It’s been a rough couple of years for brands, and the last quarter of last year may have been the worst of it. Deals in the period were less than half of what they were just two years ago, and talk of down rounds and slow fundraising dominates discussion. So what caused it? First of all, it wasn’t just brands that were having trouble raising money. Venture Capital investors say that the pension funds and other large capital pools they rely on as limited partners have moved away from VC as they rebalanced their portfolios to account for a down stock market a couple of years ago. Additionally, interest rate increases that are designed to battle inflation have cut into private investors’ ability to leverage the dollars they do have for deals. That slowdown has been accompanied by a willingness from many capital pools to sit back and enjoy safe, high-interest savings and fixed income investments as their chosen alternative. As a result, brands are starting to publicly announce they’ve reached the end of the line: Ocho, Bro Dough, Rowdy Energy and Trimino all announced they’re shutting down in recent weeks, while established brands like Tessamae’s and Rhythm Superfoods each went into bankruptcy. Recent transactions of brands like Tessamae’s and Beanfield’s might sound encouraging at the surface, notes Dwight Funding’s Ben Brachot, but “a lot of the transactions we saw late last year were out of desperation, not out of growth or opportunity.” Expect the market to open up as interest rates stabilize or move down, investors say, but there’s still carnage yet to come for brands that can’t find a path to sustainable margins and profitability. “Good teams continue to attract investors,” notes Liz Myslik, Managing Director at VC firm Loft Growth Partners. “There’s still competitive bidding for those brands that really offer a highly differentiated product offering – one that is really valued to consumers at a price that is compelling, and a margin that allows them to have a sustainable business. Those elements continue to be in high demand, and innovation will always drive value, growth, and investment.” Read the full story on Nosh. | 
