Direct-to-consumer brands are becoming massive - but Canada is falling behind GlobeSmallBiz
Direct to consumer is the hot new category for investors in the United States. With rising brands such as makeup company Glossier and luggage company Away, it’s no secret that such large conglomerates as Procter & Gamble Co. and General Mills, Inc. are feeling threatened. This huge shift from large-scale consumer packaged goods to indie brands is obvious to everyone – consumers, founders, retailers, investors – but Canada risks being left behind.
Also, there’s been a shift in thinking among investors. Many investors who traditionally focused on tech, AI and machine learning are starting to put dollars into DTC brands. The startup incubator Y Combinator has historically only allowed tech startups and now boasts 30-per-cent to 40-per-cent DTC brands. SoftBank Group Corp., which is known to only invest in tech, has invested in DTC brands, most notably US$240-million into Brandless Inc., an online dollar store. In 2018 alone, U.S.
Canadians invest less in DTC brands as a percentage and in absolute dollars. From many conversations with Canadian VCs, it seems like it boils down to the fact that they see potential for higher returns in tech. DTC is seen as riskier and investors recognize that the ecosystem in Canada is not built to support these brands.
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