Press commentary on direct-to-consumer brand’s growth linked to private equity firms. Read the full article.

On direct-to-consumer brand’s financial backing:

“You had venture fuel the first five or so years of the boom, and then you started to have private equity come in which is used to a little bit lower multiples, has a lot more cash on hand, a lot more strategic relationships and can bring debt into the equation…”

On private equity firms investment in direct-to-consumer brands:

According to Siegel, while some private equity investors take a longer-term outcome on their investments, there are others that do look to generate more profit in the short-term by “putting a lot of debt into companies and use it to pay themselves fees, and kind of pull cash out of the company.”

Additionally, given that many private equity firms are looking to invest when these companies have a clear path to becoming profitable, the pressure can be greater for a firm to be acquired or to go public. While venture capitalists may be making investments in companies with the expectation that only one or two will generate the necessary returns for the fund, private equity firms are “investing for the vast majority [of their companies] to make money,” Siegel said.