Access VC’s Rakesh Narayana: Investors have a responsibility to envision the future of consumer products

In 2020, Rakesh Narayana, gm of Access VC, saw that most consumer venture funding was flowing toward traditional food and beverage consumer brands, not categories like sexual health and hygiene, to which Reckitt is dedicated. Reckitt owns brands like condom brand Durex, feminine hygiene brand Queen V and sexual wellness brand KY. Additionally, there was a dearth of brands serving or being led by people of color, coupled with a growth in better-for-you brands. Since its launch, in 2020 Access VC has invested more than $50 million in over 30 startups, including sexual wellness brand Maude and men’s wellness brand Asystem, across pre-seed to Series C rounds and beyond.

On the latest episode of the Glossy Beauty podcast, Narayana shared that he grew up in India and was raised by a single mother before moving to London for higher education. From there, he worked at Boston Consulting Group as a consultant before entering the CPG category. He said his love for CPG stems from an appreciation for its tangibility and tactile nature and the way consumers interact with and are influenced by consumer brands. While at Reckitt in various roles, he saw the gap between large CPG conglomerates and more innovative indie brands, and the solution he spotted was corporate venture capital.

“There is a large difference and gap between big companies being able to do disruptive innovation and the startups and universities and laboratories that have real cutting-edge innovation,” he said. “Corporate venture capital, in some ways, is meant to bridge that gap. Large companies are exceptionally good at making $100 million brands into $1 billion brands but perhaps not as good at creating brands which don’t exist [and growing them] to a $100 million brand.”

Narayana detailed the Access VC investing strategy, the way it differs from traditional venture capital and the role investors have in fostering innovation.

The difference between VC and CVCs

“It is a distinct proposition to be a venture capital firm and a CVC. Anyone who pretends they’re very similar is off their rockers. Most venture capital firms have multiple limited partners and investors, and they pool capital that they then invest. They are financial investment vehicles and, at the core of it, they are financial managers. On the other hand, corporate venture capital is different because there is only one investor: the corporation. Most of the time, if not all, there is an intention to have good financial returns, but that is rarely the objective. If you think about the size of Reckitt, it is a $50 billion market cap company, and our fund is less than $50 million. I always say [the value of a CVC] is about having a window into the future. Startups are a window into the future of mass retail.

The other part is value-add. VCs have a lot of value, in terms of structuring startup companies and [advising on] how or where you raise more capital if you want to have an exit. Financial engineering is a big value add most VCs have. Where CVCs do quite well is access to unique talent and skill sets. For example, one of the companies we’re working with is seeking FDA approval. Maybe a handful of people in the U.S. can help you with that, and I’m pretty sure none of them work in venture capital. Most of them work in large corporations, research laboratories or regulatory teams.”

Creating a ‘swords and shields’ investment philosophy

“It’s a criterion we always use when we use to invest. We often ask why this brand is good when we make investments. Everybody on the team has a point of view on why a company is a good or bad investment. What we’ve come to accept is there are a lot of features that are shields that protect [the brand]. There is the minimum that is expected of you in the market today by millennial, Gen Z and Gen A consumers. … Those minimum expectations are what we call shields; you need that to be able to fight the battle in today’s market. Then there are the swords, which are what differentiate the winners from the average brand. Swords are features in a brand that make it truly cutting edge, like their ability to get a specific target audience.”

Access VC‘ is focused on’s focus categories

“There are a lot of exciting product categories, but maybe not so many great brands in those spaces. One space we’re keen on and looking at is women’s health. There is a lot of whatever the equivalent of ‘greenwashing’ is in women’s health. Everything has ‘women’s health’ slapped on it now, as opposed to credible science focused on helping women. We’re watching that space closely to see what brands break out in that space. Metabolic health is another, with the rise of semaglutide and Ozempic. There is a significant appetite in the market for natural ways of controlling your blood sugar so you don’t feel as hungry and you can manage your metabolism better. The aging population is another space where we’re looking for breakout brands. Most of us will live 85 years or longer if you are born [starting] in the late 1980s. The ability to buy products and the desire to want to live a happy, healthy life for as long as possible is a high aspiration.”