Venture studio Squared Circles has big plans to launch the next big health, wellness and food product.
The project began a little over three years ago when Lukas Dirksen, formerly of creative firm Sid Lee, began making angel investments in brands with entrepreneurs Alexander Gilkes and Osman Khan — one of their early investments was hair wellness brand Nutrafol — and they decided to formalize the program as an incubation studio.
But after a few years, Squared Circles decided to take a more hands-on approach: Rather than acting as an incubator or investor for outside brands, the studio became focused on launching and scaling its own businesses, which is why the company just raised a $40 million Series A led by L Catterton.
“Our pitch to partners that we’re going to build with going forward is, how can we actually build these things all the way to launch and even all the way to Series A without having to give up any more capitalists,” said co-founder Dirksen, who appeared on the Modern Retail Podcast to discuss Squared Circle’s growth so far.
Squared Circles is currently incubating two brands: cooking oil startup Algae Cooking and skin care company Magic Molecule, and plans to launch other brands in areas such as “nutritional foods for the GLP-1 generation” and “providing kids with tasty alternatives to functional medicines,” according to its website.
Dirksen said all of these ideas were born from data: “We start with consumer insights, and that’s what we’re always striving for,” he said.
The focus now is on continually launching new products and getting them to market as quickly as possible. Although venture capital funding isn’t as plentiful as it was a few years ago, Dirksen says there’s still demand for certain areas.
“The two areas where there is disproportionate overspending are health and wellness and food and beverage,” he said.
Below are highlights from the conversation, lightly edited for clarity.
Keep a low profile
“The truth is, I would say we’ve deliberately kept a low profile over the last few years. [This is] Because we’ve always truly believed that what we do and what we put out into the world speaks for itself, not like some other people who are very pompous and trying to sell you a vision when they really have no substance. That’s why it’s such an exciting time to be talking to you. We’re at this moment now where we have three businesses in the market. We’re getting close to the point where all of this is starting to take shape.”
Focus on data
“We start with consumer insights. And that’s what we always strive for. In our humble opinion, the reason why a lot of startups fail is because they start with an idea and then try to find the consumer. And we keep that in mind. We always start with consumer insights and then build our IP and product around it. So at Squared Circles, we’re always spending time digging into insights.”
What people are buying in the current economic climate
“What we’ve seen, especially with consumers, is that even in the recession — economic hardship, inflation, etc. [shoppers] A disproportionate amount of spending was in health and wellness and food and beverage. And specifically food and beverage for health and wellness. So food is medicine. And what’s interesting is, right now food and beverage — food and beverage, pre-money — is a very hard space to raise money in. But health and wellness, backed by science, is a very hard space to raise money in. [companies that are] I think it’s really impacting consumers’ perceptions of longevity. [that] “It’s a place where we’re going to continue to see a lot of activity and investment.”
