Melissa Fakkina of Siddhi Capital became fascinated with how to be an efficient operator after starting work in her family's juice manufacturing business at a young age.
As she grew up, she saw how the food system was changing: more people began demanding transparency in the supply chain and caring about higher quality ingredients and products.
“Big CPG (consumer packaged goods) couldn't solve that problem, so I brought the family business into the big CPG space in the form of manufacturing,” Facchina said.
She left the corporate world in the early 2010s to start an outsourced operations consultancy called Siddhi Services, which has since helped build more than 500 food and beverage companies and helped 93 others succeed.
Melissa Facchina, co-founder and managing partner of Siddhi Capital. (Image courtesy of Siddhi Capital) Image courtesy of Siddhi Capital /
“We were basically 'hired guns' going into companies and solving their scaling problems,” she says. “That caught the attention of investors, and I started to realize that an unhealthy relationship was forming between investors and their portfolio companies.”
Facchina has seen investors make what seem like unrealistic demands of companies, for example asking them to do things that the companies can’t execute in a time frame that they can’t execute. The main reason, she explained, was because the companies didn’t know how to scale their CPG businesses.
When the results they wanted didn't materialize, investors downgraded the company or demanded changes in management. Facchina saw companies lying to investors and their boards out of fear of the consequences. She thought there might be a better way.
That's where Siddhi Capital, an operations-focused growth equity firm that invests in the food and beverage industry, comes in. Its portfolio includes brands such as Aura Bora sparkling water, Thistle food delivery, chocolate snack company Mid-Day Square and cereal maker Magic Spoon.
Facchina is a co-founder and shares the title of managing partner with Steven Finn, who has led hundreds of investments through the family office. With a team of 24 people, the four-year-old firm raised Fund I of about $70 million with help from Finn's father, Brian Finn, who is now Siddhi's chairman and was previously CEO of Credit Suisse USA.
Being a startup fund manager hasn't been easy over the past four years, and it's even more difficult for women-led funds, which grew to about 3% of the $107 billion raised by venture funds worldwide last year, according to the Venture Capital Journal.
But Facchina faced no such difficulties, as his first fund closed in an hour. Yes, that's right. Facchina credits a lot of that to the influence of Brian Finn and his wealthy friends.
“I won't mention names, but some of the most prominent private investors in the world have invested in us,” she said. “I never could have done it on my own. When you bring two people with really good skills together, people take notice. The proof is in the track record.”
Siddhi recently closed its second fund, $135 million, in less than an hour (it actually took two years to close), but Facchina says about 98% of the limited partners reinvested in the second fund.
That's largely because the fund launched just as Ukraine's war with Russia was happening: the firm was “very fortunate that our current group of investors believed in what we were doing and were happy with the trajectory of Fund I,” but didn't expect it to take two years.
The firm has invested during that time, adding 10 companies to the fund, including lab-grown protein ingredients company Ingrediom and recombinant protein manufacturer Future Fields.
Siddhi Capital's first fund invested in more than 40 early-stage companies, but Fund II will focus on putting more capital into a smaller number of companies at a more growth stage. Fakkina plans to invest $5 million to $10 million in companies with revenues between $25 million and $100 million.
The bulk of the investment will be directed towards consumer goods companies, with some going to food technology companies operating in areas such as fermentation and cellular agriculture.