us also applies to many of the industries we invest in, such as the food industry, a sector in which we’re very active. A strong brand can help a company stand out from the crowd, especially in a competitive market.

The brand also conveys a company’s basic values. As an impact investor, that matters to us. In fact, we seek out companies that subscribe to certain values. We believe that it is precisely those businesses that care about their social and environmental impact that will generate the most sustainable value in the future.

BB: What role does an investment firm like yours play in promoting awareness of the importance of branding among the companies you invest in?

CB: Fondaction has been practising sustainable finance for 25 years now. Our close collaboration with entrepreneurs and our experience in supporting their initiatives has enabled us to identify key factors of success and value creation. The brand often plays a role in that. Therefore, from the moment we start analyzing a given case, we try to understand the brand, its value and the company’s business strategy. In some instances, depending on the recommendations that emerge from that initial assessment, we may adopt a particular approach to supporting the company. The strategic planning exercise includes brand strategy, and we work with experts in the field throughout the process.

BB: How do you measure the value of the intangible asset that is the brand?

CB: Brand valuation depends on revenues generated, alignment with market trends, and current and future cash flows. Quantitative assessment generally draws on market-based and benefit-based approaches. And it’s important to bear in mind that a brand’s value can rise and fall over time, depending on the market.

BB: In what kinds of investment files or types of companies is branding most often an issue?

CB: The stakes are much higher in the consumer goods sector. But consistent brand positioning is indispensable for any company (and thus any investment) looking to distinguish itself from the competition.

Guy Laroche, Portfolio Manager, Impact

BB: Can you give us an example of a project where branding made a difference to you or to a company you invested in or are currently investing in?

GL: There are several I could mention, especially in the food industry, where branding is particularly important. Take Top Glaciers, for example, which has a portfolio comprising a variety of sorbet, ice cream and frozen yogurt brands (Solo Fruits, Bilboquet, Hudson and Lambert). This Quebec company has plans for innovation and market expansion in a very competitive sector that has its own particular dynamics and relatively seasonal product categories. As an investor, it was crucial for us to understand their marketing challenges. And BrandBourg was able to guide us in analyzing the branding issues in this case.

BB: What is the value-added of working with branding experts when it comes to investment (or due diligence processes) and how does their involvement affect your decisions and recommendations?

GL: Everyone has their own area of expertise. Dealing with the financial side of a transaction is one thing; it’s quite another to be able to grasp the realities of the market as well as of each particular industry and company. Sometimes we need to enlist the assistance of specialists to gain a deeper understanding of the different facets of a company and its brand(s), be it in the area of distribution, portfolio management, product line, market trends, consumer needs, and so on.

This analysis allows us to identify the issues, challenges and potential risks involved, but also the opportunities. It puts us in a better position to support the development and growth of the company that we’re considering investing in, to optimize our investments, to maximize the allocation of resources and to propose a plan of action that is realistic, relevant and tailored to that specific company.

Bringing a branding firm to the table is a relatively new practice. It has proven to be a plus in many cases. It allows us to cover all our bases and leave nothing to chance.

BB: If you had one single piece of advice for an investor who thinks branding is just a matter of marketing, what would it be?

On the contrary, brands are central to businesses. A brand is the face of a company – it is what consumers engage with. People adopt, consume, buy, and build relationships with brands. Brand equity is an asset in and of itself, and it is a means for a company to win or protect market share from its competitors. Moreover, brand positioning clearly conveys and influences a company’s business model and strategy, and thereby shapes its development. The success of an investment project is intimately linked to the success and performance of brands themselves. This is not just a matter for the marketing department; it’s of concern to the entire company!

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