How I Evaluate DTC Brands Before Investing

I've invested in over 30 consumer brands at this point. Some have been acquired, some have scaled to eight figures, and some didn't make it. After enough reps, you develop a filter — not a spreadsheet model, but an instinct backed by patterns.

Here's the actual framework I use when evaluating a DTC brand for investment.

Does the Product Solve a Real Problem?

This sounds basic but most pitches fail here. A lot of founders come to me with a "better version" of something that already exists. Better skincare, better supplements, better athleisure. "Better" alone isn't a business.

What I'm looking for is a specific, articulable gap in the market. When the Doe Lashes team started, the gap was clear: comfortable, affordable lashes that you could actually wear all day. Every existing option was either expensive, uncomfortable, or both. That's a real problem with a real solution.

Can the Founder Explain the Customer in 30 Seconds?

If a founder can't tell me exactly who their customer is — age, behavior, where they hang out online, what they buy instead — that's a red flag. The best DTC founders I've backed are borderline obsessive about their customer.

They're in the DMs. They're reading every review. They know the customer's language better than any agency could learn it.

What's the Unfair Advantage?

Every brand needs one. It could be:

• Distribution — they already have an audience (creator-led brands)
• Supply chain — they can make it cheaper or better through proprietary relationships
• Community — they've built a loyal following before launching the product
• Domain expertise — they've spent years in the industry and understand things outsiders don't

At Paking Duck, our unfair advantage is the supply chain. We've built relationships with manufacturers that took years to develop. A new entrant can't replicate that overnight.

Unit Economics at Scale

I don't need perfect margins at launch. Early-stage brands are still figuring out their supply chain and customer acquisition costs. But I need to see a believable path to healthy unit economics at scale.

The key numbers I look at:

• Gross margin — needs to be north of 60% for most DTC categories, ideally 70%+
• CAC payback — can they pay back customer acquisition cost on the first order? If not, what's the LTV story?
• Repeat purchase rate — this is the number that separates real brands from one-hit wonders. If customers aren't coming back, no amount of ad spend will save you.

The Founder's Relationship with Their Product

This one is hard to quantify but it's maybe the most important signal. Is the founder a genuine customer of their own product? Do they use it every day? Do they care about the details — the packaging, the ingredients, the customer support response time?

The founders who treat their brand like a financial exercise rarely succeed in consumer. The ones who are genuinely obsessed with making a great product — they're the ones I bet on.

What I've Learned from the Misses

Not every investment works. The patterns I've seen in brands that didn't make it:

• Over-reliance on paid acquisition without organic demand
• Expanding to too many SKUs too fast
• Founder-market fit was weak — they picked the category for financial reasons, not passion
• Packaging and brand experience didn't match the price point

Every miss teaches you something. My hit rate has improved over time because the pattern recognition compounds. That's the real value of angel investing at scale.