From cupcakes to VC, CN2 Ventures co-founders look to raise a debut fund

Candace and Charles Nelson, the pair behind Sprinkles Cupcakes and Pizanna, are raising $25m for their first venture vehicle.

CN2 Ventures is a new consumer-focused fund run by founders whose careers have taken them from corporate finance to cupcakes to venture capital.

The Los Angeles-based firm entered the scene in March seeking $25 million to invest in consumer companies with strong branding potential. CN2 Ventures was founded by husband and wife Candace and Charles Nelson who are looking to pull from their experiences to be a meaningful partner to their portfolio companies.

The pair met while working in investment banking in the thick of the dot-com bubble in San Francisco. When that market went bust, Charles went for his MBA and Candace took the opportunity to take a different path and act on a passion.

She got a culinary degree in pastry and in 2005 opened up Sprinkles Cupcakes with Charles. It became known as the first cupcake-only bakery, and it has since expanded globally.

It also gave the pair the entrepreneurial bug.

“That entrepreneurial spirit, we wanted to create something new again,” Candace said. “The next phase for us was finding partners and finding great talents and creating an experience to make a great company with somebody else.”

The pair went on to start Pizzana, a critically acclaimed Neapolitan pizzeria, and Play 2 Progress, a sensory play-focused company. Candace has also gone on to judge baking competition shows, such the Food Network’s Cupcake Wars and Netflix’s Sugar Rush, among other programs.

The couple looks to use these past entrepreneurial experiences and their connections to help scale the next great batch of consumer brands, backed by CN2 Ventures.

“As we evolved, we’ve encountered a lot of people who have started start-ups who want our advice and expertise, and of course maybe want some investment,” Candace said. “It has all evolved organically from that.”

Branding expertise

CN2 Ventures is looking to invest between $500,000 and $2 million into consumer companies that have some revenue or at least a proof of concept. The firm is sector-agnostic, and Candace and Charles are excited about companies that look at an existing category in a modern way or from a new angle. They have already seen interesting opportunities in such areas as alternative dairy, frozen foods and edtech.

“We feel that branding is an area of our expertise,” Charles said. “Consumer and retail, whether it’s packaged or storefront retail, are strengths of ours. That’s how we landed on so far. Candace and I have always started things that we would be customer number one at.”

Charles added that their past careers in finance gives them an edge as they not only have been through the start-up lifecycle, but they also have knowledge and experience surrounding company scale and the exit process.

“We aren’t just financial people, but we do have that background,” Charles said. “We don’t just understand the brand, but we do understand the finance side. We also understand the exits. We’ve had exits.”

The couple exited Sprinkles in 2012 after selling a majority stake to private equity firm Karp Reilly.

The firm declined to comment on fundraising activities. CN2 Ventures hasn’t closed any deals yet, but Charles said the firm has seen great inbound and is looking to roll its metaphorical sleeves up and get to work.

“All of our businesses represent an evolution in a space,” Candace said. “This is the next frontier. We are always looking for people who are looking at businesses through a different set of eyes, giving it a new spin and thinking about it in a modern way.”