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Mehtab | Karta Ventures

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@MehtabKarta

Investing in & operating 8/9 figure consumer brands. We welcome complex opportunities others are unwilling or unable to tackle.
Vancouver, British Columbia kartaventures.com Joined January 2018
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Mehtab | Karta Ventures Verified account @MehtabKarta
Hi, I am Mehtab. I run Karta Ventures with my cofounder Alex. Since 2018 we've put 8 figures of our own capital into growth, turnarounds, and special situations. We welcome complex deals others won't touch.

Why work with us?

We supercharge profit by cutting cost, improving quality, and growing revenue, using a battle-tested playbook built on a decade of combined DTC operating experience across dozens of 8-figure brands.

We have no limited partners to answer to.

Every dollar we invest is our own, earned from exits and cash flow across our portfolio of consumer brands.

That's why we can tailor the right deal for each founder and move fast.

We also have the operating experience to understand your business at a fundamental level no 25-year-old VC associate can.

Our approach makes sense in consumer because consumer brands don’t scale to massive valuations like tech companies do, or as quickly.

Nobody investing in DTC-first brands is underwriting to a $10 billion dollar outcome the way they do in tech. This means your valuations are much lower when raising growth equity, because the company will not sell for anywhere close to what a tech company would. In turn, your ability to sell stock along the path to a final exit is reduced massively, and it’s hard to make meaningful money.

Consumer brands struggle with venture capital because operating leverage isn't as strong as it is in software. Serving 100 customers in software comes with nearly the same cost as serving 100,000 customers.

In consumer businesses, we sell physical products which means costs do decrease with scale, but not to the same degree.

This reality means you can’t afford to make as many mistakes with the capital you raise. You can’t pull back and cut burn the way a tech company can.

If exits aren’t likely to reach large multiples, and capital must be deployed efficiently...

...you need a value-add partner to help you optimize capital allocation and minimize unnecessary dilution.

Not just a check from someone that gives you advice like “just reduce your ad spend!”

For example, if you raise $10M from a venture fund, you might only efficiently deploy 20% of that; meaning just $2 million drives results.

When you work with us, capital is deployed efficiently at a realistic pace, which means you need less capital and you keep more of your company. By improving the fundamentals of your business, we can dramatically improve both net margin and liquidity - which means the reliance on external capital to fuel business is wiped out.

It’s exponentially less risky to retain a larger stake in a small company while achieving similar financial outcomes at exit.

We're very very flexible too:

Want to de-risk and take some off the table, but still own your company? We can solve for that.

Want to "trial" the relationship first and see the value we add? We can solve for that.

Want us involved for just a short stretch? We can solve for that.

Worried about losing control? We can solve for that.
Have a cofounder who isn't pulling their weight? We can solve for that.

Want a higher valuation? We can solve for that.

Facing a near-term cash crunch? We can solve for that.

Criteria:

Non-Control/Minority:
-$10m - $50m in rev
-Profitable or unprofitable
-Based in the US/CAN
-Bonus points if manufacturing in-house or if you have a complex supply chain

Control investments.
-$20m - $100m in revenue
-Require a buyer that can move quickly
-Profitable or distressed
-US-based
-Prefer brands with an in-house manufacturing component.

Just drop me a PM or email us through our site.
10 replies 1 reposts 123 likes 19K views View on X
Mehtab | Karta Ventures Verified account @MehtabKarta
My experience using the healthcare systems in Canada, US and Mexico:

1. Mexico. Very cheap, very fast. Doctors will text you. But the skill levels are noticeably lower and they are way too liberal with prescribing certain things. They gave me a black label antibiotic that would never have been given to me in Canada/US and I ended up with a tendon rupture lol. I would not want to be in Mexico with any serious health condition. I texted a dr friend in LA about it and he was laughing that I was stupid enough to take the antibiotic...fair lol.

2. US. A little faster than Canada, but kind of a pain in the ass to organize things. I had unlimited health care (which was $$$). I had 2 surgeries while in the US and one was botched to the point where I have permanent chronic pain. The surgery should not have been botched so idk. Specialist wait was the same as Canada for my specific issue. As an employer, I hated organizing our company healthcare and dealing with the insane paper work load.

3. Canada. Slow in some ways. I just pay for MRIs privately and that makes it fast. MRIs are not that expensive and my healthcare spend is a lot lower than the US. The main dr I see went to a tier 1 US school, and same with my wife's main specialist. Emergency can take a bit sometimes but if you have something serious you are seen asap. I took my grandpa/grandma there a bunch last year + previous year and no problems being seen quickly.

I think if you are $$$, then the US is probably nicer or if you have some niche condition. But generally, healthcare in BC/Canada is pretty good and probably a better solution for most ppl. If the US had *true* private healthcare, maybe that would make it very good...but I think there's a bunch of weird laws that neuter how good it could be.
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Mehtab | Karta Ventures Verified account @MehtabKarta
Most DTC brands don’t throw off much distributable cash.

Why is it hard...?

Profit (not ebitda!) margins for brands are usually ~12-18%

Tax takes 21% of that -> you’re at ~9.5-14%

If you're growing, you get pwnd because inventory isn’t an expense until it sells.

So when you grow, you pay cash for more inventory AND pay tax on profit because that inventory can't be expensed yet!

You pay months early for inventory. Deposits + 60-120 day lead times = cash out before the sales

Quick math on a $10M brand at 15% net:

15% net -> ~11.9% after tax

Growing 25% -> ~3.3% of revenue goes into new inventory (assumes inventory is ~13% of revenue which is pretty generous lol)

= ~8.5% distributable

Grow 50% -> ~5%

How do you fix this?

-Externalize working capital costs; better net terms or consignment/made to order
-Become lendable. Borrow conservatively via non-PGd lines to deal with working capital costs --> lets you get paid more

There's more, but i am typing this from a farm