EMERGING Fund

Interview with Mathew Focht on the EMERGING Fund

Anyone reading this is undoubtedly familiar with Mathew Focht, the CEO and founder EMERGING, co-founder of Consolidated Concepts, and founder of Emerging Concepts.   At the core of these enterprises lies one commonality: a commitment to the restaurant and entertainment industries and a passion for supporting operators in achieving excellence on a national scale. 

Recently, I had the pleasure of speaking with Mathew about the EMERGING Fund, a modern fund that combines capital investments with mentorships and strategic growth resources. Here’s what he had to say about the road it’s taken since launching in 2023.

Marisa: So, let’s start from the beginning. What’s transpired with the EMERGING Fund since launching?

Mathew: We launched in March 2023 with our first investors and started the process of raising capital. Our focus was to find the top intellectuals who are the movers and shakers in the industry. So, we looked for leaders with proven track records and a conviction for growing technology or concepts. That was our first and foremost strategy—finding those leaders in the industry that we could build a fund with, and that could put us in a position to build other funds with this base of leaders who are industry Titans. 

I think that took a long time to do because we carefully curated this list of individuals. We currently have 70 LPs who are executives and industry experts in different areas, from concepts to technology and other service industry-related venues. We made 10 investments in the last year with five of our concepts in tech, and I’m really proud of what we’ve been able to put together.

Right now, the headwinds in the fund environment are real, with a lot of funds out there experiencing challenges. But we’re a bit naive because we’re a first-time fund and don’t know what it’s like to raise capital in tough times versus great times. The reception that we’ve experienced has been wonderful. I think we’ve been fortunate to have people giving us their vote of confidence because of our 70 LPs, who are industry experts in this environment. I think the toughest time to fundraise has proved to be a great transition for us.

We’ve actually done this over the years. We started Consolidated Concepts, our supply chain company, in 2008 amidst the market crisis. John Davie started Dining Alliance with his dad in 1999, and then we brought these two companies together under Buyer’s Edge Platform in 2018. We took a private equity investment that same year and have acquired over 40 companies under Buyer’s Edge Platform since then. The company saw some of the greatest growth rates when people were focused on COVID. We’ve particularly shined in those moments when the current climate is rough. 

We also differentiate ourselves by investing in companies that are performing well and that we know we can help. Essentially, we’re blue-collar workers in the trenches with truly Midwest roots, working and building these companies with them. 

Marisa: Can you discuss some brands the EMERGING Fund has invested in? 

Mathew: We’ve made five tech and five concept investments thus far. One example is Puttshack, which has had tremendous growth as an experiential concept from the founders of TopGolf and Adam Breeden. We’ve seen them expand rapidly across the country, and we’ve been helping them build their core plan with our data science and real estate teams. 

The first F1 Arcade in the U.S. opened in Boston, and another is headed for Washington, D.C., and Miami. They also have two venues in the U.K.—London and Birmingham. So, we’re excited not only as investors but also to help them make real estate decisions. 

Federales, an open-air taco and tequila concept with an energetic vibe, is opening a new unit in Nashville this year, which is also exciting. 

Marisa: So, it sounds like you not only invest in these companies but support them with real estate decisions. Is that right? 

Mathew: Yes, we support these companies with investments and growth strategies through our real estate and data science team. 

It’s also been a really good year for some of our investments in tech. We invested in Botrista, which automates drinks for the restaurant industry. It was built by a Tesla engineer who invested in a bubble tea company and witnessed the challenges restaurants face in labor. So, he built a machine with 93 patents that created craft beverages, from popular energy drinks to premium iced teas, high-quality coffees, and desserts. This machine is now coming to the market and has experienced exponential growth. Today, we’re working on $100 million contracts.

It’s attracted a lot of investment and is truly providing value, allowing QSRs and fine, fast restaurants to serve higher quality non-alcoholic beverages in 25 seconds or less when historically if it didn’t come out of a soda pop dispenser machine or fountain machine, it wasn’t being served or was with left up to the bartender in the evenings. This machine blends, shakes, and stirs and provides a great variety of products.

Tablz has also had a good year figuring out its target market. This technology enables restaurants to monetize their real estate and charge for their premium seating, whether window views or favorite patio locations. For instance, restaurants currently charge the same price Monday through Saturday, even though the demand is quite different. This gives operators the chance to better manage these premium tables and help the 20-year-old hostess who continually gets pressured to give guests the best seating in the house. Now, restaurants get compensated for their premier seating, just like theaters and other venues.

1Huddle has had great growth as well. We invested last year and found that the market desperately needs to educate its workforce in a fun, gamified, and mobile way. It’s a strategy that enables staff to learn in an entertaining approach instead of a boring LMS way. Essentially, it’s education that doesn’t suck. 

It also helps staff discover their passion, learning from a mobile phone on a platform that allows you to elevate your whole career through gamified learning. I’ll never forget the story Sam Caucci, the founder, shared about the Loews Hotel in Santa Monica. He was talking to one of the executives at the hotel, and they were telling him how they needed to find bartenders. Sam responded that he knew who their next best bartender was. Their response was, of course, how do you know? He was looking at their dashboard and could see their top scorer on their beer, wine, and spirits modules and games. This woman, who was in housekeeping, is now one of the best bartenders at Loews.

So, we’ve had a really good year of investing in tech and concepts, and we’re extremely well-positioned to continue growing these companies. Our differentiator is our operating companies; that’s where our edge comes from. There are a lot of good venture capital firms and private equity firms out there, but they don’t have the operational expertise or work with 250,000 restaurants that they write checks to every quarter. 

So, we have the ability to leverage our relationships, which can help these technology companies and restaurant and entertainment concepts go to market with much less risk and faster. All these companies are in the growth stage. I can say we’re not venture capital. We want zero zeros. Because we have operating companies, we don’t need to have zero returns. 

We’re not taking that much risk because we’re investing in companies that have proven customers and a proven market. They are early in their growth cycle, but they’re delivering value today to the market. We can back those companies using our relationships and scale them with a lower cost of customer acquisition than they traditionally have. So that’s the key to scalability for all these companies. 

It’s not just about how much money it costs to get to the market but also whether they are doing it intentionally in the right way. Our strength is to go to market with the right influencers, the early adopters, and the innovators in a space. That’s the magic. Almost everyone in the industry recognizes those leaders, and if we can match the technology with those leaders and create value, the market takes a hold and responds, and that’s how we achieve growth.

Marisa: So, what do you see transpiring for the remainder of 2024?

Mathew: In 2024, we are looking to solidify our fund with partners that have a long-term interest in our early investments. And what I mean by that is we adopt companies in their early growth stages. These companies will need capital in later rounds, and we want to position these investments to have partners that can take them all the way up to the later rounds, potentially going public or being sold for over a billion-dollar evaluations. 

So, we are focusing on identifying partners that can come to the fund that have the interest and affinity for the food and beverage space. We’re looking for groups that have a capital interest and want to hold these positions with these companies into their later rounds. It will produce nice returns for the investor because it won’t necessarily go to the highest bidder. They benefit from the strategic relationship of our fund as well as their relationship with the investor from the early rounds. 

So, this enables the companies we invest in to build a relationship throughout their entire growth cycle without having to be introduced to a whole new LP base later in the cycle. I think our fund is going to be one of the top performers. It’s all about expanding and leveraging our sales and growth capability. Essentially, we’re looking to close out the fund with the best LP base that you can hope for in hospitality.

 



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