How We Actually Decide
The filter behind every check we write.
By: Jack Hamrick. General Partner, First Run.
Ask any early-stage investor what they look for and you'll hear the same answer: great founders, great products, big markets. All true. None of it useful. A filter that can't say no isn't a filter.
Ours says no a lot. Here's how it works.
The gate: it has to work in grocery. We back brands built to scale through retail. Direct-to-consumer and e-commerce are real channels and we like seeing them. They're often where repeat purchase first becomes visible. But in American food, grocery is still where the power law lives: it's where the biggest brands are made and where acquirers look first. A product that can't earn and hold a spot on a grocery shelf has a ceiling, and we'd rather know that on day one.
Past this foundational gate, we look for four effects. I call them effects deliberately. The cause comes at the end.
1. Real gross margin, 40 to 50 percent, honestly counted. Not the pitch-deck version. The version that survives freight, waste, trade spend, and the co-packer's next price increase. Healthy margin in food comes from exactly two places. Pricing power: a product differentiated enough that people pay for it. Or production efficiency: a founder who has engineered cost out of the process. The best brands have both.
2. Repeat purchase. The most important signal, and the hardest to find. Repeat is customer obsession made visible: it means the product survived contact with someone's actual life and got invited back. The best food brands aren't bought once and admired. They're bought weekly, on autopilot. Through Foraged, the specialty foods marketplace I founded, I spent five years watching the behavior of tens of thousands of consumers, and the lesson that stuck is that almost everything else can be manufactured – except for repeat purchases.
3. Velocity. Units per store per week is the language retail speaks, and low velocity is a deal-breaker: a product that doesn't turn gets discontinued, no matter how much anyone loves it. But velocity has an honesty problem. Great marketing can rent it for a quarter or two. That's why we read velocity and repeat together. Velocity tells you the product is moving. Repeat indicates why.
4. Low capital in, high founder ownership. When we meet a brand doing real revenue on very little raised capital, with founders who still own most of their company, that's not a sign they couldn't raise. It's a sign they didn't need to. It means the margins are real, the operation is disciplined, and every dollar in the business has a job. We'd rather back a founder who has been capital-starved but efficient than back one who has been well-funded and sloppy.
The cause behind the effects. Here's the pattern underneath all four: somewhere early, the founder did something hard that most people won't do.
Maybe they chose the operationally painful category. Or they built the sourcing relationship that took years. They potentially kept manufacturing in-house because no co-packer could hit their spec. The hard thing creates the pricing power, which creates the margin. It makes the product impossible to substitute, which creates the repeat. It's the thing competitors decline to copy, which protects the velocity. Do the hard things early and the numbers follow. Skip them, and no amount of capital will produce those numbers later. Of course, once you have the financial strength, the hard things become much easier to solve at scale.
That's the filter. Margin, repeat, velocity, ownership, gated by grocery and caused by hard things.
None of it is a secret, and that's the point. The filter isn't clever. The discipline is in applying it. In saying no to the beautiful brand with rented velocity, the beloved product with no margin, the raise that's really a substitute for repeat purchase metrics. Over the next few weeks we’ll take it apart one piece at a time with concrete examples: repeat and velocity, then the operator discipline, then the hard things.
If you're building a brand that fits this description, we'd like to know you: firstruncpg.com.
