Late last year, Santa Monica, California-based venture firm M13 named Anna Barber as a partner and head of Launchpad, its in-house venture studio. Barber joined M13 from Techstars LA, where she was a managing director.
M13 is currently investing from its $175 million second, raised in 2019, and is reportedly raising a third fund, according to a regulatory filing, although Barber and the firm declined to discuss fundraising. The firm, named after a bright star cluster in the northern sky, invested early in such companies as Lyft, Ring, Slack and Daily Harvest.
M13’s Launchpad was founded in 2019 with the goal of launching innovative new consumer brands, independently and in partnership with corporate partners. Current partners include Procter & Gamble Ventures and PepsiCo.
Barber talked with Venture Capital Journal about the studio as an emerging model in venture and the relationship with corporates.
How does a venture studio help large corporations stay relevant?
The philosophy behind M13 Launchpad is asking the right questions at the right time. As a partner to corporations, we focus on identifying a white space in the market, where we think there’s a need and an opportunity to find a solution that solves a customer’s problem.
Once we build conviction about the problem to solve, we design a solution and launch it to the market, leveraging lean start-up practices. Relative to traditional corporate innovation, we can get to market more quickly and get real market feedback as we iterate.
What’s your typical process of working with corporate partners?
Every idea starts from the perspective of a customer problem. We first learn as much as possible about the corporation we work with. For instance, with PepsiCo, we spent two weeks just getting up to speed with all of the research on the market that the company has done to identify where they see white spaces in democratizing health and wellness.
We try to understand the customers’ profiles and what their needs are. We then move to a phase of ideation where we build products that we believe will be responsive to those needs. After that, we start testing whether our early hypotheses were right. We also find entrepreneurs to run these products or companies when they take off.
How do you find entrepreneurs to run the spin-offs?
This is one of M13’s secret superpowers. We believe that there is an incredible diversity of talent out there, and we work hard to create a process that brings that in.
We wanted to avoid that narrow funnel that venture capitalists and start-ups traditionally rely on. Starting from the very first step in our application process, we are trying to understand what entrepreneurs get excited about, what they’re looking to do, what their values are. We leverage broader communication channels and networks and take inbound applications seriously.
What is it like to work with corporates?
This might sound really strange, but I have learned to have empathy for large corporations. I think many people in the start-up world see them as slow, heavy and out of touch. Others don’t know how hard it is to be a public company and keep the markets satisfied. There are a lot of complexities and competitive pressure on people inside these corporations.
We work hard to bridge these gaps, to understand the perspective of our partners and what a win looks like for them, and how we can access the advantages and abilities that they and we bring to the table for success.
What success stories have you had?
In partnership with P&G Ventures, for instance, we launched two direct-to-consumer OTC brands. . A wellness brand and product line Kindra, which helps alleviate many common menopause symptoms, and Bodewell, a product line with natural active ingredients that effectively treat and prevent eczema and psoriasis.
We also launched Opte, a precision skincare system that combines the best of optics, proprietary algorithms, printing technology and skincare all in one device.
Can a venture studio exist without corporate partners as their customers?
Anyone with an opportunistic mindset is able to run a venture studio. It’s not corporations who are the end customer, but millions of people like you and me. It all starts by looking out into the market and identifying where the biggest opportunities are.
Last year alone has shown us so many whitespaces in very different areas, such as consumerization of healthcare and educational technologies, innovations in e-commerce and workforce development to name a few. Each of these opportunities reflects new customer pain points, which may be addressed by new solutions, which in their turn might not have been needed before. Of course, big corporate players want to be at the forefront of such innovations.
However, we have also seen dozens of start-ups emerging and skyrocketing during pandemic. I believe we are at the beginning of a period of massive innovation across a number of consumer categories, which is pretty exciting.