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Volition
Jan 31, 2020
Susie Harbour

Mission-Driven Brands: Creating Value with Values

by Susie Harbour, VP at Volition Capital

The Mission-Driven Movement

During the Australian wildfires earlier this month, Jeff Bezos found himself amid controversy when he announced Amazon would commit $1 million Australian dollars (or $690,000 U.S. dollars) to the relief effort. Critics slammed him for not doing more given the company’s seemingly limitless funds and recently publicized poor record of behavior toward its employees.

Around the same time, leaders at the World Economic Forum in Davos were discussing another theme: stakeholder capitalism, or the idea that companies have a greater purpose besides just providing returns for shareholders.

These examples illustrate a larger shift that – perhaps – has reached a tipping point: it’s not enough for brands to be charitable or not do harm. It’s expected that they make meaningful contributions to their communities by embracing values and missions that signal moral identity to consumers.

For years, being a “mission-driven” brand was reserved for companies with core values naturally aligning with their customer base (Patagonia is a good example). Now, all brands – large and small – are embracing some version of mission-driven messaging.

And, consumers are paying attention to what they are saying and doing.

The Impetus Behind the Shift: The Empowered Consumer

There are several macro trends and technological advancements that are driving this mega-trend, which has resulted in a more vocal and educated consumer:

  • Consumers have unprecedented access to information
  • The consumer’s voice is now more far-reaching than ever due to the rise of social media
  • The rapid rise of DTC companies has led to an empowered consumer and a business model set up to engage with its consumers and respond quickly to feedback

Consumer expectations have never been higher. It’s not enough to have a good product or service anymore. If you’re sourcing or manufacturing unethically, polluting, or even just not using better-for-the-world materials in your packaging, you’re probably not good enough for many of today’s consumers. They support companies whose missions align with their own values and beliefs.

Recent consumer research by Accenture demonstrates the significance of this attitude shift:

  • The consumer’s voice has never been stronger – 67% of consumers believe their actions can influence a brand or company.
  • Consumers are willing to walk away – A majority of consumers disappointed by a company’s words or actions will complain publicly. 17% will never come back.
  • Mission and purpose can provide the competitive advantage required – Unilever’s mission-driven brands grow ~70% faster than the average Unilever brand.

IMAGE: Accenture, “To Infinity and Beyond: From Me to We, The Rise of the Purpose-Led Brand,” 2018

Emerging Areas of Opportunity 

With high consumer expectations, a new generation of companies is emerging to satisfy this growing consumer demand. We have identified 4 major areas within this theme where we see opportunities emerging to partner with companies looking to grow with purpose:

  1. Accessibility – As a theme, accessibility will focus on opening up markets that were either closely held among a few competitors or unaffordable for most consumers. We believe the sharing economy will continue to thrive and business models that provide access to a broader swath of consumers through more flexibility will emerge and take share from legacy players.
  2. Inclusivity – Brands that attempt to provide goods or services to traditionally underserved demographics are on the rise. They will continue to outshine as consumers demand a shakeup in how we as a society define what is “normal” or “standard” whether that is in beauty, fashion, healthcare, etc.
  3. Sustainability – This remains a key focus as our environmental impact becomes increasingly more evident. We see the commitment to living a more sustainable lifestyle both from consumers and from retailers. We are excited about this space as it has broad implications for brands, manufacturers, service providers, and the planet.
  4. Giving back – Popularized by brands such as Toms, which utilizes the “buy-one-give-one” model, companies committed to charitable donations have been on the rise and we are taking notice. Growing a company while benefiting the stakeholders alongside giving back to a specific cause is a win-win from our perspective.

 

Dashed Outline = Volition Portfolio Companies BURST & RTS

Beyond just areas of opportunity, these four categories represent exciting and energizing brand priorities, enabling real connection with customers and communities. Customers can see when companies make half-hearted attempts at positive change, and, as Amazon recently learned, they react accordingly. Mission-driven brands offer a refreshing alternative where positive change itself is at the heart of their value proposition. The emerging companies in these spaces are not merely disruptors, they’re designers of a better future.

Volition’s Vision

Volition Capital will continue to invest in the way we’ve always invested: in strong, capital-efficient businesses that have product-market fit and loyal, happy customers. That’s why we are excited to partner with the next generation of mission-driven brands: they can fit our profile while also doing good.

We have already started investing in the space, but we are excited to invest in our future alongside the brands and companies that aim to redefine their industries while doing good along the way. What is particularly interesting to us as investors are the ability to align our business objectives with our own sense of purpose for our community. We have seen great value creation alongside innovative products and services that benefit the consumer while aligning with a stronger social and environmental responsibility – a win for everyone involved.

Contact the Authors

Susie Harbour 

Vice President

+1 617 830 2309 
susie@volitioncapital.com 
LinkedIn

MK Marino

Vice President

+1 617 830 2103
Marykate@volitioncapital.com  
LinkedIn

 

 

 

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