In this Q&A, FGB speaks to Ernesto Schmitt, co-founder of mission-focused global investment fund The Craftory, and Jonathan Propper, founder & CEO of non-toxic, plastic-free detergent company Dropps. Following The Craftory’s USD$16m investment in Dropps, we discuss why the partnership was considered mutually beneficial, balancing profit and planet, and how Dropps will use the funds.
Ernesto Schmitt: Why did you decide that Dropps would make a good addition to your investment portfolio?
We were drawn not only to the mission-based approach of the Dropps team but also the ‘no bullshit’, simple approach they take to fixing a broken industry. The ‘find the stupid and remove it’ mantra speaks to our own goal of backing the companies that will transform the world for the better and we couldn’t be prouder to be welcoming them into The Craftory family. It is a model challenger brand making the right choices for the planet and its consumers. We have been impressed by Jonathan, a seasoned entrepreneur with more than thirty years of experience in the fabrics and detergents industry.
Ernesto Schmitt: How do you envisage you will work together?
We’ll be partnering closely with the Dropps team around the 4 core capabilities we believe are essential for challenger brands to succeed at scale – namely excellence in brand development, digital platforms, operational scale up, and new product innovation. In each case one of the Craftory’s specialist Craft Partners will be supporting Jonathan and his team with raising the bar in their respective capability. It’s a unique model that goes well beyond the mere provision of capital that is the standard VC approach.
Ernesto Schmitt: You guys invest in brands with mission-driven purposes, but at the end of the day, you are still there to make money. How do you look to balance profit and purpose in your investments?
We’re cause capital, but we’re neither anti-capitalist nor a charity. We believe that cause-driven challenger brands uniquely bridge the divide between doing well and doing good. It’s immensely exciting to see that the two can go hand in hand. Having said that, one of our core values is that should we ever be forced to choose between being big or staying relevant for one of our brands, we’ll always choose relevant. Too many brands hit the wall not because they’re bad businesses, but because conventional VC pushes them to chase ever less sustainable growth. Just consider the fate of Brandless as an example – a terrific business that ended up going bankrupt after receiving USD$250m from Softbank tied to impossible growth targets. We won’t ever do that. It’s one of the things that makes us different.
Jonathan Propper: Congratulations on the investment – how do you plan to use the additional funds?
The investment will help us to extend our positive impact by allowing Dropps to scale up and meet the growing demand for our subscription business. We intend to expand our team and product development capabilities. In addition, we intend to build out internal infrastructures that will allow us to scale, all while also ensuring we manage our environmental footprint.
Jonathan Propper: What criteria did you use when looking for an investment partner? What constitutes a ‘right’ and ‘wrong’ fit in investment partner?
The Craftory is an ideal partner for our business. Their founders and operational team provides more than just money to their portfolio companies. The Craftory’s revolutionary investment philosophy aligns well with our mission-driven values so we can maintain our triple-bottom line of social, environmental and financial impact. They offer permanent capital, building a new house of brands. Unlike traditional VC, they’re not here to buy and flip quick.
We were not proactive in seeking an investor because of the notorious tribulations that are associated with the traditional VC model. However, The Craftory’s “Anti-VC” message aligned well with our mission as we too believe in sustainable growth. We also value their reputation and experience in the consumer-packaged goods industry.
Jonathan Propper: You guys have managed to make your products plastic-free, but many brands struggle to be sustainable. What advice would you give to similar sized brands trying to be more eco-friendly?
Dropps is no stranger to category disruption and innovation. As the original single-dose laundry detergent pod introduced on the market, we have built a valuable customer-base over the years that amplifies our message as the most sustainable and convenient clean around.
While hard to pull off, sustainability, convenience and cost are not mutually exclusive. Dropps is driven by a core belief: Our customers can have it all: safe, effective and eco-responsible products that are both convenient and economical. Not one thing at the expense of another. It is our goal to design products that allow us to offer better alternatives – both from a formulation and packaging standpoint. We believe that sustainability is a journey, not an end state. As a small company, we innovate to the best of our ability and source as ethically as possible with what’s available in the market.
Even as a variety of new “eco-friendly” essential brands enter the market, Dropps sees this as an opportunity to help shift the narrative away from consumer’s inherent choice of big household cleaning names, to ones that are better for their health and for the environment’s.
That’s the key — build a community (no matter how big or small) that not only evangelises for your brand or product, but rather the lifestyle of being sustainable. We say this because, Dropps believes that individuals and families can take simple steps to replace everyday products with those that are both eco-responsible and economical – which, if multiplied across a multitude of individuals and families, can have a measurable impact on the planet.