Welcome to our live show!

Welcome to Drink Up.

Do we lose Sam?

He froze.

Yeah, well, I'll step— I wasn't sure if it was my connection or not. I'll step in. Hello everyone, welcome to Drink Up. I am not Sam Anderson, but I'm Adam Smith, and Sam will hopefully be back in a second. Today we've got Marshall— am I— is it Lebovitz?

Lebovitz.

Lebovitz, perfect— with us, who does asset-based lending and is going to walk us through something incredibly interesting to brand owners at all stages, which is financing and how you can find creative solutions for paying for things. Again, hopefully, hopefully Sam will be back soon. Um, but Marshall, welcome. Thanks for joining us.

Appreciate it. It's always great to be here, uh, early on a Saturday morning.

Absolutely. Yeah, you're— it's, it's funny. So for, for those of you, you know, following along at home, I'm usually in Minnesota with Sam. I'm in Phoenix right now at a friend's house, and I'll be in Anaheim next week. And Marshall, you're in California, right?

Right. And I'm, I'm in, um, Redondo Beach area, and I will be, uh, looking forward to seeing you next week at Expo West.

Perfect. Very cool. Um, so I mean, to kick us off, just kind of a 2-part question. How did you and Sam come to know each other? And kind of within that, how did you come to get involved in, in asset-based lending? But for now specifically, how'd you come to get involved in it for the CPG and the startup community?

Yeah, great questions. Thanks. Um, so Sam I met through outreach after listening to your podcast and saying, hey, that's really— those are enjoyable. They're sharing a lot of great information with early-stage and growing brands.

Very cool.

I might have some things of value to say that could help those companies. And how did I get into this world? I've been, you know, 35 years of lending experience, helping companies grow, financing their equipment, financing their working capital. And about 8 and a half years ago, I think it was 8 and a half years, I left the banking world and reached out to some of my colleagues who said, we're working with a lot of growing brands in the better-for-you CPG space, food and beverage. Can you take some of the expertise that you have and provide assistance to those companies so that they're not always giving away their shares, giving away their equity? As a way to fund the growth of their business. And I said, sure, let's, let's do that. And over the course of 8 years, I've met a lot of great trusted advisors, and they're the ones who refer me opportunities and to help the various companies that I do. And it's again, food beverage. I've worked with personal care products, pet food, as well as some companies outside the consumer packaged goods space. But that makes up The lion's share of my, uh, business advisory work.

Very cool. Sam, welcome back. Can you hear us?

I, I can hear you. I apologize, but my internet went down here, so I'm on my cell phone. But that's how we roll, uh, on, uh, this podcast. Uh, things always happen, which makes it fun. So I apologize, but it seems like we got Adam in the driver's seat to introduce you, uh, Marshall, and And, uh, and, and welcome. So I'm not sure where you're at, so continue on. I'll just, uh, I'll interject as we go forward.

Next question.

Yeah, I was gonna say, so, so, uh, Sam, we just kind of gone through how you and Marshall met, uh, and he, he essentially said, you know, long time listener, first time caller, which is super cool, uh, and then, uh, was given some background on how he got into doing what he does, but specifically for CPG and for startups and, you know, whether that's food and beverage or other startups. So, and Marshall, this was kind of the question we were talking about before we went live, but I mean, we'll start here.

Sure.

Personally, I work with a lot of very early stage, right? So, I mean, when I think early stage, I think people who, you know, maybe they had $20,000, $30,000 Saved up on a nest egg from their day job and they wanna make a go of this. And so a lot of what I talk to them about, whether it's e-com, excuse me, e-com, self-distributed retail sales if they can, depending on the product, is going out and even if it's small, proving that they're getting orders, right? Just a, hey, proving the idea.

Yeah.

Right. So for you, how do you, how do you take somebody who's in that stage and kind of bridge or make the explanation to them of, hey, even if it's just, you know, a couple cases here, a couple cases there, you know, what opportunities or even just education can you provide them on ways that asset-based lending could be a solution?

Yeah, you know, not every client or prospect is necessarily going to end up with a— as a client. But one of the things they always walk away with after a conversation is a lot more knowledge than they didn't have, that they, you know, didn't previously have. And I get a lot of those conversations that finish up with, wow, this was really helpful. I learned a lot. I'll be back to you in 18 months. And it's like, that's cool.

Sure.

Right? I may not be able to help you now, but if I helped you avoid stepping in some of the potholes along the journey so that you don't break your ankles and never get to me 18 months down the road, then we've accomplished, you know, something that's really helpful. A perfect example is I just closed actually a deal, I think about a month ago for an oat milk company. And it's a company that I've been advising now since 2020. And so all along they're calling me, they're learning, they're getting advice, trying to understand the pros and cons of different funding options for themselves that would be non-dilutive. And ultimately I did get an opportunity to help them with actual funding. But, you know, sometimes it's a process.

Sure.

And sometimes while in theory I can help even the tiniest company that has receivables, it may not solve a big enough problem for them or do it in a way that matches up with their order-to-cash cycle, right? You have to look at all those things because not all cash is the same, and you want to make sure that you are giving them a good fit for what they need.

Absolutely. No, and I've got one more question here, and then I'll kick it over to Sam for a sec, but I think first and foremost, and Sam and I talk about this a lot with everybody we talk to, is, you know, I think to your point on being willing to take the time and educate, even if it means it's not closing business today, is the mark of A, a good consultant, and B, a good salesperson, right? So shout out to, you know, the teachers and the educators out there, even if you're not a fractional operator like ourselves. It's just what makes the world go round in a lot of ways. So I'm curious then, the question that comes from that is, I know this is going to ebb and flow, and obviously it's different every time, but if you had to generalize it to some degree, what's the tipping point? Maybe using this oat milk brand as a reference, what's the tipping point when they go from, in your mind, hey, I can help out just being an informative voice, to—

Mm-hmm.

Okay, now it seems like I can actually, you know, get my hands dirty and truly provide some, some bigger picture value here in terms of what I really do, right?

So last year I actually looked back at all the deals I've looked at in the last 8 years and where I've actually been successful in actually arranging funding for that company. And I found that the cutoff was right about the $1.5 million, $2 million of annualized revenue. That's where the problem I solve can be done in a more efficient way, right?

Okay.

Often when you're smaller than $1.5 million of revenue, you might not really understand where working capital comes into play and equity comes into play. And all of your friends and your advisors have said, Go fund it this way. And that may not be the best solution, but that's what you're hearing. And the common refrain I hear from those prospects is, this is great, I love it, it doesn't solve a big enough problem for me. And if it's not solving a big enough problem, it's often at that stage of their lifecycle is that they don't understand the difference between what funds are supposed to do to cover investment in the business Versus a true working capital problem. Sure.

Interesting. No, I mean, it makes total sense. And I think, you know, for the brands out there listening, and I know for the folks that I talk to, it'll be a conversation I share with them of, hey, you know, again, right, maybe Marshall's someone you want to talk to just to understand some of your financing options and just the general accounting of things. But, you know, look at this sort of dollar figure mark as a place that maybe as you approach it, have a more involved conversation. So super useful. With that, Sam, uh, I think we can hear you and you can hear us. So what have you got?

Well, I'm good. Glad to be back. And again, I apologize for, uh, for falling off the line. I gotta call MediaCom and ask for my money back because this has been going on for about a month, by the way. Full transparency. They might need to talk to you, Marshall, because they must be undercapitalized because for some reason they can't keep the freaking internet going here. So You probably can help those folks out, so I'll make sure you connect them.

My phone is always open to a phone call.

Yeah, so I think there might be a business opportunity here. But all seriousness, you know, I've been— I don't know this world, but obviously, you know, I talked to our friend Roger Lee and what they do. They do M&A work, and I've met some venture capitalists. I was on a phone call earlier this week with a little brand called Noventus, and we were meeting with some investment folks through Wendy. and, uh, you know, looking for like a, I don't know, like a $200,000 cash raise and stuff. Can you just tell people, like, you know, I know it was like, what are the different people in this space that they could talk to to raise money? Obviously you're just one piece of it, right? I mean, you have to go deep. We want to go deeper in your piece, but there's all kinds of different avenues people can go to raise money because everybody I talk to, yep, I'm going to capital raise, say as soon as I get my capital I'll give you a call and we'll get you guys on board. I hear that all the time. Or would you work on commission, help us find an account or distributor because I just don't have the money right now?

So there's a lot of money out there. It's interesting because if you look back at what's going on with— so what's the cheapest source of funds, right? And in theory, most readily available are the banks, right? That's where the cheap money is. If— but banks really aren't a good fit for early-stage companies for so many different reasons. And while bank loan demand was actually up in the last quarter of 2024, the banks were tightening credit, making it more difficult for companies, as you know, through the underwriting process. But that's because there's so much uncertainty going on in the market right now. But on the flip side, There is so much money available in private credit and all types of debt financing, and asset-based funding is one of them. Revenue-based funding— there are other types of private credit funds. Finding the one that's most appropriate for you is really about understanding the uniqueness of your situation, how much money you're trying to raise, what are you going to use it for. And most importantly to the lenders, how are you going to repay it? Right? Because the— I always tell people the difference between an equity investor and a lender is the equity investor wants to get rich with you. The lender simply wants to get repaid, preferably with interest. Right? So you have to really understand what's driving their interest in putting money out on the street, so to speak. to know who's the right lender for you, because you want to match up what they want and with what you want and need. And when you can do that, you can get a good match.

Wow, that's, that's really interesting. So what would you recommend? Maybe there's 3 stages here: early stage, mid-stage, and end stage. Like, like, should it— are all applicable within that, or is there a certain place you should go first? And then I heard this thing called bootstrapping. I don't even know what that means. You strap your boots on, put them on.

Yeah, but bootstrapping, I'm sure it has a lot of different definitions, but at the end of the day, bootstrapping is, yeah, you're going to pull yourself up by the straps at the back of your boots. And that means that you're going to dip into your savings. You're going to maybe ask mom and dad, your brothers and sisters, your friends, your extended family. and maybe even your drinking buddies. So that's, you know, that really truly is the way to access the earliest stages of capital because often whether it's even the angel investors who also come in very early or the seed investors or, you know, down the food chain line, so to speak, they really want to know, is there proof of concept? Is this scalable? You know, is there an exit opportunity here? Is this an opportunity to invest in a spaceship, or is this more about investing in an old Toyota Corolla? Right. It'll get you there. You'll have a nice ride. You'll get there safely. But you're not going in style and you're not going to blow it up and get rich.

Right.

And look, there's— I think that's a lot of the misunderstanding of entrepreneurs is they think every idea is going to be the spaceship, the rocket ship, and take off and have a really great exit. And the truth is, most of those businesses are probably really great lifestyle businesses, right? Where they could be grown to $15, $20 million of annual revenue and throw off a lot of cash flow if they're run for that objective. And honestly, in many cases, that may be a better journey than the one that says, I'm going to spend a ridiculous amount of money to try and grow this to $100 million, a $200 million revenue business. And then exit because they may never get there. Yeah.

So if I hear you correctly, so, and chime in, uh, Adam, because I know you're thinking through this one because I am. So you said lifestyle, right? So like, I have a business that's more, you know, I want to help people find work and do right by brands, but I'd call our business a lifestyle business, right? It's, uh, it feeds my partner, myself, and our, um, you know, sales agents and partners like Adam. Now we get clients. I'd call that a lifestyle business. We don't really need to raise a lot of money because we get paid on what we do, right? So we're consultants at the end of the day, and we connect people to opportunities. But it's interesting because I do meet a lot of brands, and brands have been around for 10 years. And we always— some of them we'll name, some of them we won't. But this one's been around for 10 years, and they have a nice little business, and they want to scale it, but they don't want to get the big investments in it. So it's just really interesting. I don't know, is 10 years too long? Is 15 years too long? Is there a timeframe in which, hey, if you're gonna, you know, actually, you know, I always say this, I say, you know, you test it, you build it, you scale it, and you sell it. Is there a timeframe within there they need to talk to people like you to get to the end? Or if it's a lifestyle, there's 2 different things I'm asking here.

But it's 2 different things because one of the things you have to think about Look, it's the old saying, if you don't know where you're going, then any road gets you there.

Yeah.

So the first thing you really have to decide is where you're going. Is it that you're going the route of hypergrowth and an exit? Or is it that your goal is to build a business that meets the needs of you and your employees and maybe the next generation in the family that you're planning to transition the business to at some point? Those are different journeys and you need a different roadmap. And if you are going to go to the— on the journey where you need to bring in outside capital, it really does get to where you have to understand what's the goals and the objectives and the timeline of the investor, right? Because some investors, you know, that angel investor who's coming in may understand that they're going on a 7 to 10 year journey. Right? They're looking for the 2 to 3 year exit. But if you come in very early, you have a longer journey. Whereas the seed investor, the Series A, the Series B needs to get out in 3 to 5 years depending on the industry. Now, when you approach them for funding, you also have to understand, well, how long has your fund been around? Because if they're their limited partners and the people who gave them money said, okay, from start to finish, you got to be done in 7 years. And they've already been out there putting money into the, into investments for 3 years already. That really means their timeline is 3 to 5 years, right? So if you don't understand where they are in their own timeline, you may approach different investors that aren't a good fit for you.

Wow.

I know Adam was part of a, you know, a couple brands as well as I've been where they just ran out of money.

Yeah.

And I got the dreaded phone call. Hey, we, we really like you, but we can't afford to pay you anymore. You know, perhaps you can become an advisor for us. So the, the old like, hey, I'm not gonna pay you, but will you advise me? Maybe I'll pay you conversation, right? And it's a difficult one. And it seems like everybody wants to be big really fast. Is it real? All right, I'm gonna stop actually, Adam. I think you probably have some backup questions when you just shared.

Yeah, no, you're fine. I mean, I think you're making a lot of really good points, Mark. They're really good points being addition to you know obviously what you do. It's funny when you talk about the the Toyota Corolla versus the space.

Yeah, you know, the friend— I have a friend who's an advisor with the company, and he calls, uh, it's the difference between the rocket ship and the Toyota. And he refers to the companies that could be really great companies that just grow steadily as tardigrades.

Yep.

It's all about survival, long-term slow growth. It's not meant to be the rocket ship. And again, it's a different approach depending on how you're trying to raise money, whether or not, like I said, they want to be the rocket ship or whether they're happy being the Corolla.

The reason I love that analogy so much is a lot of the small brands I talk to, and if they're listening, they'll probably roll their eyes and go, yeah, yeah, we know, is I encourage people, even if they're trying to be the rocket ship, right, even if that's the goal, is a 5 to 10 or 10 to 12 year exit, right? Because we all know that exit horizons are a lot longer than, you know, sometimes people are like, oh, I'm gonna exit in 3 years. The hell you are. Yeah.

Yeah.

Right. So even if they're trying That brand, and my encouragement to them, especially because they're such— Never been built. So start at least, build, figure out, you know, take that basic engineering understanding of a car and work on a rocket ship. Um, the, the question that comes out of that for you, and I'm curious, I'll try and paint some simple parameters, is for— let's say, for example, and you mentioned it earlier, that, that $1.5 million to $2 million stage brand that's kind of ripe for working with you. Is it something where if you think about very simply just 2 types of investment, I know there's multiple, but if you think about dilutive versus non-dilutive, right? Or dilutive versus non-dilutive access to capital, maybe. Is it, you know, you think there's 2 types, and so is it your recommendation for brands generally is Hey, maybe look at it being 50/50, 70/30. You know, does it wildly swing, you know, the split from one direction to another depending on the brand, or what's that mix in your mind ideally for brands at that stage?

There's really no rule of thumb in that regard. But where you can find the answer to that is in the 3rd statement of a complete set of financial statements, right? You've got The profit and loss statement, which is, you know, how much revenue did we make and how did we spend the money on expenses. And there's the balance sheet, which reflects where you are at a given point in time— assets, liabilities, equity. It's the third statement, the statement of cash flows, which helps you better understand how to fund a company, right? Because what that cash flow statement will tell you is how much of my cash shortfall is caused by losses, which you can really only fund through equity. It will tell you how much of your need is based on changes in working capital, right? How much money did I tie up in receivables and inventory that now I don't have that money to invest in growing my business? And then the third area where you can use funds is by Investing in plant and equipment, right? So it's that 3rd statement which really helps you understand why am I raising money and what's the best way to go forward in finding the right funding solutions. So I'm really dealing in my world with a very small piece of that cash flow statement, which is I tied up too much money in receivables and inventory. How do I solve that problem? Especially because I'm hypergrowth and I'm not yet profitable or I'm just barely profitable. And those are the companies that banks aren't as happy with. They aren't as interested in lending money to them. So I help companies by leveraging those receivables and the inventory to find good solutions to fund that working capital problem.

Sure, sure. No, I mean, it's— yeah, it's a beautiful solution to a problem. I mean, again, it's definitely something I'm gonna tee up to the folks I talk to and something I want to know more about myself. I mean, when you talk about— in my world, and some have said too, we sit on opposite sides of a very similar coin. You mentioned The, the, the receivables and inventory, but then you also mentioned plant equipment, right? So in specific to, you know, high acid plants, a few of the folks I talked to, not none, but very few own their own operations facilities. So when I think plant, plants and equipment, I don't think things that the brand owners actually own as part of their business. I think co-packers, I think third-party logistics facilities, I think, gosh, simply put, warehousing, cold storage, things like that, right? Would that also fall into that bucket?

If you as the brand are buying those, then yes, that's exactly what would fall into the bucket. But a lot of early-stage brands can't justify the investment in building out plant. In order to make their own product because there's just too much downtime and usage of that product. So they're better off going and working with the co-packer. So the portion of the cash flow statement which is about investment in plant and equipment is usually minimal, right, in terms of that outlay. When you've working with the co-packer and a 3PL, in most cases they're providing all the equipment. And so there would be a negligible, if any, impact in your cash flow statement as a result of needing those assets.

Did we lose Adam?

We did.

This is what happens when you go live, raw, and real. But I'm still here. I don't know, can you hear me?

I can, yeah. Let's keep talking.

Yeah, good. I'm good. So, so a couple things. What's your plans this week? So you're going out to Expo West to talk to a lot of folks. What's your process? So why would, why would people want to connect with you?

Well, I connect with 2 types of people at Expo West. First, the brands, right? The companies that are actually out there selling food and beverage and personal care products and other consumer packaged goods. Often, again, they have issues with receivables, they have issues with inventory, and they're looking for funding. Everybody's looking for funding these days. So they would want to talk to me because I might give them some insights in how to move forward in solving their working capital challenges. that maybe they haven't thought of, or maybe they have, but they don't have the expertise to address the issues themselves, or they simply don't have enough time because they're busy working on rebranding, protecting their intellectual property, doing more sales campaigns.

Right.

Financing is the last thing they want to work with. And it's often, you know, it's not as much fun to go out and ask people for money as it is to, you know, go out and spend your time asking for people to buy your product. So it's a chance for me to interact with brands and share some knowledge with them. The other group of people that I'm out meeting at a show like Expo West are the trusted advisors, because most of my business comes from trusted advisors. I do very little direct solicitation. I'm not a big marketing person, but I share my knowledge with other trusted advisors and I'm a resource to them. And that's where 95% of my business comes from, is by working with a chief marketing officer, a fractional CFO, an attorney, an accountant. You know, they have clients who need my services, who need my insights. And because I'm willing to talk to anybody, Yeah. You know, without charging any money up front, they're always happy to share my name with other parties once they understand that the pain being experienced by their clients is a pain that I can help solve.

Yeah, we were talking about that yesterday, the power of networking, right?

It's tremendous. And so while I'm out walking the floor at Expo West from 10 AM to 5 PM, At 5:05 is when you'll find me at the first after-hours networking event, you know, talking with both brands, but more importantly, with trusted advisors. I have full schedules both Wednesday and Thursday night next week of simply going from networking event to networking event, trying to meet the trusted advisors who I already know and to make some new acquaintances. And you and I have talked about this. I also run 2 networking groups. That are comprised solely of service providers who work with food, beverage, and other types of consumer packaged good companies. And we meet together on a monthly basis and talk about the challenges that we're having serving our clients to find out if somebody else in the room maybe has expertise that can help solve that problem. And we also talk about the problems we have as service providers. How do you get your name out there? How do you Make sure that you're qualifying your prospects correctly. And, you know, what do you do when you've got a client that is really trying to, you know, extract a lot of information from you but doesn't understand the value of what you're providing and thus is reluctant to, you know, pay you at all or pay you what you truly think you are worth? So, It works a lot of different ways, but it's a good group and everybody really enjoys the fact that here's somebody we can share knowledge with. And that is so important when you might be a small group of entrepreneurs, right? Your company is only 5 to 10 people. Where do you go? You can't go hang out with the big companies at big major conferences. You really need somebody who understands your perspective as a service provider, which could only have anywhere from 1 to 10 employees.

I love that. Let me ask you a question about it. I don't know if you can share, but what's the cost of entry? We talked about this a little bit yesterday.

Oh, for my networking groups?

Yeah.

There's no dues. You have to be— what we're looking for are people who truly want to help one another. And who are committed to being a solution provider, whether it's to the clients of one another or to each other, right? It's more about engagement. If you want to be there and you're committed to being there, great. But I, you know, I'm not doing this to make money.

Yeah. Well, I asked if I could join. You're like, do you live in LA? And I said, no. And I said, you do it virtually? He said, too bad, you can't join.

Well, it's not that it's too bad. It's that what you miss, the dynamics of being there next to one another and seeing everything from— you look across the room and see the wheels turning in somebody's head because it's like, oh, they've got the solution to the problem we're talking about.

Right.

Or just the body language, or, you know, you can see who's engaged and really interested. And being part of your team, even though they're not on your payroll, right? Everybody's really looking out for one another and they're building. And even next week, I'm going out walking the floor with a couple of them.

That's awesome.

Wow.

I mean, so is Roger Lee going to be out there too? So you're probably walking the floor.

Roger's going to be at Expo West on Wednesday, and we've talked about walking the floor together for a while.

Oh, that's awesome. Well, give him a hug for me. I'm a hugger. So just full transparency, same here. See you live. I'm gonna give you a big hug. So you're cool.

Yeah.

But I was, I was supposed to be out there. But unfortunately, the Expo West people happen to catch this episode. I am media. This is real. And we talk to people every week, but they didn't allow me in on a media pass. So I have to try a different strategy. next year to attend. But it's really, you know, I want to touch something on this and I want to get back to what it is you do. But the power of— I talk about this community and what you've created because there's, you know, obviously, you know, I joined WSWA, that's an association. And for an association, sure, there's a fee, right? I joined NBWA, but there's people are creating communities in their church and fee for it, and I just totally disagree with it. Like, you've created a community because I believe I have people you can meet, and we're in a community together now because we met each other, Marshall, right? But there's people trying to charge for it. I'm not trying to tell them what to do, but I don't know if that's a community. That's more of an association, wouldn't you call the difference between those two?

Yeah, you know, um, there— it's a wide spectrum of opportunities, right? You can go the the association route, the community route, and incur a lot of overhead and create legal liabilities for yourself and, you know, have a lot of rules.

Yeah.

Um, I actually was the founding chair of Naturally LA here for the natural products community. But that's different than what I'm trying to do with my smaller groups, right? Uh, where there, there aren't any rules, there aren't any deals. Or there aren't any dues. And what I'm trying to do is build a different type of community where people are committed to one another and want to help one another, which is the same thing as Naturally LA. But I do it on a scale which is I send out a monthly email. You know where the, the place is that we're meeting, and you know what time to show up and what we're going to be talking about. And it's just different when you have to go out and get speakers and run big membership, you know, databases and the like. I've got my Excel spreadsheet, I've got my emails, and the programming really does— it's not as complex. We talk about the things that the members want to talk about.

I guess so. The bigger organization, like association, you go to BevNet down in Del Mar. That's an association. WSWA, MBWA Expo. And then you meet the community in and around the events, right? You, like you already said, you're going to these networking events and you're going to meet your people that you have relationships with and continue the conversation. That's what we did at WSWA. We, we, we didn't attend any events. We were, we were out in the coffee shops. in the hallways, having meetings and talking to people. And then when they had the networking event that night, there was that— we walked around and I saw my friend Jay Williams. I always have to call him out here. You'll see. Matter of fact, you have to look up Jay. He's probably out there, free bird. So both of you should find Jay Williams. And I have a task for you, by the way. Oh, okay.

Jay Williams.

Jay Williams. You got to give him a hug. Duncan Alney. Let's see who else is going to be out there. These, these are assignments for both of you. And both of you need to meet. You need to find time.

Yeah, let's find time. Yeah, yeah.

So Adam, he's gonna walk the floor, by the way. So I don't know, maybe tell him what— I think you're, you're in a booth, Adam, out there.

No-ish. So, which, Marshall, would be a good introduction for you. Are you familiar with the group Food Ops LLC?

It does sound familiar. But, you know, I know so many— there are a lot of little informal groups and formal groups, and it's It's hard to know all of them, which is why you show up at a conference and you spend less time with, you know, going by and eating every free sample of mochi. And you try to shake as many hands as you can.

Absolutely. No, you're spot on. Which, by the way, for the Naturally Network, shout out to Allison Hone and Kate LaBrosse from Naturally Minnesota. But, uh, so FoodOps, so Sam, to your question, FoodOps is a consulting group focused in obviously the food space, uh, the manufacturing side of the food space. And Johnny and Asa, who are the 2 kind of, uh, founders, owners, um, you know, heads of the business, were kind enough to invite me out on a guest pass. They are doing the— I'm not gonna get the name right, but they're They're doing a business school on Tuesday the 4th.

Oh yeah, right, the business school.

Yeah, so they're, they're working there, so I'll be around for that, and then I'll be walking the show. But I would love to make an introduction for you there because I think, again, my work is in beverage, but for food, they could be a couple really good folks to know.

So yeah, look, like I said, food, beverage, ingredients. I've— I helped a co-packer for in— for equipment financing a couple years ago, they were referred to me by a brand who they were serving, and they— the brand was growing so fast with their chocolate products that their co-packer needed more equipment. And so I helped finance the equipment for the co-packer.

You know, I hadn't considered that until you just mentioned it, but there are a couple small-stage co-packers that intentionally work with Again, small and startup brands that, that could be— you may know them already, but there could be a couple good intros there as well. That's interesting.

Yeah, there's, there's so many ways. I mean, one of my favorite stories, people go, well, tell us a success story. Where did you grow, you know, help a company scale? And so one of my clients, actually 2 of my clients, I helped them raise money, which is, you know, probably not directly related, but it supported their goals of growth, and they both ended up on the Inc. 5000 fastest-growing private companies list. And one of them is in the beverage space. And I think I was introduced to them, they were probably revenues in the mid-teens of millions, and I arranged an asset-based line of credit for them. And that asset-based line of credit has scaled with them. and help them grow by 300%.

Holy shit.

From the time when we first put in that line of credit, probably not—

There's a lot of people we can introduce you to, Marshall. So this is great about that.

They grew from mid-teens to now close to $50 million of revenue, you know, using that. And again, it was non-dilutive. So they raised a lot of money. It helped them hold on to their shares. And then this past year I came back and I helped them with a sale leaseback on all their production assets because they actually are making their own product.

Hey, Marshall, I gotta ask, I got, I gotta ask this question. I'm sorry to interrupt, but I'm gonna, I'm going to this. I'm a pitcher a little bit. How can people afford you if you're raising all this money? You got to be expensive, right?

Well, okay, so I work success fee only. If I don't get you money, You don't owe me a dime.

Damn.

Okay.

And in 95% of the cases, the lender has priced in a commission for me. So I never, never show up at closing and say, okay, now you owe me money. So what happens is you get a rate that is better than you would get on your own, and my commission's already baked in. And so, you know, people go, well, it must cost me more in my financing. In many cases, I actually save you money on top of what you'd get on your own.

Yeah, interesting.

That's brilliant because that's— when we talked about that, it reminded me because we talked about this yesterday because we have brands that, you know, one's doing like crowdfunding. It's up in the Northeast. I believe I told you about these guys, um, Booze Box. Yeah, but I'd love to introduce you to, um, Ryan and Norman and that group because, you know, they have production and They have inventory, and, you know, we're getting them in distribution. We actually found them wholesalers. So, right, so now I need the capital to make the product like we talked about earlier. Sam and Alicia have found a distributor to take it, but I got a time making it. And there's, there's brands here that they got the PGA, they got the Valspar, they got Capital Beer to take it. Now they're like, holy cow, I got to ship 18 pallets down to Florida. I might get the Great American Ballparks. I don't have money to make it.

Well, yeah, and that's— and so the first question is, why don't they have money to make it? Is it because they're generating losses of significant amount? Or again, is it because you have money tied up in receivables and inventory? And that's money that it's sitting there and it's, it's costing you the ability to produce more product and so that you can fill up the pipeline and generate more sales. So You know, if you can't manage your receivables and your inventory in an appropriate way, then you're going to end up with a very expensive bill for raising capital.

Yeah.

Marshall, I'm curious. I got to ask before I forget. Kind of similar to Sam, do you know the folks at BevSource at all?

I'm sorry, where?

BevSource.

I don't think so.

Um, okay.

Yeah, well, um, uh, and I know I've got your, your email from the, the invite for the, the placeholder on the calendar, but, uh, I asked because— so again, when I talk about— and Sam knows this about me, it's, it's— he interviewed there back in the day and we met when I was still working there. Um, but Bed Bath& Beyond was where I cut my teeth in the industry. I worked there for about 6 years. And, um, whereas now, I mean, don't get me wrong, I'll work with brands of any size if I can provide value, and I want to be very upfront about what I can and can't do. But a lot of the folks I work with right now personally are very small. They would be, they would be in the education phase of your ability to help, right?

That's fine. Yeah, I always help.

But BevSource has been— they've, you know, when I started, they were sub-50 employees. And now, you know, they've had some private equity get involved, and they're probably at a couple, just shy of a handful of companies under the umbrella. And somewhere in the ballpark, I would guess, of 200, 250 employees. Point I'm getting at is they do a lot with what I'll call the startups, but more movers and shakers of the world, right?

Yeah.

People that have some substantial investment, some substantial sales, some things like that, but who are looking to grow, you know, who probably have revenues in the mid to 7 figures, Several million, right? So call it $5 to $7 million a year-ish brands. I think that could be a really interesting conversation for you.

Yeah, I work with a lot of— so again, while I talk to everybody because I want to help them and learn, and part of that is that's just who I am, is to try to educate. I probably should have been a teacher as opposed to a banker, but it's building the pipeline and it's helping the trusted advisors who I'm, you know, as much as anybody, that's who I'm serving. So take care of their clients and you'll end up, you know, generating a nice pipeline through having, again, created that bond with them. But I talk to everybody. I find at the low end where I really can actually help somebody is that $1.5 million to $2 million of revenue. But most of the companies that I've helped are probably, I would say, in that $5 to $30 million range of annual revenue. That's when the investors that are working with them understand the power of leverage and doing it correctly. Because look, once you're already on the cap table as that investor, The last thing you want to do is keep writing checks when you're trying to protect, right? You don't want to keep writing checks because that impacts your ultimate return. And so you start to get wiser about the use of leverage. You know, even when you're bringing in that angel or that seed investor, they want you back working on the company. So if you come to them and say, I need $1 million and I need $200,000 of working capital, they're just gonna say, let me write you that check, because what I really want you working on is sell, sell, sell. And I don't want you spending another 5 weeks of your time trying to find a working capital facility.

Right, right.

Not what I would agree with, but I understand what they're saying is get back to work, promote that product, sell. So once you've raised Seed money, Series A is really when the investors start to understand the power of leverage.

Well, and I think that's phenomenal. Again, you made several good points on this call that if there's any brand owners listening, I hope they're taking notes. And that's one of them, right? Is, you know, big company, small company within the framework of being a startup, meaning, you know, whether you're a one-man band at the time, or, you know, a couple people, or you have 10 to 12 folks, right? If the smaller the team, someone's job is go get money, right? Almost from sunup to sundown. Which means if the team is small enough, that person's not doing the 99 other things that they need to be doing to keep the brand going. And so the sooner they can talk to someone like you to, to at least you know, I won't say solve because it's never totally solved, but at least maybe bridge a gap for a time so they can focus on getting things done is a godsend. And I'm sure you've experienced that.

Yeah, look, sometimes it's expertise. I hope it's most of the time expertise, and sometimes it's the extra set of hands on deck who knows how to get it done a lot more efficiently. One of the clients I'm working with right now in the salty snacks space actually has a very qualified fractional CFO, but his involvement in raising capital of this type for a size company like this, he's really learning a lot and he sees the value in what I'm doing. And I think they're pretty— they at least they're telling me thank you a lot because I helped prepare them to go to market. Right. We want to make sure the financial reports are the right ones. And that they're accurate, that they all tie out and everything looks good. And it's also knowing the lenders well enough so that you're not cold calling lenders or taking advice from your friends who are well-intentioned but may not know who the best lenders are for you. And, you know, we were— we got into the market probably 10 days ago. We've got our proposals that are already starting to come in. Got— I've told them how to evaluate them, what the difference in the structures are by doing side-by-side analyses. And at some point they're going to say, okay, which one's the best?

Right.

And my response to them is going to be, you've got 2 different types of structures. You've got one that's really, really clean and will be a little bit more of a burden from an administrative perspective. but no covenants, no financial covenants which will dictate how you run your company. The other structure is going to provide them with a different amount of availability and it'll be structured differently. Could be better for them. The pricing will be the same, but there's going to be financial covenants. And so there's going to be tradeoffs in how much administrative burden I have and, you know, who makes it easier for me to get the most availability. in terms of the dollar amount of funding that I need. The choices will— it'll ultimately be theirs. I can't make that value decision for them.

Totally.

But I can help them understand the right framework to make that decision so that it's— they're evaluating all the factors that'll really be helpful for them as they enter into a financing which will support them for at least the next 18 to 24 months.

Wow, that's incredible.

If not longer.

I tell my wife all the time, my, uh, and you just, you just said it, but I tell my wife all the time because she's— she'll hear me on the phone and she's like, what are you doing? Like, like, and not, not in a, uh, you know, talking smack kind of way, but just, you're, you're spinning all these, you know, you're telling all these different angles. I'm like, I can't tell them what to do, but I can't help them make an That's what I'm doing all day long. Sometimes I get paid for it, and sometimes it's just a 20-minute phone call, but I can try to help.

Karma's real though. If you give it, if you give, you know, the more you give, the more you get in return, by the way.

So yeah.

Yeah, look, I want my clients to understand a couple of things. I want them to understand the APR, the effective all-in rate of the financing, even though I don't think that necessarily going with the cheapest funds are always the best. best solution. I want them to understand the actual dollar cost of that financing, because particularly when you're a small company and your gross margins may not be as attractive yet, I want them to know how much of your gross margin, your gross profit, are you eating up with that financing. And the third thing I want them to understand is how does this fit your ability to repay the financing, right? Because deals are structured differently. So If you take out a revenue-based funding loan, which requires you to start repaying in 7 days and then daily or weekly thereafter, but you're borrowing money because you are building inventory, which may not even be made for 2 weeks and then sits in the warehouse for 3 weeks, and then you've given net 30 terms where they don't pay for net 45.

Wow.

You've got a really, really long order to cash cycle that may not work well with a loan that's got to be repaid starting next week.

Totally.

So I want to help them understand all of the different factors that come into play so they make the best decision for what their issues are today and who they are as a borrower today. Because everybody wants to say, but I'm going to be like this in, in 12 months. It's like, well, in 12 months we can reevaluate. But let's figure out what the best source is to solve your unique problems today and set you up for making that transition in 12 months if you really do achieve all of your goals.

Yeah. Yeah, I mean, again, and I could belabor the point, but I won't. I think it's just a phenomenal approach that you're taking to try and give people as holistic a view as you can. And I think, you know, speaking on behalf of Sam and I, it's what we try to do for our particular pieces of the business as well. I have one final question. It's very plain, but I'm curious. When you say, you know, so you get introduced to a brand, they say, hey, we'd like to work together, we're a right fit size for you, right? And you go, okay, you know, I'm gonna collect all the information I need and then I'll go and get offers, you know, lending offers that you've just ran us through.

Mm-hmm.

From, I'll call it first conversation and realizing that the 2 parties, yourself and the brand can work together to having offers to kind of sit down and go, here are the 5 to 10 offers we've got and let's make an informed decision. Is that a 6-week process? Is it a 6-month process? Like what's the ballpark? And again, I know it varies, but gimme a sense.

Yeah. If you have your financial reports in good shape and ready to go, You could have proposals to look at in a week.

Oh, shit. Okay.

Right. For purchase order financing where you have to move really fast, I've, you know, had those deals signed up in 3 days.

Oh, okay.

So it really depends on what it is that you're trying to do, whether you have your financial information in good shape and ready to go. So, you know, I'd like to tell you there's rules of thumb, but I've had— I've still got— I've got prospects I've been working with for years, and it's like, I'm going to send you the NDA tomorrow so I can— and I'm still waiting on the NDA. And then when you get the NDA and, oh yeah, we have all of our financial information ready, and then it's another 6 weeks.

So sure.

It's really— but if you really do have everything glued together, then you could go from sharing your information with the lender to getting an LOI in a matter of days. And once you sign the LOI, um, the length to close to funding depends on what structure you've chosen.

Sure.

And, and so many other things. You know, when I tell people, like, fourth quarter, I tell people, if you really Don't have your deal under LOI by November 1st, the likelihood of it closing by year end isn't good.

Sure. Yeah, yeah. No, we've all, we've all been there of, you know, contract— I mean, I did it this past year because I got laid off in October, right? Contracts out to folks in, uh, right around that Thanksgiving time frame. I'm like, I'm not seeing ink on this until January 15th at the soonest. That's just— it's not happening.

And I got to tell you, this is exactly why the world of online lending is able to help some companies and in other cases take advantage of them. Because if you've got to have money to make payroll next week and you haven't thought about it and somebody says, you know, give me access to your accounts so that I can take money out of them every day.

Right.

And I'll have you with funding in 48 hours. Well, there's a reason they're able to give you funding in 48 hours. Sure, it's because the interest rate is going to be very attractive to the lender.

Sure, yeah, and not so much the borrower.

Yeah, right. So way of putting it, you can get money a lot faster than in some cases I'm able to help you get money. But you will pay a price.

Sure. Oh, but I mean, even that, right? And again, this is part of the reason I asked the question of if they have their, their documentation and, you know, their ducks in a row, as the saying goes, right? The timeline is not egregious, right? The timeline is very reasonable if they've done their homework. Now, if they haven't done their homework, that's also a good learning for them of, hey, get things in, get your house in order. And this can go smoothly for you. Yeah. So yeah, well, I know I— we kind of bounced it back and forth, but Sam, I'll let you— I started us off. I'll let you wrap us up.

Yeah, thank you. And again, I apologize, everybody. When you're live and raw and real, man, things happen. And my internet went down. I don't know if people were asking us questions out there. We'll get back to you if you did. Everybody that joined us, we appreciate it. There will be a podcast of this, Marshall. And Adam as well. Marshall, just, just to wrap up, do you have like— so first of all, kind of what would you want to leave everybody with? Maybe the 3 or 4 things that you want people to know? And do you have any type of like one-sheeter that you could possibly share with us that we could get out to everybody?

Like, yeah, I can give you a one-pager. And you can share that with whomever you would like.

You want to pop it on the screen? You can share the screen too if you want to walk people through it.

Oh gosh. Let me see if I can do that here real quickly.

Yeah, we can put it out there and it'll live forever out in this video so people have it. But then also, if you could send it to me, I'll include it.

Yeah, and I would encourage anybody that is interested in chatting with me to simply reach out to me on LinkedIn. And I'm always happy Uh, to talk with, uh, any— whoops— uh, with—

and I'm happy to include your email if you want to tell people. Just link them, I guess.

Yeah, it's, uh, it's a great email. It's marshall@funding911.com. Can't forget that one, man.

Funding 911.

I will never forget that. Hey, you know what? You should meet my friend, uh, Marshall. He's marshall@funding911.com.

Yes, funding911.com. And so I do have a one-sheet which I can send to you.

Okay.

And you can share. It basically says, you know, here are the solutions that I work with, who's a great prospect for me, so that you know, look, I'll talk to anybody regardless of revenue size because I really do want to help and make sure that people avoid mistakes which could result in an untimely demise of their company. But it gives a little bit of a bio of who I am. And then, you know, you've got the banker, what we call tombstones, which are representatives of all the different kinds of transactions that I have helped fund for growing consumer packaged goods companies, as well as some companies in other industries as well. Because I am industry agnostic. It just so happens that most of the work I do is in the food and beverage space.

Wow, this is really awesome that you have this. Please send it to me.

I will.

And I'll probably put it as an— I'll do a couple of things. I'll do it as an attachment and then put a link to the video or a link to this attachment. Even if you have it, do you have it like where you can link it into like a website to see this or anything like that? Like a link?

I do not. Yeah. And it may be on my LinkedIn page and if not, I'll down— I'll put it there. But, you know, again, happy to share it. Easiest way to reach out to me is on LinkedIn. And don't hesitate to reach out via email as well. And, you know, look, I, I want to help as many companies as I can. And I'll never pressure anybody to take a deal because that's just not who I am. I'd rather you go away saying, at a minimum, I learned something that helps me move towards success for my business. If I accomplish that on a phone call, thumbs up, we've done a great job.

That's just amazing that you do that. Any parting words that you want to leave with the audience today, Marshall, that you want them to know?

There is a lot of money out there. A lot of money out there. Choose wisely.

Okay, okay.

Well, thank you.

Choose wisely. I agree. I mean, I wish I would have met you, um, a couple years ago with a couple brands I was on. They could have used your services. Yeah, there's no shortage of funds.

There really isn't. Um, the, the key is you want to find the funds that are best for your situation. And doesn't tie your hands so that you end up in trouble down the road.

Yeah, well, that's amazing because I would leave you with this is people can get money, but you got to be smart about the type of money you get. Have I heard you loud and clear? Because there's— if I do the 7-day loan due back in 7 days, I might find myself in trouble being that my— I'm not going to get paid for 30 days and I'm sitting 60 days of inventory on my floor, it might be a train wreck. So this is really good knowledge.

Particularly the early-stage companies whose ability to forecast with a high level of certainty, that's not a good bet. Something's, you know, it's just your forecast is a great planning tool, but if you think that you're going to hit those numbers all the time, it's not going to happen. And that Can really be a problem if you've taken out a loan where you have to meet the repayment schedule. So again, think through those things, make sure that you're making good choices.

Awesome. Well, thank you, Marshall, for joining us today. Uh, we're, we're gonna end here. Uh, Adam and Marshall, hang on as we end as a reminder. Um, but thanks everybody for joining us on Saturdays. Thanks for, uh, riding the wave with us. And hopefully everybody had some fun along the way. And thanks, Adam, joining us from Phoenix today.

Yeah, Adam, I look forward to meeting you in Anaheim next week at Product— at the CPG Natural Product Expo West.

Absolutely.

Me too. Let's make it happen.

All right, see you guys later.

Thanks, everyone. All right, it's done.

So here— so we were recording a few weeks ago, by the way.