By Dan Levitan, co-founder of Maveron

Considered one of the greatest investors of all time, Peter Lynch had a simple investment principle - “invest in what you know.” This straightforward investment philosophy helped him find good undervalued consumer-oriented stocks and achieve an annual average return of 29 percent while managing the Fidelity Magellan Fund from 1977 to 1990, which grew from $20 million to $14 billion during that time.

We appreciate Lynch’s simple, yet adaptive, investment style, which focused on the basics of good management, exceptional businesses, and quality consumer products. However, in today’s Sarbanes-Oxley world, for lots of logical reasons, investors are increasingly unable to realize this type of return or get in early enough to see that magnitude of returns. For example, a single share of Starbucks bought at the 1992 IPO is now worth almost 100x its original price. Even if one invested at Facebook’s public nadir of $50 billion in value, and it reaches $350 billion market capitalization, it would only be a 7x return.

The JOBS Act has relieved some of the restrictions that were put into place by the Sarbanes-Oxley Act, with the most notable innovation being crowdfunding. As the investment banker who had the privilege to take storied retail brands like Starbucks public, I see the crowdfunding marketplace improving upon the investment banking franchises of yesteryear by allowing retail investors to once again gain early access to high-risk growth investment opportunities.

Providing that opportunity early to investors inspired us to invest in CircleUp, a great equity-based crowdfunding site focused on consumer and retail.  In our minds,  CircleUp’s equity-based crowdfunding approach will become the 21st century investment banker.

Rather than shying away from what some consider to be competition, we were the first institutional investors to back Ryan Caldbeck and Rory Eakin, the co-founders of CircleUp, and embrace the value that crowdfunding can bring to early-stage startups. Two years later, CircleUp is on its way to making their vision a reality with a game-changing approach and marketplace that matches promising consumer companies with the right investors. This week, the company successfully closed new funding of $7.5 million led by Union Square Ventures and Google Ventures, with participation from my firm, Maveron. The financing marks the next step for Caldbeck and Eakin in making CircleUp the investment platform for the next generation of consumer brands. Early evidence shows that there is a good chance the next Chobani, Vitamin Water, or Under Armor will start by raising capital on CircleUp.

In his Forbes article on the one-year old “Jumpstart Our Business Startups” (JOBS) Act, Caldbeck says “Equity crowd funding is the most disruptive thing to happen to the financial services industry in a very long time.” As a former investor at consumer private equity funds, Ryan saw a hole in the market – early stage consumer businesses with great potential struggling to find capital and not a head on fit with normalized fundraising models paired with investors who couldn’t gain early access to these high quality businesses.

I couldn’t agree more. Not only is crowdfunding great for investors, but it’s even better for entrepreneurs, opening up untraditional sources of capital and creating a network previously unavailable to early stage companies. While we know as well as any the value great institutional investors can bring to the table, we also know that institutional capital is not right for every type or stage of promising business. Raising capital from individuals rather than institutions, can provide entrepreneurs with benefits such as more internal control, or more flexible liquidity timelines. Unlike investment banking, crowdfunding gives independent investors complete transparency and visibility into where other smart investors, frequently their peers, are investing. Rather than a junior banker calling dozens of institutional clients and retail investors with research and analysis on potential investment opportunities, CircleUp offers individual investors direct access to opportunities. It provides a format where they can find the relevant information, receive sample products, and connect directly with the company and management team. This new approach allows influential private investors to speak with their pocketbooks, a signal that is vastly superior to the investment banking research analyst reports in today’s hyper connected world.

Lets face it, crowdfunding is the new investment banker and, in many ways, a new important player in the venture capital ecosystem. Maveron has been one of the few VC firms that have made bets on equity crowdfunding.  Just like all our investments, we’re looking for incredible entrepreneurs like Ryan and Rory and for businesses that are ready to disrupt industries, displace incumbents, and establish market leadership. We love the idea of investing behind disruptive companies like CircleUp, and relish in the fact they might end up being our competition for certain investments. With crowdfunding, more entrepreneurs with the next big idea will access capital and that’s a good thing for the entire entrepreneurial ecosystem.

By Rebecca Kaden, Maveron Associate

Last week, as the New York Times labeled the food industry “the next big thing in tech,” Maveron announced its latest seed investment, Panna, a young company already making big moves in transforming the way we follow recipes at home. Launched by media industry veteran and cooking enthusiast, David Ellner, Panna is the first digital cooking magazine, bringing high quality video recipes to mobile devices and allowing amateur chefs to cook and create alongside some of the world’s best and most renowned.

So why do we agree with the Times? At Maveron, we invest with the thesis that the next generation of consumer brands will harness technology to reach more people, faster, and in more meaningful, personal ways. We believe the difference between a cool product and a massive brand and business stems from fanatical consumer passion, and the ability to seamlessly improve and integrate into a user’s daily life—to be their lifeline for how they accomplish what they want to do, whether it’s book a vacation home for their family (AirBnB), share moments with their friends and family (Instagram), or purchase clothes for their children (zulily). And the more personal the more problem, the more passionate consumers become around the solution. Yet, while there are few moments more intimate than dinners prepared and shared in our own homes, technology hasn’t yet disrupted the cooking experience.

Panna takes on this challenge with a mobile app featuring beautiful videos of star chefs such as Jonathan Waxman, Rick Bayless, and Anito Lo in a format that harnesses technology to make life easier and more enjoyable for food enthusiasts through bite size step-by-step clips. It uniquely unites the editorial curation of recipes, chefs, tips, and tricks formerly only found in offline food magazines with the ease, personalization, and freedom that mobile video allows to help the amateur cook execute like a pro.

Most importantly, Panna combines the things we love most at Maveron: a standout, all-star entrepreneur uniquely positioned to take a fresh look and create disruptive models for a big, stale market. Integrating new digital solutions into old industries isn’t a new task for David—in fact, he’s been doing it his whole career and is responsible for some of the most innovative initiatives in the entertainment world from his time at Universal Music and 19 Entertainment. He has that “A” entrepreneur ability to disregard even the deepest set standards and, instead, begin with an empty canvas. “Panna started with a blank sheet of paper and the customer in mind. We have no pre-existing models and we’ve built a vehicle to transmit the recipes, passion and expertise of master chefs to the home cook through video technology.” Even better, it’s a business model we can get behind. David’s taken the hard to monetize content category and created a quickly scaling product people are already paying for, the value proposition of the mouthwatering recipes and easy to follow format deliciously clear.

We’re thrilled to welcome Panna to the Maveron family and excited to work with David to reimagine the ingredients of the cooking industry. But, first, we’re busy boasting about our homemade tarte aux pommes.

Already, 2013’s been marked as the enterprise revolution. Angel investors and venture capitalists, many of whom have spent recent years dabbling in consumer investing, are turning to enterprise as the better investment decision and the focus of the next great wave of innovation. At Maveron, we’re happy to wish them well on their way.

While others turn their heads, we remain more certain than ever around Maveron’s core belief: that great entrepreneurs can use technology to disrupt markets and build billion-dollar consumer brands. And that a committed investment partner with experience, knowledge, and passion around this kind of company building from a business’s earliest days can make a huge difference on a brand’s journey towards ubiquity.

As part of continuously reevaluating and reinvigorating our commitment to investing in early stage consumer businesses, we are doubling down on both sector and stage with a new seed program designed to fund high potential businesses and build lasting relationships with the next generation of world-class entrepreneurs.

Consumer startups are requiring increasingly less capital to get off the ground as technology and tools evolve. The boom of crowd-funding platforms such as Angellist and Kickstarter are illustrations not only of consumer interest in innovation and desire to be a part of invention that will change our daily lives, but also that a relatively little bit of cash and an indication of market interest can be an incredible springboard for turning big ideas into tangible businesses.

However, from working with our diverse portfolio across our funds, we know that entrepreneurs need more than money to launch transformative consumer brands in today’s market. Instead, they require thoughtful partners that can provide the expertise, mentorship, access, resources, and mindshare that businesses and builders need to get great companies off the ground.

To be as valuable of a partner as we can be throughout a company’s lifecycle, we’ve designed our early-stage investment program to provide entrepreneurs with seed funding ranging from $100,000-$250,000. We will focus on consumer businesses with technology-enabled products and services in commerce, education and health and wellness, and partner with them to help navigate the early terrain and establish product market fit. Maveron has already completed three seed investments in 2013 and more than 15 in the last two years, including Everlane, CircleUp, CourseHero and Julep.

Julep, in fact, has become one of the fastest growing beauty brands in the U.S. and recently announced $10.3 million in Series B financing led by Andreessen Horowitz, with Maveron’s participation. The company’s unparalleled product innovation and speed-to-market, coupled with vocal social media engagement instead of traditional marketing, have enabled Julep to produce more products in an 18-month span than any other beauty company.

Through the Maveron portfolio, we’ve seen the power of a standout team, a big market, and innovative technology to change the way we engage in daily life—how we shop for our kids (Zulily), pursue education (General Assembly), protect our pets (trupanion), and make sure our parents and grandparents are safe (Lively). We look forward to our new seed program spurring increased opportunity to partner with the next wave of great entrepreneurs who will build the services, products, and platforms we soon won’t be able to live without.

Author Jonah Berger talks to entrepreneurs at last week’s Maveron conference about his latest book, Contagious – Why Things Catch On

By Jason Stoffer, Partner of Maveron

The Harlem Shake is yet another cultural phenomenon that has hit the internet racking up more than 700 million views around the world in just one month. The awkward display of flailing arms and wriggling torsos has spark newscasters, the Norwegian army and even everyone’s favorite TV family – The Simpsons to join the digital dance craze.

So what does the Harlem Shake have to do with starting a new consumer company?

At the Maveron conference last week, Prof. Jonah Berger talked to C-level executives and entrepreneurs about why things go viral – both online and offline. The Wharton professor and author of the bright orange book Contagious – Why Things Catch On, Berger, described the real value of social currency and the triggers that make things go from ordinary, even mundane, to remarkable.

Berger claims that word of mouth is more important and more effective than advertising, because it creates trust with consumers and is more targeted than traditional ads. People, as Berger points out, tend to have friends with people who have similar lifestyles and interests. So by igniting viral programs, consumer companies can leverage existing customers do the targeting for you.

To help us understand how viral works, Berger looks at the science behind social networks and developed a “recipe” to engineer content to help increase its odds of become contagious. He provides six key steps that consumer companies can use to become more viral. These include: social currency, triggers, emotions, public, practical value and stories.

Entrepreneurs often recognize the value of social currency or the idea that consumers can attain status by association to things they consume or say. Experiences or products can make consumers feel like an insider, or special and it’s a powerful driver for brands. But companies also need to identify triggers that give people something remarkable and timely to talk about.

For instance, Berger explains how the song called Friday by Rebecca Black became an internet craze immediately after it launch on YouTube. He found that one reason it garnered so much public attention, especially on Fridays, was a result of association to that given day. Other brands have taken similar approaches associate itself with breakfast, weekends or beach vacations. It’s these triggers that help keep brands top of mind for consumers.

What I found to be the real magic of Berger’s talk centered on social proof, and the idea that people imitate others if they can see what they are doing. He talks about how when we don’t know what to do, we look to others for information. This is a powerful concept that has worked extremely well for Apple and other consumer brands that have master the art of social proof. Whether it’s the placement of logos, the color of products, or crowds, it’s valuable to recognize that people tend to follow others when they can see what they are doing.

Berger pushes entrepreneurs to not only turn consumers into advocates, but into social proof through design, color and experiences. These visual can be a signal for their peers to follow suit, thus turning social currency into social proof that influences others. This isn’t about turning consumers into walking billboards, but finding how they can share their deeper connection with a brand with others.

For startups, that’s real magic.

By Jason Stoffer, Maveron, Partner

Beauty is a $160 billion offline category, which has experienced virtually no share shift online. So when we first invested in Julep in 2011, we were excited about the potential to build the first great vertically integrated online-first beauty brand. Since our first seed investment, Julep CEO Jane Park has built a multi-channel beauty business we believe has the opportunity to be the first beauty company to truly leverage social media and big data to build an enduring and valuable brand. We’re thrilled to participate in Julep’s $10.3 million Series B financing announced today, which was led by Andreessen Horowitz

The beauty business has a long line history of charismatic CEOs building billion dollar brands – including Leslie Blodgett of Bare Escentuals, Cristina Carlino of Philosophy and Anita Roddick of Body Shop. We believe Jane has the ability to join this rarified group.  She has the consumer business entrepreneurial qualities we look for at Maveron: she is a child of entrepreneurs, with a maniacal focus on consumer experience, formal brand building experience at The Boston Consulting Group and Starbucks and has an infectious passion for wanting to build a game-changing consumer company.

We first met Jane when she started Julep as a chain of nail salons in Seattle. We loved Jane, but did not think the early business model was suited to venture capital. As she was contemplating pivoting the Julep business online, Jane spent time with Darrell Cavens, CEO of zulily, the leading daily deals site for moms and an early stage Maveron portfolio company. Darrell called us thereafter and suggested that Julep had a great deal of potential. As we reconnected with Jane we immediately recognized that if given the chance, and connections to the right people with relevant consumer business experience, Jane would take the company to new levels and she did. My partners at Maveron and I worked with Jane as she brought on a strong team and a Board of Directors that included the former head of Sephora.com and the Chairman of Skullcandy. We led a Series A round of financing in the business.

Julep has ignited a cultural beauty phenomenon that uses social media to spread the brand like wildfire. In fact, much of Julep’s online growth has been fueled by social media, which we believe will be the catalyst for launching any great multi-channel consumer brand, especially in the beauty category.  With over 100,000 Facebook fans, 26,000 Twitter followers and 12,000 Pinterest followers highly engaged in swapping nail art designs and “nail swatches,” Julep’s social media community has been a strong substitute for brand building via traditional print marketing.  Julep is a pioneer in using Facebook, Pinterest and the social web to deeply engage its community of beauty lovers around color and its line of fashion forward beauty products. They don’t have to spend millions of dollars launching a new product – their social media fans help them get the word out.

Julep has produced more products in an 18-month span than any other beauty company. Within the past 18 months, Julep has launched 52 new beauty products including mascara, lip-glosses, glycolic scrubs, and 186 nail colors – a feat that no other beauty brand can do. The number of products launched each month is so vast because of Julep’s one-of-a-kind marketing blueprint: the freedom to operate without the limits of physical shelf space and to produce limited run SKUs that bring an inventory of lightening fast fashion business model to beauty.

It’s an honor to be part of Julep’s early and rapidly growing success and we intend to be there every step of the way for Jane.